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Page 1: (c) crown copyright Catalogue Reference:CAB/128/66/8 Image ...fc95d419f4478b3b6e5f-3f71d0fe2b653c4f00f32175760e96e7.r87.cf… · House and in hi vies unlesw s some concessio were

(c) crown copyright

Catalogue Reference:CAB/128/66/8 Image Reference:0001

Page 2: (c) crown copyright Catalogue Reference:CAB/128/66/8 Image ...fc95d419f4478b3b6e5f-3f71d0fe2b653c4f00f32175760e96e7.r87.cf… · House and in hi vies unlesw s some concessio were

79

S E C R E T

UMENT IS T H E P R O P E R T Y O F H E R B R I T A N N I C M A J E S T Y ' S G O V E R N M E N T

8th C O P Y N Osions

C A B I N E T

C O N C L U S I O N S of a M e e t i n g o f 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 5 J U L Y 1979

at 11 . 00 a m

P R E S E N T

T h e R t H o n M a r g a r e t T h a t c h e r M P P r i m e M i n i s t e r

fcon Lo rd C a r r i n g t o n T h e R t H o n S i r G e o f f r e y H o w e Q C M P H r y of State for F o r e i g n a n d C h a n c e l l o r o f the E x c h e q u e r B iwea l th A f f a i r s

At Hon Sir Ke i th J o s e p h M P T h e R t H o n F r a n c i s P y m M P [etary of State for I n d u s t r y S e c r e t a r y o f State f o r D e f e n c e

l it Hon Lord Soames T h e R t H o n J a m e s P r i o r M P [resident of the C o u n c i l S e c r e t a r y of State f o r E m p l o y m e n t

^ H o n Sir Ian G i l m o u r M P T h e R t H o n P e t e r W a l k e r M P B r i v y Seal M i n i s t e r o f A g r i c u l t u r e , F i s h e r i e s a n d F o o d

K i o n Michael H e s e l t i n e M P T h e R t H o n G e o r g e Y o u n g e r M P f tary of State for the E n v i r o n m e n t S e c r e t a r y of State f o r S c o t l a n d

fton Nicholas E d w a r d s M P T h e R t H o n H u m p h r e y A t k i n s M P B y of State for W a l e s S e c r e t a r y o f State f o r N o r t h e r n I r e l a n d

f o n Pa t r i ck J e n k i n M P T h e R t H o n N o r m a n St J o h n - S t e v a s M P B y of State for S o c i a l S e r v i c e s C h a n c e l l o r o f the D u c h y o f L a n c a s t e r

fct Hon John Nott M P T h e R t H o n D a v i d H o w e l l M P B y of State f o r T r a d e S e c r e t a r y of State f o r E n e r g y

l R tHon Mark C a r l i s l e Q C M P T h e R t H o n J o h n B i f f e n M P ffcry of State for E d u c a t i o n a n d S c i e n c e C h i e f S e c r e t a r y , T r e a s u r y

T h e R t H o n A n g u s M a u d e M P P a y m a s t e r G e n e r a l

SECRET 84

Page 3: (c) crown copyright Catalogue Reference:CAB/128/66/8 Image ...fc95d419f4478b3b6e5f-3f71d0fe2b653c4f00f32175760e96e7.r87.cf… · House and in hi vies unlesw s some concessio were

S E C R E T

T H E F O L L O W I N G W E R E A L S O P R E S E N T

T h e R t H o n M i c h a e l J o p l i n g M P Hon Norman F o w l e r M P P a r l i a m e n t a r y S e c r e t a r y , T r e a s u r y of T ranspor t r

T h e R t H o n S i r M i c h a e l H a v e r s Q C M P A t t o r n e y G e n e r a l ( I t em 4)

S E C R E T A R I A T

S i r J o h n H u n t M r M D M F r a n k l i n M r P L e C h e m i n a n t M r P J H a r r o p M r R L W a d e - G e r y M r P M o u n t f i e l d M r D E-\R Ftui fca fcr M r G D M i l e s D t N B W T h o m p s o n

C O N T E N T S

Sub j e c t

P A R L I A M E N T A R Y A F F A I R S

F O R E I G N A F F A I R S

Tokyo S u m m i t

A u s t r a l i a

M idd l e E a s t

V i e t n a m e s e R e f u g e e s

C O M M U N I T Y A F F A I R S

RHODESIAN S A N C T I O N S

F u r t h e r I n q u i r y

MPs 1 A N D M I N I S T E R S 1 P A Y

R E G I O N A L " I N D U S T R I A L P O L I C Y

( I t ems 2 a n d 3) ( I t ems 4 - 6 ) ( I t em 1) ( I t ems 2 and 3) ( f t e m 6) ( I t em 1) ( I t em 5)

( I t em 4)

P a g e

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CONFIDENTIAL

1, T h e C a b i n e t w e r e i n f o r m e d o f the b u s i n e s s to be t a k e n i n the H o u s e of 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 .

