(c) crown copyright
Catalogue Reference:CAB/128/54/25
Image Reference:0001
COPY NO
CC(74) 25th
IConclusions
9 4
CABINET
C O N C L U S I O N S of a M e e t i n g of the C a b i n e t
h e l d at 10 D o w n i n g S t r e e t on
T H U R S D A Y 11 J U L Y 1974
at 11. 00 a m
PRESENT
T h e R t Hon H a r o l d W i l s o n
P r i m e Minister
MP
the Rt Hon E d w a r d S h o r t M P
Lord P r e s i d e n t of the C o u n c i l
T h e R t Hon J a m e s C a l l a g h a n M P
S e c r e t a r y o f State f o r F o r e i g n and
Commonwealth A f f a i r s
he Rt Hon L o r d E l w y n - J o n e s
iOrd C h a n c e l l o r
T h e R t Hon R o y J e n k i n s M P
S e c r e t a r y of State f o r the H o m e D e p a r t m e n t
[he Rt Hon D e n i s H e a l e y M P
Chancellor of the E x c h e q u e r
T h e R t Hon A n t h o n y C r o s l a n d M P
S e c r e t a r y of State f o r the E n v i r o n m e n t
the Rt Hon M i c h a e l F o o t M P
secretary of State f o r E m p l o y m e n t
T h e R t Hon E r i c V a r l e y M P
S e c r e t a r y of State f o r E n e r g y
( I t e m 1)
the Rt Hon S h i r l e y W i l l i a m s M P
Secretary of State f o r P r i c e s and
pnsumer P r o t e c t i o n
T h e R t Hon B a r b a r a C a s t l e M P
S e c r e t a r y o f State f o r S o c i a l S e r v i c e s
THE Rt Hon A n t h o n y W e d g w o o d Benn M P
pcretary o f State f o r I n d u s t r y
T h e R t Hon P e t e r S h o r e M P
S e c r e t a r y of State f o r T r a d e
Pe Rt Hon R o y M a s o n M P
jpcretary of State f o r D e f e n c e
The R t Hon R e g i n a l d P r e n t i c e M P
S e c r e t a r y of State f o r E d u c a t i o n and S c i e n c e
I
T h e R t Hon John M o r r i s Q C M P
S e c r e t a r y o f State f o r W a l e s
f* Rt Hon W i l l i a m R o s s M P
Pcretary o f State f o r S c o t l a n d
P E Rt Hon M e r l y n R e e s M P
Pcretary o f State f o r N o r t h e r n I r e l a n d
T h e R t Hon F r e d P e a r t M P
M i n i s t e r of A g r i c u l t u r e , F i s h e r i e s and F o o d
Pe Rt Hon H a r o l d L e v e r M P
Pancellor of the Duchy of L a n c a s t e r
T h e R t Hon L o r d S h e p h e r d
L o r d P r i v y Seal
m
1
i
:
: R E T
SE
.
,
,
THE FOLLOWING WERE ALSO
PRESENT
Civil Service Department
(Item 6)
SECRETARIAT
.
Sir
Mr
Mr
Mr
Mr
Mr
Mr
Mr
Mr
John Hunt
P D Nairne
.
H F T Smith
J A Hamilton
K R Stowe
H F Ellis-Rees
D Evans
R G S Johnston
R L Baxter
(Item 2)
(Item 2)
(Items 4-6)
( I t e m s 1 and 3 )
(Item 4)
(Item 2)
(Item 5)
. (Item 6)
CONTENTS
Item
Subject
1
PARLIAMENTARY AFFAIRS
2
FOREIGN AFFAIRS
1
Portugal
European Community:
Page
2
Beef
2
3
BUILDING SOCIETY FINANCE
3
4
ASSISTED A R E A BOUNDARIES
4
5
P U B L I C OWNERSHIP OF THE SHIPBUILDING A N D
6
A I R C R A F T INDUSTRIES
7
LONDON WEIGHTING A L L O W A N C E
8
PARLIAMENTARY
UFFAIRS
1.
T h e C a b i n e t w e r e i n f o r m e d of the b u s i n e s s t o b e t a k e n i n
the H o u s e o f C o m m o n s d u r i n g the f o l l o w i n g w e e k .
T h e d e b a t e on
the M o t i o n on the C o u n t e r - I n f l a t i o n ( A b o l i t i o n o f P a y B o a r d ) O r d e r
could p r o v e d i f f i c u l t s i n c e i t w a s l i k e l y that the C o n s e r v a t i v e -Opposition
and the L i b e r a l s w o u l d o p p o s e i t .
2. T H E F O R E I G N A N D C O M M O N W E A L T H S E C R E T A R Y said
that the r e s i g n a t i o n o f the P o r t u g u e s e P r i m e M i n i s t e r ,
D r P a l m a C a r l o s , and four of h i s c o l l e a g u e s r e f l e c t e d d i v i s i o n s
w i t h i n t h e G o v e r n m e n t on i n t e r n a l p o l i c i e s , p a r t i c u l a r l y i n e c o n o m i c
matters.
T h e S o c i a l i s t F o r e i g n M i n i s t e r , D r S o a r e s , w a s in a
p o s i t i o n o f s o m e d i f f i c u l t y ; t h e r e w a s a m e a s u r e of a g r e e m e n t
b e t w e e n C o m m u n i s t and n o n - S o c i a l i s t m e m b e r s o f the G o v e r n m e n t ,
T h e A r m e d F o r c e s M o v e m e n t at p r e s e n t t e n d e d t o s u p p o r t the r i g h t
w i n g on i n t e r n a l m a t t e r s , but s i d e d with the l e f t w i n g about the
n e e d t o m o v e q u i c k l y t o w a r d s d e c o l o n i s a t i o n of P o r t u g a l ' s o v e r s e a
territories.
T h e r e w e r e s o m e i n d i c a t i o n s that G e n e r a l S p i n o l a
m i g h t b e t e m p t e d in due c o u r s e to e s t a b l i s h a p r e s i d e n t i a l f o r m of
g o v e r n m e n t ; but at p r e s e n t t h e ' m o s t l i k e l y o u t c o m e w a s f o r
D r C a r l o s to b e a s k e d to a t t e m p t t o f o r m another G o v e r n m e n t .
The Cabinet ­
1.
T o o k note of the s t a t e m e n t by the F o r e i g n and C o m m o n w e a l t h S e c r e t a r y . T h e C a b i n e t w a s i n f o r m e d that the C o u n c i l of M i n i s t e r s ( A g r i c u l t u r e )
on 15-16 J u l y w o u l d b e c o n s i d e r i n g p r o p o s a l s b y the C o m m i s s i o n
f o r c h a n g e s in the a r r a n g e m e n t s f o r b e e f under the C o m m o n
Agricultural Policy ( C A P ) .
The Commission proposals presented
p o t e n t i a l p o l i t i c a l r i s k s ; t h e y i n c l u d e d the p o s s i b i l i t y of s a l e s o f
cheap b e e f f o r c e r t a i n c l a s s e s of o r g a n i s a t i o n s and c o n s u m e r s
w i t h i n the C o m m u n i t y , and t h e y w e r e of s p e c i a l i m p o r t a n c e t o the
U n i t e d K i n g d o m both b e c a u s e o f t h e i r r e l a t i o n s h i p t o o u r p r o p o s a l s
f o r the r e n e g o t i a t i o n of the C A P and b e c a u s e of t h e g r e a t s e n s i t i v i t y
o f the c u r r e n t b e e f s i t u a t i o n .
It w o u l d b e p a r t i c u l a r l y i m p o r t a n t t o
e n s u r e that n o d e c i s i o n s w e r e taken by the C o m m i s s i o n w h i c h m i g h t
b e shown t o b e c o m p a r a b l e t o the d e c i s i o n in 1973 to s e l l 200, 000 tons
o f cheap b u t t e r to the S o v i e t U n i o n .
T H E P R I M E M I N I S T E R , s u m m i n g up a b r i e f d i s c u s s i o n , s a i d that
t h e M i n i s t e r of A g r i c u l t u r e w o u l d b e c i r c u l a t i n g a m i n u t e t o t h o s e of
h i s c o l l e a g u e s m o s t c o n c e r n e d s e t t i n g out the a p p r o a c h h e p r o p o s e d
t o adopt on 15-16 July in the C o u n c i l o f M i n i s t e r s , w h e r e the t a s k
would not be e a s y .
I t w a s i m p o r t a n t f o r the G o v e r n m e n t s p o l i c y
t o w a r d s the C o m m u n i t y B e e f a r r a n g e m e n t s to b e f u l l y u n d e r s t o o d and
h e w o u l d h i m s e l f b e m a k i n g an a p p r o p r i a t e r e f e r e n c e to the s u b j e c t in
a forthcoming public s p e e c h .