2 . T H E P R I M E M I N I S T E R s a i d that the E c o n o m i c S u m m i t m e e t i n g i n T o k y o o n 2 8 - 2 9 J u n e h a d b e e n d o m i n a t e d b y e n e r g y q u e s t i o n s . O n the i m m e d i a t e n e e d f o r r e d u c e d o i l i m p o r t s b y the d e v e l o p e d w o r l d , the U n i t e d S t a t e s , J a p a n a n d C a n a d a h a d b e e n u n w i l l i n g to a c c e p t i m p o r t t a r g e t s u n l e s s 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 ( E E C ) g l o b a l t a r g e t w h i c h h a d b e e n a g r e e d p r e v i o u s l y b y the E u r o p e a n C o u n c i l i n S t r a s b o u r g w a s b r o k e n d o w n o n a n a t i o n a l b a s i s . T h i s p r o c e s s w a s b o u n d to p r e s e n t d i f f i c u l t y f o r s o m e m e m b e r s o f the E E C and she h a d a r g u e d that c o m m i t m e n t s shou ld no t be m a d e u n t i l o u r E E C p a r t n e r s who w e r e n o t at T o k y o had b e e n c o n s u l t e d . She h a d n o t r e c e i v e d s u p p o r t , e s p e c i a l l y f r o m P r e s i d e n t G i s c a r d , f o r t h i s a p p r o a c h . S i n c e a c c e p t i n g a n a t i o n a l t a r g e t p r e s e n t e d no d i f f i c u l t y f o r the U n i t e d K i n g d o m , w h i c h w i t h i n a few y e a r s w o u l d c e a s e to be a ne t i m p o r t e r , she had gone a l o n g w i th the v i e w s o f the o t h e r S u m m i t p a r t i c i p a n t s so tha t a n a g r e e m e n t on s p e c i f i c t a r g e t s c o u l d be p r e s e n t e d to the O r g a n i s a t i o n o f P e t r o l e u m E x p o r t i n g C o u n t r i e s ( O P E C ) c o u n t r i e s a s a r e d u c t i o n i n d e m a n d b y the d e v e l o p e d c o u n t r i e s . T h e t a r g e t s w e r e s o m e w h a t d i v e r s e but the r e s u l t w a s b e t t e r than no a g r e e m e n t o n i m p o r t r e s t r a i n t . T h e S u m m i t h a d b e e n c o n c e r n e d about the v u l n e r a b i l i t y of the W e s t to c o n t i n u e d p r e s s u r e f r o m the O P E C c o u n t r i e s and

a c c e p t e d the n e e d f o r i n c r e a s e d u s e o f n u c l e a r p o w e r to b e c o m e l e s s d e p e n d e n t o n o i l i n the l o n g e r t e r m .

T H E P R I M E M I N I S T E R s a i d that , f o l l o w i n g the T o k y o m e e t i n g , she h a d p a i d a s h o r t v i s i t to A u s t r a l i a . H e r t a l k s w i t h M r F r a s e r h a d l a r g e l y c o n c e n t r a t e d o n R h o d e s i a but one r e s u l t of h e r v i s i t h a d b e e n to c l e a r the w a y f o r the s i g n i n g of a U n i t e d K i n g d o m / A u s t r a l i a S a f e g u a r d s A g r e e m e n t f o r the s u p p l y of u r a n i u m . T h i s h a d b e e n b l o c k e d b y the E u r o p e a n C o m m i s s i o n w h i c h was c o n c e r n e d , f o l l o w i n g r u l i n g s b y the E u r o p e a n C o u r t , about the c o m p a t i b i l i t y o f the a g r e e m e n t w i t h the E U R A T O M T r e a t y . She h a d p e r s o n a l l y t aken t h i s up w i t h M r R o y J e n k i n s who h a d now a g r e e d to w i t h d r a w the C o m m i s s i o n ' s o b j e c t i o n s o n the u n d e r s t a n d i n g that the U n i t e d K i n g d o m / A u s t r a l i a S a f e g u a r d s A g r e e m e n t w o u l d be r e c o n s i d e r e d be f o r e the e n d o f 1982 i f no E U R A T O M / A u s t r a l i a a g r e e m e n t h a d b e e n c o n c l u d e d i n the m e a n t i m e .

CONFIDENTIAL

Page 5: (c) crown copyright Catalogue Reference:CAB/128/66/8 Image ...fc95d419f4478b3b6e5f-3f71d0fe2b653c4f00f32175760e96e7.r87.cf… · House and in hi vies unlesw s some concessio were

CONFIDENTIAL

T H E P R I M E M I N I S T E R s a i d that she h a d t a l k e d to the P r i m e M i n i s t e r of B a h r a i n , S h e i k h K h a l i f i , d u r i n g a r e f u e l l i n g stop o n h e r f l i gh t h o m e f r o m A u s t r a l i a . H e h a d e m p h a s i s e d the i m p o r t a n c e w h i c h M i d d l e E a s t o i l c o u n t r i e s a t t a c h e d to the s a f e g u a r d i n g o f the r i g h t s o f the P a l e s t i n i a n p e o p l e ; bu t a l s o the d e s i r a b i l i t y o f m o r e f r e q u e n t f i r s t - h a n d c o n t a c t s b e t w e e n the M i d d l e E a s t o i l c o u n t r i e s and the W e s t e r n w o r l d .

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 s a i d tha t on h i s way h o m e f r o m J a p a n he h a d v i s i t e d I r a q , w h e r e the G o v e r n m e n t had a g r e e d w i t h h i m that the b o y c o t t o n B r i t i s h t r a d e s h o u l d be l i f t e d , but h a d p r o v e d u n w i l l i n g to r e l e a s e a n u n j u s t l y i m p r i s o n e d B r i t i s h sub jec t a l t h o u g h t h e y h a d a g r e e d to i m p r o v e m e n t s i n h i s t r e a t m e n t .

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 s a i d that he had d i s c u s s e d the r e f u g e e p r o b l e m i n H o n g K o n g a n d M a l a y s i a on h i s w a y b a c k f r o m J a p a n . W e w o u l d now n e e d to p r e p a r e o u r own p o l i c y l i n e f o r the i n t e r n a t i o n a l c o n f e r e n c e w h i c h the U n i t e d N a t i o n s H i g h C o m m i s s i o n f o r R e f u g e e s was h o l d i n g i n G e n e v a on 20 J u l y ; th is c o u l d be w o r k e d out b e t w e e n the P r i m e M i n i s t e r , the H o m e S e c r e t a r y a n d h i m s e l f ,

T H E P R I M E M I N I S T E R a d d e d that w h i l e i n A u s t r a l i a she h a d u r g e d the A u s t r a l i a n P r i m e M i n i s t e r , M r F r a s e r , to h e l p H o n g K o n g ' s d i f f i c u l t i e s b y a c c e p t i n g r e f u g e e s f r o m t h e r e i n a d d i t i o n to A u s t r a l i a ' s n o r m a l y e a r l y quo ta o f V i e t n a m e s e i m m i g r a n t s .

T h e C a b i n e t -

T o o k n o t e .

2

CONFIDENTIAL

Page 6: (c) crown copyright Catalogue Reference:CAB/128/66/8 Image ...fc95d419f4478b3b6e5f-3f71d0fe2b653c4f00f32175760e96e7.r87.cf… · House and in hi vies unlesw s some concessio were

kous

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) 6th usions,

fcand 4

CONFIDENTIAL

3. T H E P R I M E M I N I S T E R s a i d that , at the E u r o p e a n C o u n c i l i n S t r a s b o u r g o n 2 1 - 2 2 J u n e , i t h a d p r o v e d v e r y d i f f i c u l t to get the o t h e r M e m b e r S ta t e s to r e c o g n i s e tha t the U n i t e d K i n g d o m h a d b e s n b a d l y t r e a t e d o v e r the C o m m u n i t y B u d g e t . N e v e r t h e l e s s , the C o u n c i l h a d a g r e e d to i n s t r u c t the C o m m i s s i o n to p r e s e n t a n ana lys i s . , i n c l u d i n g the l i k e l y budge t o u t c o m e i n 1979 a n d 1980 . T h i s w o u l d go to the C o u n c i l o f M i n i s t e r s ( F i n a n c e ) f o r c o m m e n t and the C o m m i s s i o n w o u l d t h e n m a k e p r o p o s a l s i n t i m e f o r the n e x t m e e t i n g of the E u r o p e a n C o u n c i l i n D u b l i n i n N o v e m b e r . P r o g r e s s h a d thus b e e n m a d e but we f a c e d a r e a l b a t t l e i f we w e r e to s e c u r e a n adequate r e s p o n s e f r o m the r e s t o f the C o m m u n i t y .

T H E M I N I S T E R O F A G R I C U L T U R E , F I S H E R I E S A N D F O O D s a i d that, i f the U n i t e d K i n g d o m h a d a c c e p t e d the o r i g i n a l C o m m i s s i o n p r o p o s a l s o n C o m m o n A g r i c u l t u r a l P o l i c y ( C A P ) p r i c e s , i t w o u l d have i n v o l v e d a h i g h e r U n i t e d K i n g d o m c o n t r i b u t i o n to the C o m m u n i t y budge t . A s i t was , the p r i c e i n c r e a s e s a g r e e d to b y the C o u n c i l r a i s e d the C o m m u n i t y budge t b y f a r l e s s than the f i g u r e s w h i c h h a d b e e n g i v e n to the P r e s s b y the C o m m i s s i o n . O u r c o n t r i b u t i o n to t h i s i n c r e a s e d c o s t w a s m o r e t h a n o f f se t b y the h i g h e r s u b s i d i e s to be p a i d to the U n i t e d K i n g d o m o n b u t t e r and s c h o o l m i l k so that we w o u l d i n f a c t be b e t t e r of f b y s o m e £34 m i l l i o n H e w o u l d c i r c u l a t e the d e t a i l s to the C a b i n e t .

In a b r i e f d i s c u s s i o n , s o m e c o n c e r n w a s e x p r e s s e d about the c o m i n g s i x m o n t h s u n d e r the I r i s h P r e s i d e n c y . T h e I r i s h P r i m e M i n i s t e r h a d b e e n m o s t u n h e l p f u l d u r i n g the d i s c u s s i o n s about the U n i t e d K i n g d o m b u d g e t p r o b l e m at S t r a s b o u r g . T h e r e w e r e c l o s e l i n k s b e t w e e n the I r i s h a n d the F r e n c h who t ook a s i m i l a r l i n e o n m a n y i s s u e s o f i n t e r e s t to u s . F o r e x a m p l e , t h e r e w a s e v i d e n c e that the F r e n c h w a n t e d to p o s t p o n e a s e t t l e m e n t of the f i s h e r i e s i s s u e i n the e x p e c t a t i o n that o u r l e g a l p o s i t i o n w o u l d be w e a k e r a f t e r 1 J a n u a r y 1982 . T h e y w o u l d t r y to p e r s u a d e the I r i s h P r e s i d e n c y to put off the F i s h e r i e s C o u n c i l s c h e d u l e d f o r the a u t u m n , a l t hough C o m m i s s i o n e r G u n d e l a c h h a d a s s u r e d the M i n i s t e r o f A g r i c u l t u r e p r i v a t e l y that the C o m m i s s i o n w o u l d not s t a r t p r o c e e d i n g s i n the E u r o p e a n C o u r t a g a i n s t the U n i t e d K i n g d o m ' s n a t i o n a l c o n s e r v a t i o n m e a s u r e s b e f o r e the C o u n c i l h a d m e t .

T h e C a b i n e t -

T o o k n o t e .