T h e F o r e i g n and C o m m o n w e a l t h
S e c r e t a r y w o u l d be c o n s i d e r i n g w h e t h e r , in the m e e t i n g o f the C o u n c i l
o f M i n i s t e r s ( F o r e i g n A f f a i r s ) on 2 2 - 2 3 J u l y , t o d r a w attention t o the
p r o b l e m in the C o m m u n i t y b e e f m a r k e t as a w a y o f e x p o s i n g f u r t h e r
the f a i l i n g s of the C A P and thus h e l p i n g t o p r o m o t e o u r r e n e g o t i a t i o n
objectives.
T h e Cabinet ­
2.
Took note.
CONFIDENTIAL
3.
T H E C H A N C E L L O R O F T H E D U C H Y OF L A N C A S T E R s a i d that
in h i s f u r t h e r m e e t i n g s w i t h r e p r e s e n t a t i v e s of the B u i l d i n g
S o c i e t i e s A s s o c i a t i o n he had a s k e d t h e m t o m a i n t a i n the m o r t g a g e
r a t e at 11 p e r cent until about the end of the y e a r ; and in o r d e r to
h e l p t h e m cope w i t h the r e s u l t a n t p r e s s u r e on building s o c i e t y
m a r g i n s had o f f e r e d t h e m a G o v e r n m e n t r e s e r v e c e r t i f i c a t e , t o b e
e n c a s h a b l e at the end of a s o c i e t y ' s c u r r e n t f i n a n c i a l y e a r i f i t w e r e
then n e e d e d , t o e n s u r e that the s o c i e t y ' s r e s e r v e r a t i o d i d n o t f a l l
b e l o w the l e v e l w h i c h q u a l i f i e d i t f o r t r u s t e e s t a t u s .
T h e building
s o c i e t i e s had r e j e c t e d the p r o p o s e d s c h e m e , as a m e a s u r e l i k e l y t o
l e a d t o the G o v e r n m e n t h a v i n g t o o m u c h c o n t r o l o v e r t h e i r
a c t i v i t i e s , and had s a i d that t h e y e x p e c t e d to cope w i t h the p r o b l e m s
o f m a r g i n s , without r a i s i n g the m o r t g a g e r a t e , f o r a f e w m o r e
months.
T h e y had a g r e e d t o r e c o m m e n d t o t h e i r C o u n c i l m e e t i n g
on F r i d a y 12 J u l y , that the m o r t g a g e r a t e should b e m a i n t a i n e d at
11 p e r c e n t f o r t h r e e m o n t h s on the u n d e r s t a n d i n g that m a t t e r s could
be further r e v i e w e d t h e r e a f t e r .
I t s e e m e d l i k e l y t h a t the C o u n c i l
w o u l d a c c e p t t h i s r e c o m m e n d a t i o n , and that they w o u l d then ask the
G o v e r n m e n t to m a k e a v a i l a b l e the f o u r t h £100 m i l l i o n t r a n c h e o f the
£ 500 m i l l i o n l i n e of c r e d i t .
I t w a s a l s o l i k e l y that the C o u n c i l
w o u l d w a n t the G o v e r n m e n t t o r e l e a s e the fifth t r a n c h e i n A u g u s t
and he p r o p o s e d that the G o v e r n m e n t should do so i f the r e q u e s t
w e r e in fact m a d e .
;
T H E P R I M E M I N I S T E R , s u m m i n g up a b r i e f d i s c u s s i o n , s a i d the
C a b i n e t c o n g r a t u l a t e d the C h a n c e l l o r o f the Duchy o f L a n c a s t e r on
the o u t c o m e of t h e s e n e g o t i a t i o n s .
T h e p r o b a b i l i t y of the building
s o c i e t i e s h o l d i n g t h e i r m o r t g a g e r a t e s w a s c o n d i t i o n a l on the
m o v e m e n t of i n t e r e s t r a t e s g e n e r a l l y but i t w a s v e r y s a t i s f a c t o r y
that the r a t e l o o k e d as though i t w o u l d b e h e l d until the autumn.
T h e C a b i n e t a g r e e d that the f u r t h e r t r a n c h e s of the £ 5 0 0 m i l l i o n
l i n e of c r e d i t should, i f r e q u i r e d , b e m a d e " a v a i l a b l e by the
E n v i r o n m e n t S e c r e t a r y i n c o n s u l t a t i o n w i t h the C h a n c e l l o r o f the
Exchequer.
The Cabinet T o o k n o t e , w i t h a p p r o v a l , o f the P r i m e M i n i s t e r s
s u m m i n g up o f t h e i r d i s c u s s i o n .
1
3.
4.