CONFIDENTIAL 2? 0 0

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CONFIDENTIAL

4. T H E P R I M E M I N I S T E R r e c a l l e d the C a b i n e t ' s d i s c u s s i o n o n 14 June o n the u n d e s i r a b i l i t y o f h o l d i n g a f u r t h e r i n q u i r y in to b r e a c h e s of R h o d e s i a n s a n c t i o n s ( C C ( 7 9 ) 6th M e e t i n g , M i n u t e 8) w h e n i t h a d been a g r e e d to d e f e r a f i n a l d e c i s i o n u n t i l L o r d H a r l e c h , the G o v e r n m e n t s s p e c i a l r e p r e s e n t a t i v e i n A f r i c a , h a d r e t u r n e d f r o m N i g e r i a . In d e c i d i n g to d e f e r a d e c i s i o n the C a b i n e t h a d b e e n i n f l u e n c e d p a r t l y b y c o n s i d e r a t i o n o f o p i n i o n i n A f r i c a and p a r t l y b y the f a c t that the D i r e c t o r o f P u b l i c P r o s e c u t i o n s ( D P P ) h a d s t i l l to r e a c h h i s d e c i s i o n o n w h e t h e r a n y p r o s e c u t i o n s should, f o l l o w f r o m the B i n g h a m R e p o r t . L o r d H a r l e c h h a d now r e p o r t e d bu t 'the D P P h a d no t y e t taken a d e c i s i o n o n p r o s e c u t i o n s . T h e q u e s t i o n r e m a i n e d w h e t h e r the t i m e w a s y e t r i g h t f o r the C a b i n e t to r e a c h a d e c i s i o n a n d a n n o u n c e i t .

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 s a i d that he f a v o u r e d f u r t h e r d e f e r r i n g a d e c i s i o n . T h e N i g e r i a n G o v e r n m e n t had r e a c t e d a d v e r s e l y to the B r i t i s h Petrulftfcna ( B P ) - C O N O C O o i l exchange d e a l w h i c h w o u l d r e s u l t i n n o n - e m b a r g o e d c r u d e o i l b e i n g supp l i ed to South A f r i c a . E v e n though that d e c i s i o n w a s e n t i r e l y de f ens i b l e , a d e c i s i o n now n o t to i n s t i t u t e a f u r t h e r i n q u i r y in to R h o d e s i a n s a n c t i o n s w o u l d e x a c e r b a t e r e l a t i o n s w i t h N i g e r i a i n the r u n up to the M e e t i n g o f C o m m o n w e a l t h H e a d s o f G o v e r n m e n t due to be h e l d i n L u s a k a i n the f o l l o w i n g m o n t h . T h e r e was m o r e o v e r l i t t l e p r e s s u r e i n P a r l i a m e n t f o r a G o v e r n m e n t a n n o u n c e m e n t a n d , even i f the G o v e r n m e n t w e r e p r e s s e d f o r a d e c i s i o n , s u c h p r e s s u r e cou ld e a s i l y be r e s i s t e d .

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 the C a b i n e t a g r e e d that a f i n a l d e c i s i o n o n w h e t h e r t h e r e s h o u l d be a f u r t h e r i n q u i r y s h o u l d i n a n y c a s e be d e f e r r e d u n t i l the i n t e n t i o n s of the D i r e c t o r o f P u b l i c P r o s e c u t i o n s w e r e k n o w n o n the q u e s t i o n of p r o s e c u t i o n s a r i s i n g f r o m the B i n g h a m R e p o r t . T o d e f e r a d e c i s i o n and an a n n o u n c e m e n t w o u l d h a v e the a d d i t i o n a l advantage of a v o i d i n g p r e j u d i c i n g the a t m o s p h e r e a t the f o r t h c o m i n g M e e t i n g o f the C o m m o n w e a l t h H e a d s of G o v e r n m e n t . A n y P a r l i a m e n t a r y p r e s s u r e f o r an a n n o u n c e m e n t c o u l d c o n t i n u e to be m e t b y s a y i n g tha t no d e c i s i o n had yet b e e n r e a c h e d . T h e C a b i n e t w o u l d r e t u r n to the i s s u e i n the au tumn w h e n the d e c i s i o n o f the D i r e c t o r o f P u b l i c P r o s e c u t i o n s was known.

T h e C a b i n e t -

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 .

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5. T h e C a b i n e t h a d b e f o r e t h e m a m e m o r a n d u m b y the C h a n c e l l o r o f the D u c h y o f L a n c a s t e r (C (79) 24) r e p o r t i n g on the sound ings w h i c h h a d b e e n t a k e n o n p r o p o s a l s f o r d e a l i n g w i t h the p a y of M e m b e r s of P a r l i a m e n t a n d M i n i s t e r s c o n t a i n e d i n the 12th R e p o r t o f the R e v i e w B o d y o n T o p S a l a r i e s ( T S R B ) .

T H E C H A N C E L L O R O F T H E D U C H Y O F L A N C A S T E R s a i d that the C a b i n e t ' s o r i g i n a l p r o p o s a l s h a d p r o v e d v e r y u n p o p u l a r w i t h the H o u s e a n d i n h i s v i e w u n l e s s s o m e c o n c e s s i o n w e r e m a d e t h e r e was a g r a v e r i s k that the M o t i o n to i m p l e m e n t t h e m w o u l d be d e f e a t e d . T h e C h i e f W h i p h a d d i s c u s s e d p o s s i b l e c h a n g e s i n the G o v e r n m e n t s p r o p o s a l s w i t h the 1922 C o m m i t t e e and the C h a i r m a n o f that C o m m i t t e e h a d s u b s e q u e n t l y w r i t t e n to m a k e the s p e c i f i c p r o p o s a l s set out i n p a r a g r a p h 2 of C (79 ) 24 . In h i s v i e w the G o v e r n m e n t shou ld a c c e p t these p r o p o s a l s w i t h one change d e s i g n e d to b r i n g t h e m m o r e c l o s e l y i n t o l i n e w i t h t h o s e r e c o m m e n d e d b y the T S R B . T h i s wou ld i n v o l v e p a y i n g 50 p e r c e n t o f the i n c r e a s e r e c o m m e n d e d b y T S R B i n the f i r s t s t a g e . T h i s w o u l d be o n l y s l i g h t l y m o r e g e n e r o u s than the 1922 C o m m i t t e e p r o p o s a l f o r the m a j o r i t y o f M e m b e r s , bu t wou ld a v o i d an a n o m a l y b y w h i c h c e r t a i n O f f i c e - H o l d e r s w o u l d h a v e b e e n s u b s t a n t i a l l y w o r s e off u n d e r the 1922 C o m m i t t e e p r o p o s a l s . It wou ld a l s o h a v e the p r e s e n t a t i o n a l advan tage that the C a b i n e t w o u l d not be s e e n to a c c e d e c o m p l e t e l y to a n a p p r o a c h r e c o m m e n d e d b y a C o m m i t t e e of b a c k b e n c h e r s . H e w o u l d p r o p o s e that the r e m a i n d e r of the T S R B i n c r e a s e s h o u l d be p a i d i n two f u r t h e r e q u a l i n s t a l m e n t s i n June 1980 , a n d J u n e 1981, and that the J u n e 1980 f i g u r e s h o u l d be updated to take a c c o u n t o f i n f l a t i o n m e a n w h i l e , i n a m a n n e r a n a l o g o u s to that a d o p t e d f o r o t h e r R e v i e w B o d y g r o u p s . T h e T S R B s h o u l d a l s o be a s k e d s p e c i f i c a l l y to s e e k one o r m o r e p r o f e s s i o n a l a n a l o g u e s to w h i c h the p a y of M P s c o u l d be l i n k e d i n the f u t u r e . T h e a i m s h o u l d be to h a v e the s e a v a i l a b l e f o r a n y u p d a t i n g tha t p r o v e d n e c e s s a r y i n 1981.

In d i s c u s s i o n i t w a s a g r e e d that the m a i n p r i n c i p l e to be p r e s e r v e d was that the s e t t l e m e n t s h o u l d not be m o r e g e n e r o u s than the t r e a t m e n t tha t h a d b e e n a c c o r d e d to o t h e r R e v i e w B o d y g r o u p s . T h a t i m p l i e d t h r e e s t a g e s , s p r e a d o v e r two y e a r s . N o c o m m i t m e n t cou ld be g i v e n to u p d a t i n g of the t h i r d s t a g e . A l t h o u g h t h e r e w e r e c o n s i d e r a b l e p r o b l e m s w i t h e s t a b l i s h i n g " l i n k a g e " , o p i n i o n i n the H o u s e w a s s u c h that u n l e s s the C a b i n e t m a d e s o m e r e c o m m e n d a t i o n o n th i s , i t s e e m e d l i k e l y that a m e n d m e n t s to p r o v i d e f o r l i n k a g e w o u l d be m a d e to the G o v e r n m e n t s M o t i o n a n d c a r r i e d . T h e r e w e r e g r a v e d i s a d v a n t a g e s i n the u s e o f a g e n e r a l i n d e x of e a r n i n g s o r i n l i n k i n g , d i r e c t l y o r i n p e r c e n t a g e t e r m s , to h i e r a r c h i c a l , a n d i n c r e m e n t a l , s a l a r y s c a l e s , s u c h a s that o f the A s s i s t a n t S e c r e t a r y i n the C i v i l S e r v i c e . T h e s u g g e s t i o n f r o m the 1922 C o m m i t t e e f o r a l i n k w i t h p r o f e s s i o n a l s a l a r i e s t h e r e f o r e h a d a t t r a c t i o n , and w o u l d r e s u l t i n p e r i o d i c r e v i e w s b y a n i n d e p e n d e n t b o d y o u t s i d e the c o n t r o l o f the H o u s e .

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F o r M i n i s t e r s 1 s a l a r i e s i t wa s a r g u e d that the b i e n n i a l r e v i e w s sugges ted b y the T S R B s h o u l d be adop t ed , a n d that s o m e f o r m o f updat ing b e t w e e n r e v i e w s w a s d e s i r a b l e f o r M i n i j t ^ n f i a l s a l a r i e s , as f o r P a r l i a m e n t a r y s a l a r i e s . H o w e v e r i t wa s n o t e d that w i t h 75 p e r c en t o f the T S R B i n c r e a s e now p r o p o s e d f o r p a y m e n t f r o m June 1980, u p d a t i n g at that t i m e c o u l d w e l l t ake the M i n i s t e r i a l s a l a r i e s above the f i n a l l e v e l r e c o m m e n d e d b y T S R B . It w a s f e l t that C a b i n e t M i n i s t e r s s h o u l d i m p o s e a c e i l i n g on the u p r a t i n g o f t h e i r own s a l a r i e s ) to the f i n a l l e v e l r e c o m m e n d e d b y the T S R B R e p o r t .