T h e C a b i n e t c o n s i d e r e d a m e m o r a n d u m by t h e C h a n c e l l o r of
the E x c h e q u e r ( C ( 7 4 ) 68) about p o s s i b l e c h a n g e s to a s s i s t e d a r e a
boundaries,
T H E C H A N C E L L O R O F T H E E X C H E Q U E R said that the M i n i s t e r i a l
C o m m i t t e e on E c o n o m i c P o l i c y ( E C ) had r e c e n t l y d i s c u s s e d p o s s i b l e
c h a n g e s t o a s s i s t e d a r e a b o u n d a r i e s on the b a s i s of a r e p o r t b y
o f f i c i a l s w h i c h r e c o m m e n d e d that no c h a n g e s should be m a d e f o r
the p r e s e n t , but that the m a t t e r should b e l o o k e d at a g a i n t o w a r d s
t h e end o f the y e a r in the l i g h t of d e c i s i o n s on s t e e l c l o s u r e s and o f
p o s s i b l e c h a n g e s in the r e g i o n a l e m p l o y m e n t p a t t e r n .
E C had a g r e e d
that t h e r e w a s a s t r o n g c a s e f o r a f u n d a m e n t a l r e v i e w of a s s i s t e d a r e a
p o l i c y at an a p p r o p r i a t e t i m e ; but w e r e d i v i d e d on w h e t h e r t h e r e
should b e s o m e i m m e d i a t e c h a n g e s in a d v a n c e of such a r e v i e w .
If i m m e d i a t e c h a n g e s w e r e to b e m a d e the p r o p o s a l w a s that
M e r s e y s i d e and N o r t h W e s t W a l e s should b e u p g r a d e d f r o m
d e v e l o p m e n t t o s p e c i a l d e v e l o p m e n t a r e a s , E d i n b u r g h and t h e
Cardiff t r a v e l to work a r e a (excluding N e w p o r t ) f r o m intermediate
t o d e v e l o p m e n t a r e a s , and C h e s t e r f i e l d should b e c o m e an i n t e r ­
mediate area.
T h e c o s t of such a p a c k a g e would b e about
£20 million a y e a r .
T h e e c o n o m i c a r g u m e n t s in f a v o u r of
it w e r e n o t s t r o n g - it w o u l d o n l y t e n d to d i l u t e the e f f e c t i v e n e s s
o f e x i s t i n g m e a s u r e s - and though p o H t i c a l a d v a n t a g e m i g h t be g a i n e d
f r o m m a k i n g c e r t a i n c h a n g e s , his c o l l e a g u e s would w i s h t o b e a r in
m i n d that w i t h the p r e s e n t c o n s t r a i n t s on public e x p e n d i t u r e the c o s t
w o u l d h a v e to b e m e t f r o m s a v i n g s in o t h e r p r o g r a m m e s .
T H E S E C R E T A R Y O F S T A T E F O R I N D U S T R Y s a i d that the p r o p o s a l s
n o w b e f o r e the C a b i n e t s t e m m e d f r o m h i s o r i g i n a l s u g g e s t i o n that
c h a n g e s should b e m a d e to c o r r e c t t h r e e outstanding a n o m a l i e s M e r s e y s i d e , C h e s t e r f i e l d and E d i n b u r g h - f o r e a c h o f w h i c h t h e r e
w a s a s t r o n g c a s e both in the l i g h t o f t h e i r i n d u s t r i a l and e m p l o y m e n t
p r o b l e m s and i n c o m p a r i s o n w i t h s i m i l a r a r e a s w h i c h a l r e a d y
e n j o y e d a h i g h e r d e g r e e of a s s i s t a n c e .
In t h e i r d i s c u s s i o n E C
had a c c e p t e d that t h e r e w e r e s t r o n g a r g u m e n t s f o r i n c l u d i n g N o r t h
W e s t W a l e s and C a r d i f f in the p a c k a g e ; though t h e r e m i g h t b e s o m e
r i s k that the u p g r a d i n g o f C a r d i f f w o u l d b e p u b l i c l y i n t e r p r e t e d as a
p r e m o n i t i o n that the E a s t M o o r s s t e e l w o r k s would b e c l o s e d .
At a
c o s t of about £ 2 0 m i l l i o n a y e a r t h e s e c h a n g e s would r e p r e s e n t a
m o d e s t but u s e f u l e x p e n d i t u r e on d i r e c t a s s i s t a n c e t o a r e a s of
p a r t i c u l a r c o n c e r n to the G o v e r n m e n t , and m i g h t w i t h a d v a n t a g e
b e i n c l u d e d with the o t h e r m e a s u r e s t o d e a l w i t h t h e c u r r e n t J'\
e c o n o m i c situation that the C h a n c e l l o r of the E x c h e q u e r w a s
at p r e s e n t c o n s i d e r i n g .