T H E P R I M E M I N I S T E R , s u m m i n g up the d i s c u s s i o n , s a i d that the C a b i n e t w e r e a g r e e d that the T S R B r e c o m m e n d a t i o n s s h o u l d be i m p l e m e n t e d i n t h r e e s t a g e s , s p r e a d o v e r two y e a r s . 50 p e r c e n t of the i n c r e a s e s w o u l d be p a i d i m m e d i a t e l y , a n d the r e m a i n d e r i n two e q u a l i n s t a l m e n t s i n J u n e 1980 and J u n e 1 9 8 1 . T h e J u n e 1980 i n c r e a s e w o u l d be f u r t h e r u p d a t e d , i n a m a n n e r a n a l o g o u s to that adopted f o r o t h e r R e v i e w B o d y g r o u p s . T h e s e c o n c l u s i o n s w o u l d app l y to the s a l a r i e s o f M e m b e r s o f P a r l i a m e n t , M i n i s t e r s a n d o ther O f f i c e - h o l d e r s , bu t f o r C a b i n e t M i n i s t e r s the a m o u n t p a y a b l e i n June 1980 f o r t h e i r M i n i s t e r i a l s a l a r y w o u l d be l i m i t e d to the f i g u r e s r e c o m m e n d e d i n the 12th R e p o r t o f the T S R B . T h e G o v e r n m e n t w o u l d i n v i t e the T S R B bo th to c a r r y out the 1980 u p r a t i n g and to m a k e r e c o m m e n d a t i o n s abont one o r . m o r e auaaloguea i n the p r o f e s s i o n s to w h i c h M e m b e r s ' s a l a r i e s c o u l d be r e l a t e d f r o m 1981 o n w a r d s . M i n i s t e r i a l s a l a r i e s w o u l d be su b j e c t to a b i e n n i a l r e v i e w by the T S R B b e g i n n i n g i n 1981 . T h e r e h a d a l r e a d y b e e n e x t e n s i v e c o n s u l t a t i o n , and t h e r e w a s no n e e d f o r a f u r t h e r G o v e r n m e n t a n n o u n c e m e n t . S u b j e c t to f u r t h e r c o n s u l t a t i o n s d u r i n g the c o u r s e of the d a y , t h r o u g h the u s u a l c h a n n e l s , the G o v e r n m e n t s h o u l d pu t down M o t i o n s , o n the l i n e 3 a g r e e d , on F r i d a y 6 J u l y w h i c h w o u l d a l l ow s u f f i c i e n t t i m e f o r M e m b e r s to p r e p a r e f o r a debate o n W e d n e s d a y 11 J u l y .

T h e C a b i n e t -

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 , and i n v i t e d the C h a n c e l l o r o f the D u c h y of L a n c a s t e r , and o t h e r M i n i s t e r s c o n c e r n e d to be g u i d e d a c c o r d i n g l y .

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6. T h e C a b i n e t h a d 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 (79) 23) r e c o m m e n d i n g s u b s t a n t i a l c h a n g e s i n the l e v e l o f G o v e r n m e n t s u p p o r t f o r r e g i o n a l i n d u s t r i a l d e v e l o p m e n t , and r e p o r t i n g d i s c u s s i o n i n the M i n i s t e r i a l C o m m i t t e e o n E c o n o m i c St ra tegy , S u b c o m m i t t e e o n E c o n o m i c A f f a i r s ( E ( E A ) ) .

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 h i s p r o p o s a l s were i n t e n d e d to m a k e r e g i o n a l p o l i c y m o r e e f f e c t i v e , and at the s a m e t ime s e c u r e s u b s t a n t i a l r e d u c t i o n s i n p u b l i c e x p e n d i t u r e . A t p r e s e n t , 40 p e r c en t o f the p o p u l a t i o n l i v e d i n a s s i s t e d a r e a s , a n d the b o u n d a r i e s h a d no t b e e n s u b s t a n t i a l l y a l t e r e d s i n c e 1972 . A s a r e s u l t t h e r e w e r e s u b s t a n t i a l a n o m a l i e s i n the p r e s e n t s y s t e m . A n urgent d e c i s i o n w a s now n e e d e d , bo th to r e m o v e u n c e r t a i n t y o n the par t of i n v e s t o r s , and to s e c u r e the e a r l i e s t p o s s i b l e s a v i n g s . A debate w o u l d be n e c e s s a r y o n the O r d e r to r e d u c e the l e v e l o f g r a n t . H i s p r o p o s a l s h a d b e e n d i s c u s s e d i n E ( E A ) w h e r e t h e r e h a d b e e n g ene r a l a g r e e m e n t on the n e e d f o r a m o r e c o s t - e f f e c t i v e p o l i c y , but d i s a g r e e m e n t o n the s p e e d a n d ex tent of c h a n g e . In s u b s e q u e n t d i s c u s s i o n , he h a d m o d i f i e d h i s p r o p o s a l s to m e e t s o m e o f t he s e ob jec t ions . T h e r e r e m a i n e d f ou r a r e a s o f d i f f i c u l t y . F i r s t , i t w o u l d be u s e fu l p r e s e n t a t i o n a l l y to l i n k the a n n o u n c e m e n t o f c h a n g e s i n r e g i ona l p o l i c y w i t h s o m e m o r e p o s i t i v e m e a s u r e s to h e l p i n d u s t r y . But i t m i g h t not be p o s s i b l e to r e a c h a g r e e m e n t o n t h e s e i n t i m e f o r a n announcement b e f o r e the s u m m e r r e c e s s . S o m e of h i s c o l l e a g u e s p l a ced c o n s i d e r a b l e e m p h a s i s o n t h i s . S e c o n d , s o m e M i n i s t e r s f e l t that the p r o p o s e d r e d u c t i o n i n the r a t e o f g r a n t i n D e v e l o p m e n t A r e a s (DAs ) w e r e too s t e e p . It m i g h t be s u f f i c i e n t to r e d u c e i t f r o m 20 p e r cent to 15 p e r c en t , a l t hough t h i s w o u l d s l i g h t l y r e d u c e the a v a i l a b l e sav ings . T h i r d , he w a s p r e p a r e d to r e c o n s i d e r the p r o p o s e d d o w n ­grad ing o f the R h o n d d a V a l l e y f r o m S p e c i a l D e v e l o p m e n t A r e a ( S D A ) to D A s tatus , a l t h o u g h the p r e c i s e b o u n d a r i e s o f the S D A w o u l d n e e d to be c o n s i d e r e d f u r t h e r . C h a n g e s o f t h i s k i n d , h o w e v e r , r i s k e d c r e a t i n g grave a n o m o l i e s a n d s h o u l d be kept to a m i n i m u m . F o u r t h , he p r o p o s e d that a l l a r e a s b e i n g d o w n g r a d e d s h o u l d r e t a i n t h e i r p r e s e n t rate of R e g i o n a l D e v e l o p m e n t G r a n t f o r one y e a r . T h e r e a f t e r the p r e s e n t I n t e r m e d i a t e A r e a s w h i c h i t w a s p r o p o s e d s h o u l d l o s e t h e i r A s s i s t e d A r e a s t a tus w o u l d r e t a i n the new s t y l e I n t e r m e d i a t e A r e a benef its f o r a f u r t h e r 2 y e a r s b e f o r e l o s i n g t h e i r s t a t u s . A s s i s t e d A r e a s w h i c h i t wa s p r o p o s e d to d o w n g r a d e b y m o r e than one step would i n a n y c a s e r e t a i n A s s i s t e d A r e a s ta tus u n t i l the end o f the 3 - yea r t r a n s i t i o n a l p e r i o d . B e f o r e that p e r i o d e x p i r e d t h e i r f u tu r e status shou ld be r e v i e w e d i n the l i g h t o f the d e v e l o p i n g s i t u a t i o n .

In d i s c u s s i o n t h e r e w a s g e n e r a l s u p p o r t f o r the m o d i f i e d p r o p o s a l s , and w e l c o m e f o r the c o n c e s s i o n s w h i c h the S e c r e t a r y o f State f o r Industry h a d s u g g e s t e d . It w a s h o w e v e r a r g u e d t h a t the p o l i t i c a l s i tuat ion i n S c o t l a n d a n d W a l e s r e m a i n e d v e r y d e l i c a t e , and that e v e n the m o d i f i e d p r o p o s a l s w o u l d e x p o s e the G o v e r n m e n t to m u c h c r i t i c i s m . Some of the a r e a s a f f e c t ed w e r e t h o s e w h e r e the G o v e r n m e n t h a d o n l y r e c e n t l y m a d e e l e c t o r a l g a i n s , o f ten b y s m a l l m a r g i n s , a n d s o m e

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m e m b e r s m i g h t have d i f f i c u l t y i n s u p p o r t i n g t h e m . In p r e s e n t i n g the changes , i t s h o u l d t h e r e f o r e be m a d e c l e a r that the p r o p o s a l to w i t h d r a w a s s i s t a n c e at l e a s t i n t h o s e c a s e s w h e r e a doub l e dov n p f a d i n g w a s invo l ved w o u l d be r e v i e w e d b e f o r e the e n d o f the t h r e e y e a r t r a n s i t i o n a l p e r i o d and that no a r e a s h o u l d be d o w n g r a d e d b y m o r e than one s tep a yea r . E v e n w i t h the s e c h a n g e s , the s h a r p d i f f e r e n t i a t i o n b e t w e e n S D A and D A s ta tus w o u l d m a k e i t m o r e d i f f i c u l t to o p e r a t e a s e n s i b l e r e g i o n a l p o l i c y i n a r e a s l i k e South W a l e s , w h e r e the S D A s w e r e g e o g r a p h i c a l l y unat t rac t i ve to i n t e r n a t i o n a l l y - m o b i l e i n d u s t r y . In a d d i t i o n , i t w o u l d be i m p o r t a n t to m a i n t a i n the o p e r a t i o n s o f the W e l s h D e v e l o p m e n t A g e n c y and ana l o gous b o d i e s i n the r u r a l a r e a s w h i c h w o u l d l o s e a s s i s t e d a r e a status.

In f u r the r d i s c u s s i o n , i t wa s a r g u e d that the p r o p o s e d r e g i o n a l p a c k a g e would g a in i n p r e s e n t a t i o n , i f i t w e r e l i n k e d to a n a n n o u n c e m e n t of m o r e pos i t i ve m e a s u r e s to h e l p i n d u s t r y . A n u m b e r o f s o - c a l l e d A c c e l e r a t o r ' s c h e m e s w e r e u n d e r c o n s i d e r a t i o n . B u t these w o u l d t ake t i m e to w o r k out i n su f f i c i en t d e t a i l , a n d c o u l d n o t be a n n o u n c e d b e f o r e the s u m m e r r e c e s s . A s i m p l e r a l t e r n a t i v e m i g h t be to c r e a t e ' p i l o t a r e a s ' i n p l a c e s such as Shot ton and M e r s e y s i d e , w h e r e a f i v e - y e a r t a x h o l i d a y m i g h t be given, and w h e r e q u i c k d e c i s i o n s c o u l d be p r o m i s e d o n p l a n n i n g app l i ca t i ons f o r n e w i n d u s t r i a l d e v e l o p m e n t . It m i g h t be p o s s i b l e to devise a l i m i t e d s c h e m e o n the s e l i n e s i n t i m e f o r a n n o u n c e m e n t b e f o r e the r e c e s s .

T H E P R I M E M I N I S T E R , s u m m i n g up the d i s c u s s i o n , s a i d that the C a b i n e t agreed u p o n the n e e d f o r a m a j o r change i n the d i r e c t i o n o f r e g i o n a l a s s i s t ance f o r i n d u s t r y , so to c o n c e n t r a t e h e l p o n the a r e a s o f g r e a t e s t