T h e y would a l s o b e a r out the u n d e r t a k i n g
i n the L a b o u r P a r t y M a n i f e s t o , r e i n f o r c e d b y the c o m m i t m e n t in T h e
Q u e e n ' s S p e e c h , that the G o v e r n m e n t w o u l d g i v e a high p r i o r i t y , ^to i t s
regional policies.
4
T H E S E C R E T A R Y O F S T A T E F O R S C O T L A N D s a i d that he had
,
s e r i o u s doubts about the v a l u e of t h e s e c h a n g e s on r e g i o n a l g r o u n d s .
F r o m such a p a t t e r n S c o t l a n d w a s bound t o l o s e .
Of the £ 2 0 m i l l i o n
a y e a r that t h e y would c o s t , £19 m i l l i o n would g o t o E n g l a n d and W a l e s
and the t o t a l population of the s p e c i a l d e v e l o p m e n t a r e a s would be
i n c r e a s e d by o v e r t h r e e - q u a r t e r s of a m i l l i o n f u r t h e r diluting the
a t t r a c t i o n of the e x i s t i n g a r e a s : a g l a n c e at the m a p s h o w e d that
the a r e a s n o w p r o p o s e d f o r u p g r a d i n g would a c t as a b a r r i e r t o
m o b i l e i n d u s t r y , w h i c h w a s m a i n l y t o b e found in the South E a s t
q u a r t e r of G r e a t B r i t a i n , f r o m m o v i n g f u r t h e r N o r t h t o a r e a s of
greater need.
U n l e s s a d d i t i o n a l r e s o u r c e s w e r e t o b e d e v o t e d to
S c o t l a n d , he would find i t d i f f i c u l t t o a g r e e the p r o p o s a l s .
T H E S E C R E T A R Y O F S T A T E F O R W A L E S said that on e c o n o m i c
g r o u n d s t h e r e w a s a s t r o n g c a s e f o r u p g r a d i n g the status of South
E a s t and N o r t h E a s t , a s w e l l a s N o r t h West W a l e s ; but he r e c o g n i s e d
that the e x t e n t of the p r o b l e m i n N o r t h E a s t W a l e s w o u l d depend
l a r g e l y on the o u t c o m e of the s t e e l r e o r g a n i s a t i o n , and at p r e s e n t
he d i d not w i s h t o do m o r e than c a l l attention to i t .
In t h e South
E a s t t h e r e had b e e n a long c a m p a i g n f o r i m p r o v i n g the status of
C a r d i f f , and although he r e c o g n i s e d that a f i n a l d e c i s i o n on s t e e l
c l o s u r e s had s t i l l t o b e m a d e , t h e r e m u s t i n e v i t a b l y b e a substantial
l o s s of j o b s in the n e x t t w o y e a r s .
M o r e o v e r , if C a r d i f f w e r e to be
t r e a t e d d i s s i m i l a r l y f r o m E d i n b u r g h , the G o v e r n m e n t would b e
s e r i o u s l y c r i t i c i s e d b y W e l s h o p i n i o n and the N a t i o n a l i s t M o v e m e n t
would benefit a c c o r d i n g l y .
T h e c a s e f o r u p g r a d i n g N o r t h "West W a l e s
w a s v e r y s t r o n g : a c o m p a r a t i v e l y s m a l l amount of m o n e y w a s at
s t a k e ; but t r a d i t i o n a l i n d u s t r y w a s d e c l i n i n g i n e x o r a b l y , u n e m p l o y ­
m e n t w a s long e s t a b l i s h e d and n o w r i s i n g , and w o r k e r s w e r e d r i f t i n g
away.
In d i s c u s s i o n t h e r e was w i d e s p r e a d a g r e e m e n t that the w h o l e p a t t e r n
o f r e g i o n a l a s s i s t a n c e n e e d e d a t h o r o u g h r e v i e w ; but i t w a s
r e c o g n i s e d that such a r e v i e w could not w e l l b e u n d e r t a k e n b e f o r e
the a u t u m n .
In the m e a n t i m e the r e a l i s t i c c h o i c e l a y b e t w e e n
m a k i n g a l l t h e c h a n g e s c a n v a s s e d , o r n o n e of t h e m .
It w a s u r g e d
that t h e r e w e r e s t r o n g a r g u m e n t s i n f a v o u r of e a c h c h a n g e , and
t h e r e w o u l d b e c l e a r p o l i t i c a l a d v a n t a g e t o the G o v e r n m e n t i n
demonstrating its concern for these a r e a s : a modest d e g r e e
o f r e g i o n a l r e f l a t i o n w o u l d c h i m e w i t h the n e e d s of the p r e s e n t
economic situation.
A l t h o u g h the c h a n g e s would h a v e t o be n o t i f i e d
t o the C o m m i s s i o n of the E u r o p e a n E c o n o m i c C o m m u n i t y , i t w a s not
thought l i k e l y that any o b j e c t i o n w o u l d b e r a i s e d to t h e m .
On the
o t h e r hand i t w a s a r g u e d that c h a n g e s in a s s i s t e d status would b r i n g
no i m m e d i a t e b e n e f i t to the a r e a s c o n c e r n e d , and the p o l i t i c a l
a d v a n t a g e that would b e g a i n e d in t h e m m i g h t w e l l b e o f f s e t b y
i l l - f e e l i n g a m o n g a r e a s that had n o t b e e n s e l e c t e d ; t h e r e w a s a l s o
a r i s k of r a i s i n g u n n e c e s s a r y f e a r s about t h e i r e c o n o m i c condition
and p r o s p e c t s .
G r a n t e d t h e n e e d f o r a t h o r o u g h r e v i e w of r e g i o n a l
p o l i c y , it would be unwise to anticipate its conclusions by making
s h o r t - t e r m changes whose benefits might p r o v e to be i l l u s o r y :
t h e r e w e r e m o r e effective ways in which expenditure of this o r d e r
c o u l d i m m e d i a t e l y b e d e p l o y e d i n support of the G o v e r n m e n t s
policies.
T H E P R I M E M I N I S T E R , , s u m m i n g up t h e d i s c u s s i o n , s a i d that
the C a b i n e t a c c e p t e d that i f c h a n g e s to a s s i s t e d a r e a s w e r e n o w
t o b e m a d e , t h e y should b e t h o s e i d e n t i f i e d in C ( 7 4 ) 6 8 ; but t h e
m a j o r i t y of t h e Cabinet w a s n o t at p r e s e n t in f a v o u r of such a s t e p .
It w o u l d i n any c a s e be i n a p p r o p r i a t e t o t a k e a d e c i s i o n in t h i s f i e l d
b e f o r e t h e y had been i n f o r m e d of c e r t a i n e c o n o m i c m e a s u r e s w h i c h
the C h a n c e l l o r of the E x c h e q u e r w a s c o n s i d e r i n g .
If d e s i r e d , the
q u e s t i o n o f c h a n g e s i n a s s i s t e d a r e a b o u n d a r i e s could b e r e o p e n e d
a f t e r the C h a n c e l l o r ' s i n t e n t i o n s w e r e k n o w n .
The Cabinet A g r e e d not at p r e s e n t t o p u r s u e t h e c h a n g e s t o
a s s i s t e d a r e a b o u n d a r i e s i d e n t i f i e d in C ( 7 4 ) 6 8 .
5.
T h e C a b i n e t had b e f o r e t h e m a m e m o r a n d u m b y the
S e c r e t a r y of State f o r I n d u s t r y ( C ( 7 4 ) 69) about i n t e r d e p a r t m e n t a l
s t u d i e s b y o f f i c i a l s o f the p r o p o s a l s f o r taking i n t o p u b l i c
o w n e r s h i p the shipbuilding and a i r c r a f t i n d u s t r i e s .
T H E S E C R E T A R Y O F S T A T E F O R I N D U S T R Y s a i d that at i t s
m e e t i n g on 4 J u l y ( I D V ( 7 4 ) 2nd M e e t i n g ) , the M i n i s t e r i a l C o m m i t t e e
on I n d u s t r i a l D e v e l o p m e n t had a g r e e d in p r i n c i p l e that the
shipbuilding i n d u s t r y (including ship r e p a i r i n g and m a r i n e
e n g i n e e r i n g ) and a i r c r a f t i n d u s t r y should b e t a k e n i n t o p u b l i c
ownership.
A n u m b e r o f d e t a i l e d p o i n t s r e q u i r e d f u r t h e r study
and h e had b e e n i n v i t e d t o a r r a n g e f o r t h i s t o b e c a r r i e d out by j
two i n t e r d e p a r t m e n t a l groups of o f f i c i a l s .
T h e shipbuilding g r o u p
w o u l d study the s t r u c t u r e of the p r o p o s e d n a t i o n a l i s e d b o d y ; the
r o l e of t h e N a t i o n a l E n t e r p r i s e B o a r d ( N E B ) ; the s p e c i a l
r e q u i r e m e n t s of w a r s h i p b u i l d i n g ; the p o s s i b i l i t y o f expanding into
c h e m i c a l as w e l l as m a r i n e e n g i n e e r i n g ; and the t i m i n g t o b e
followed.