n e e d . T h e r a t e s o f R e g i o n a l D e v e l o p m e n t G r a n t p a y a b l e i n S D A s s h o u l d r e m a i n at 22 p e r c e n t . T h e r a t e s i n D A s s h o u l d be r e d u c e d f r o m 20 p e r cen t to 15 p e r c e n t . R e g i o n a l D e v e l o p m e n t G r a n t s h o u l d be abo l i shed i n I n t e r m e d i a t e A r e a s . M i n i m u m v a l u e s f o r e l i g i b i l i t y f o r grants s h o u l d be i n c r e a s e d a s p r o p o s e d b y the S e c r e t a r y o f State f o r Industry . T h e c o v e r a g e o f a s s i s t e d a r e a s s h o u l d be m o d i f i e d i n the w a y p r o p o s e d b y the S e c r e t a r y o f State f o r I n d u s t r y , a n d se t ou t i n M a p 2 annexed to h i s p a p e r C (79 ) 2 3 . H o w e v e r , the R h o n d d a V a l l e y s h o u l d r e m a i n a S D A , and the e x a c t b o u n d a r i e s o f that a r e a s h o u l d be s e t t l e d between the S e c r e t a r y o f State f o r I n d u s t r y a n d the S e c r e t a r y of State for W a l e s . T h e a r e a s to be d o w n g r a d e d s h o u l d r e t a i n t h e i r p r e s e n t ent i t l ement to R e g i o n a l D e v e l o p m e n t G r a n t f o r one y e a r . T h e r e a f t e r the p r e s e n t I n t e r m e d i a t e A r e a s w h i c h i t wa s p r o p o s e d s h o u l d l o s e t h e i r A s a i r t e d A r e a s t a tus s h o u l d r e m a i n e l i g i b l e f o r s e l e c t i v e a s s i s t a n c e a n d for a c c e s s to the E u r o p e a n D e v e l o p m e n t F u n d f o r two m o r e y e a r s . A s s i s t e d A r e a s w h i c h i t w a s p r o p o s e d to d o w n g r a d e b y m o r e than one step shou ld n o t be d o w n g r a d e d b y m o r e t h a n one step a y e a r , n o r s h o u l d such a r e a s l o s e t h e i r A s s i s t e d A r e a s ta tus b e f o r e the end o f the 3 - y e a r t r a n s i t i o n a l p e r i o d . In a d d i t i o n the p o s i t i o n o f a r e a s s u f f e r i n g m o r e than one d o w n g r a d i n g s h o u l d be r e v i e w e d b e f o r e the e n d of the t r a n s i t i o n a l p e r i o d to see w h e t h e r t h e y s h o u l d con t inue to r e c e i v e A s s i s t e d A r e a s ta tus therea f ter i n the l i g h t o f the d e v e l o p i n g s i t u a t i o n . T h e r e v i e w s h o u l d be

8

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genuine and c a r r y no p r e s u m p t i o n that the p r e s e n t d e c i s i o n was i r r e v e r s i b l e . T h e a r e a s sub j ec t to r e v i e w s h o u l d be s e p a r a t e l y d i s t i n g u i s h e d a s r e v i e w a r e a s o n any p u b l i s h e d m a p s . T h e W e l s h and Sco t t i sh D e v e l o p m e n t A g e n c i e s , the D e v e l o p m e n t B o a r d f o r R u r a l Wa l e s , and the H i g h l a n d s and I s l a n d s D e v e l o p m e n t B o a r d s h o u l d r e t a i n the i r p r e s e n t f u n c t i o n s i n the a r e a s b e i n g d o w n g r a d e d , sub j e c t to a r e v i ew d u r i n g the t r a n s i t i o n a l p e r i o d . I n d u s t r i a l D e v e l o p m e n t C e r t i f i c a t e s ( i d c ' s ) s h o u l d n o l o n g e r be r e q u i r e d i n I n t e r m e d i a t e A r e a s and the e x e m p t i o n l i m i t s f o r i d c ' s i n the n o n - a s s i s t e d a r e a s s h o u l d be r a i s e d to 50, 000 s q . f e e t . T h e S e c r e t a r y of State f o r I n d u s t r y s h o u l d announce the G o v e r n m e n t s d e c i s i o n s o n the s e m a t t e r s i n the w e e k o f 16 J u l y , and the n e c e s s a r y O r d e r s h o u l d be i n t r o d u c e d a n d d e b a t e d t h e r e a f t e r . P r e c i s e t i m i n g s h o u l d be a g r e e d b e t w e e n the S e c r e t a r y of State and the L e a d e r o f the H o u s e . T h e e x a c t t e r m s o f the a n n o u n c e m e n t should a l s o be a g r e e d b e t w e e n the S e c r e t a r y o f State f o r I n d u s t r y , the S e c r e t a r y of State f o r S c o t l a n d a n d the S e c r e t a r y of State f o r W a l e s . The G o v e r n m e n t s d e c i s i o n s s h o u l d be d i s c u s s e d w i t h the E u r o p e a n C o m m i s s i o n as n e c e s s a r y . T h e S e c r e t a r y o f State f o r I n d u s t r y s h o u l d inv i te the B r i t i s h S t e e l C o r p o r a t i o n to d e f e r a n a n n o u n c e m e n t of t h e i r in tent ion to c l o s e s t e e l m a k i n g at Sho t t on u n t i l a f t e r the G o v e r n m e n t s announcement o n R e g i o n a l I n d u s t r i a l p o l i c y . T h e C h a n c e l l o r o f the E x c h e q u e r s h o u l d c o n s i d e r u r g e n t l y , i n c o n s u l t a t i o n w i t h the S e c r e t a r y of State f o r I n d u s t r y a n d the S e c r e t a r y o f State f o r the E n v i r o n m e n t , what m i g h t be s a i d at the s a m e t i m e a s the a n n o u n c e m e n t about the p r o p o s e d "p i l o t 1 s c h e m e s . A r e f e r e n c e to the s c h e m e s s h o u l d i f p o s s i b l e be i n c l u d e d i n the a n n o u n c e m e n t .

-T h e C a b i n e t -

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 , and i n v i t e d the

M i n i s t e r s c o n c e r n e d to be g u i d e d a c c o r d i n g l y .

C a b i n e t O f f i c e

5 J u l y 1979

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