T h e future of H a r l a n d and W o l f f h o w e v e r w o u l d b e
e x c l u d e d f r o m the g r o u p ' s t e r m s o f r e f e r e n c e , s i n c e t h i s w a s b e s t
c o n s i d e r e d in the c o n t e x t of the e c o n o m y o f N o r t h e r n I r e l a n d as a
whole.
T h e g r o u p on the a i r c r a f t i n d u s t r y w o u l d c o n s i d e r the f o r m of
l e g i s l a t i o n n e e d e d ; the r o l e of the N E B ; the c o r p o r a t e s t r u c t u r e
o f the n e w b o d y ; the f i r m s t o b e n a t i o n a l i s e d ; the r e s e r v e p o w e r s
n e e d e d t o s a f e g u a r d m i l i t a r y a i r c r a f t and g u i d e d w e a p o n c a p a b i l i t y ;
and the l i k e l y future s i z e and shape of the i n d u s t r y .
Short
B r o t h e r s and H a r l a n d w o u l d be e x c l u d e d f r o m the r e v i e w .
The
p r i n c i p l e s and t i m i n g of c o m p e n s a t i o n f o r both shipbuilding and
a i r c r a f t n a t i o n a l i s a t i o n w o u l d b e s e p a r a t e l y c o n s i d e r e d by the
D e p a r t m e n t o f I n d u s t r y and the T r e a s u r y .
In d i s c u s s i o n , i t w a s p o i n t e d out that if g u i d e d w e a p o n s w e r e
i n c l u d e d w i t h the a i r c r a f t i n d u s t r y the G o v e r n m e n t m i g h t b e f a c e d
with a w k w a r d c h o i c e s o v e r a u t h o r i s i n g the supply of a r m s t o
foreign countries.
A d i s t i n c t i o n could b e d r a w n b e t w e e n l i c e n s i n g
p r i v a t e f i r m s to s e l l a r m s , i n c l u d i n g g u i d e d w e a p o n s , and d i r e c t
G o v e r n m e n t p a r t i c i p a t i o n through a n a t i o n a l i s e d b o d y .
On the
o t h e r hand, i t w a s a r g u e d that the G o v e r n m e n t a l r e a d y p l a y e d a
s i g n i f i c a n t p a r t i n a r m s s a l e s ; e n g i n e s and a i r f r a m e s f o r m i l i t a r y
p u r p o s e s w e r e s o l d t o f o r e i g n G o v e r n m e n t s b y R o l l s - R o y c e and
S h o r t B r o t h e r s and H a r l a n d , in w h i c h the G o v e r n m e n t d i r e c t l y h e l d
shares.
It w a s u n l i k e l y that n a t i o n a l i s a t i o n in i t s e l f w o u l d c a l l f o r
any r e v i e w o f the p o l i c y f o r a r m s s a l e s to o v e r s e a s c o u n t r i e s .
In f u r t h e r d i s c u s s i o n , i t w a s p o i n t e d out that the p r e s e n t p r o p o s a l s
e n v i s a g e d s e p a r a t e B i l l s f o r the n a t i o n a l i s a t i o n of t h e shipbuilding
i n d u s t r y and the a i r c r a f t i n d u s t r y ; and a n e w I n d u s t r y B i l l .
Whether
a p l a c e c o u l d b e found f o r a l l t h r e e in the l e g i s l a t i v e p r o g r a m m e f o r
the n e x t S e s s i o n r e q u i r e d f u r t h e r c o n s i d e r a t i o n , and n o
c o m m i t m e n t to this could be given.
7
T H E P R I M E M I N I S T E R , s u m m i n g up a b r i e f d i s c u s s i o n , s a i d t h a t '
the S e c r e t a r y of State f o r I n d u s t r y should a r r a n g e f o r the g r o u p on
the a i r c r a f t i n d u s t r y to c o n s i d e r w h e t h e r i t w a s p r a c t i c a b l e and
d e s i r a b l e to d i f f e r e n t i a t e g u i d e d w e a p o n s f r o m a i r c r a f t , in v i e w of
the p o i n t s m a d e i n d i s c u s s i o n .
T h i s a s p e c t should then b e
d i s c u s s e d f u r t h e r in the M i n i s t e r i a l C o m m i t t e e on I n d u s t r i a l
Development.
The Cabinet T o o k n o t e , with a p p r o v a l , o f t h e P r i m e M i n i s t e r ' s
s u m m i n g up of t h e i r d i s c u s s i o n and i n v i t e d the
S e c r e t a r y of State f o r I n d u s t r y t o b e g u i d e d
accordingly.
I
6.
T H E S E C R E T A R Y OF S T A T E F O R E M P L O Y M E N T said
that s e v e r a l d i f f i c u l t i e s had a r i s e n in a p p l y i n g the r e c o m m e n d a t i o n s
of t h e P a y B o a r d r e p o r t on L o n d o n w e i g h t i n g .
The Government
should w o r k out a c o n s i s t e n t l i n e f o r handling the v a r i o u s
negotiations.
It w o u l d b e w r o n g f o r the G o v e r n m e n t t o e n c o u r a g e
an e m p l o y e r to p a y m o r e than the a l l o w a n c e s r e c o m m e n d e d b y the
P a y B o a r d , but i t w o u l d b e u n w i s e t o s e e k t o i m p o s e any a b s o l u t e
v e t o a s h e had p r o m i s e d that t h e r e w o u l d b e f r e e n e g o t i a t i o n s .
T h e G o v e r n m e n t should l e t the n e g o t i a t i o n s continue and s e e what
conclusion they r e a c h e d .
M e a n w h i l e t h e y should not a t t e m p t t o
d i c t a t e the o u t c o m e , although t h e y m i g h t say i n g e n e r a l t e r m s that
they w o u l d w i s h the n e g o t i a t o r s t o r e m a i n w i t h i n the t o t a l s u m s
r e c o m m e n d e d by the P a y B o a r d .
THE S E C R E T A R Y OF S T A T E F O R EDUCATION A N D SCIENCE
s a i d that the M i n i s t e r i a l C o m m i t t e e on E c o n o m i c P o l i c y h a d a g r e e d
that the M i n i s t e r s r e s p o n s i b l e f o r p a r t i c u l a r g r o u p s should s e e k t o
e n s u r e that o f f e r s on L o n d o n w e i g h t i n g w e r e c o n s i s t e n t w i t h the
p r i n c i p l e s and d i d not e x c e e d the t o t a l s set out in the P a y B o a r d
report.
H e had a c t e d on that d e c i s i o n .
A l t h o u g h the T e a c h e r s
R e m u n e r a t i o n A c t g a v e h i m the r i g h t of v e t o he had a v o i d e d any
s u g g e s t i o n of a v e t o in t h i s c a s e .
H e had p e r s u a d e d the e m p l o y e r s
t o r e m a i n w i t h i n the P a y B o a r d t o t a l at the B u r n h a m C o m m i t t e e s ,
but t h e n e g o t i a t i o n s w o u l d p r o b a b l y b r e a k d o w n .
T h o u g h the
i n n e r L o n d o n e m p l o y e r s and t h o s e in the s u r r o u n d i n g counties
m i g h t a g r e e to r e m a i n w i t h i n the P a y B o a r d l i m i t s , the o u t e r
London e m p l o y e r s would wish to pay m o r e .
H e w o u l d find i t
n e c e s s a r y io b r i n g the m a t t e r b a c k t o the C a b i n e t i f o t h e r g r o u p s
b r o k e t h r o u g h the l i m i t o r i f the t e a c h e r s w e r e t o d e c i d e t o c a l l
an o f f i c i a l s t r i k e t o b e g i n n e x t t e r m .
1
8
In d i s c u s s i o n i t w a s m e n t i o n e d that t h e r e w e r e a l s o p r o b l e m s
a f f e c t i n g the p o l i c e and the l o c a l a u t h o r i t i e s .
It w a s a r g u e d that
although i t w a s G o v e r n m e n t p o l i c y t o t r y t o e n s u r e that the t o t a l i n
the P a y B o a r d r e p o r t w a s not e x c e e d e d , any s u g g e s t i o n o f a
G o v e r n m e n t v e t o w o u l d cause the T r a d e s U n i o n C o n g r e s s t o d i s c u s s
that r a t h e r than the m e r i t s o f the c a s e f o r paying m o r e o r l e s s to
t h o s e w h o w o r k e d in L o n d o n .
T H E P R I M E M I N I S T E R s a i d that t h e r e had not b e e n t i m e t o r e a c h
any c o n c l u s i o n and that the q u e s t i o n should b e b r o u g h t b a c k to the
n e x t m e e t i n g of the C a b i n e t i f t h e r e w e r e any f u r t h e r d e v e l o p m e n t s .
T h e Cabinet
-
Took note.
Cabinet Office
U J u l y 1974
9