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P.M. Can’t you give reasons why you can’t get w’in the 2½%. Can’t you

say it wd. have bn. much worse if you hadn’t tried so hard.


S.Ll. Shall have to admit I was wrong - & give reasons e.g. rlway. deficit.

But want to be able to go on to claim greater control over

expanding p’mmes.
M. Not impressed by Ty. arguments. Incomes more important.

But ?suppose/believe we must do what is proposed.


C.S. £16 m. is maximum cut we cd. impose w’in pledges etc.

I shall try for this: but other factors & shall come back to Cab. if

I want to recommend smaller cut to get agreed settlement.
J.M. Hope we don’t touch milk.

Ready to accept school meals if we must: but don’t want it announced

in isolation. Off-take falls rapidly. Want it placed in context of

getting expre under control.


H.B. Meals will be more unpopular than milk. 7/6 or 10/- per family is

heavy at this time of year.

Milk is less of a blow & families can temper it by ordering less.

This also is right time for this: meals cd. be done later.


E.P. Agree with H.B. This is not welfare, save for the small element we

propose to retain: it is indiscriminate subsidy. I positively

want it abolished – in interests of N.H.S. Powers are expiring

in ’64: legn will be needed by 1963/4 session: if we haven’t

streamlined it by then we shd. be permanently providing for

out-of-date subsidy.


S.Ll. Cd we say we were anticipating re-organisation we wd. make in any

event.
D.E. On educn wd. sooner see increase in charge for meals than reduction

in rate of expansion of p’mme for teachers etc.

Ready to accept (meals) if Cab. want it.

But if only major cuts are related to children, won’t be easy to present.
P.M. I am opposed to both meals and milk.

Think of effect on e.g. rlwaymen. I cdn’t have said what I said

x/ to them y’day.

The incomes policy is for much higher stakes.


J.H. That policy is bound to fail if we do either.
R.A.B. Then we shd. never give pledges like the 2½%.
K. Over £100 m. excess is really too much: qua effect on confidence etc.
S.Ll. Must then be able to be firm on future expenditure.
C.S. Welfare milk will be on top of ½d p. gall. extra on all milk prices for

4 mos. in year.


D.E. Only incomes policy can keep export prices down.

What is point of company £50 m. off public investment in 63/64.

Ty. memo. argues (para. 9) for deflation this year – more slack.

Para. 5. We cd. get more out of available plant.

Look at 5., 6., 17. Policy shd. therefore be better use of skilled labour

we have & train more – i.e. expand education. Otherwise we

ought to reduce private investment.

How can Ty. argue tht. £50 m. off investment will “do the trick”.


S.Ll. All a ques. of degree. Ques. of getting economy into balance. If we

allowed more for home market, exporters wd. come back to it –

softer option.
R.M. If we have to plan ahead, we mustn’t put the figures too high.

Cd they be given a bracket.


D.E. £146 m. needed to carry out p’mme. Reduced to £136 m. Then came

down to £131 m. Below that I shd. have to announce that

announced p’mmes will be delayed.

C.S. Can’t M/Ed. see l.e.a.’s: explain economic situation: put figure as

maximum sacrifice.
H.B. In 63/4 and 64/5 he planned starts of £66 m. in each. He offered

£60 m. Cd he not give them £55 for 1st yr. saying he will do

better if he can.
D.E. Thght. yardstick was work done. If I can work on starts, instead,

I will consider it. Not sure that at £55 m. I cd. keep work done

w’in Ty. limit.
H.B. My suggn wd. bite on work done: for £55 m. starts wd. apply to

future years also.


P.M. * Settle for £57½ . starts.
H.B. Tell l.e.a.’s £55 m. adding more if thing go well. 1963/4.
E.H. Time we started thinking how we are to secure growth. We need

a policy here.

What are we going to do to increase supply of skilled labour.

Or get better service from oversea posts on exports.

These things will cost more money.
J.H. In 1961 we got 11½% increase in no. of apprenticeships by industry.
F.E. ‘Pleasure’ industries are sucking in labour etc., which ought to be

going to exports. Incomes policy cd. check expansion of those

industries.
E.H. Restriction of home market doesn’t lead industry to increase exports.

They usually wait for home market to revive.


{ Education investment: Agreed as at *. No other change.

{ Generally on investment: these figures are floor-basis of *.


S.Ll. School meals – wd. accept understandg. we wd. do it at some figure

later in the year. Say 3d or 4d.


J.H. Repeated y/. This is psychology, not logic.
H. What about the Parly diffy over the 2½% pledge?
P.M. Weigh that v. success of incomes policy.
Ch.H. Wd favour these cuts if they wd. give us the target. Does it matter

much if we are £111 m. instead of £98 or so?


H.B. There will be risk to sterling. If Cab. decide to take it, let us at least

re-examine milk & meals plan in a few months when critical

period of incomes policy is over.
S.Ll. 2d on meals later in year will do for me.

Can I have assurance there won’t be heavy Supplementaries.

So I can say we are in control of future.

H.B. School meals & milk – aim at announcg. May or June for

implementn Sept. Oct.

[Exit B-C., P.M.G., E.P.

4. Service Pay. [Enter C., J.P., J.A., R.W.
H.W. i) Timing. 1st Apl. is recognised date: announcemt. expected in

debates on Def. & Service Estimates.

ii) Comparison is with pre-pause period.

iii) Recruiting, tho’ better, is only just getting us nos. requd for all

regular forces.

iv) Grigg system – introduced because Services had lost confidence

tht. Govt. wd. treat them fairly. Para. 5 arguments.

D.S. pledged Govt. to continue the system.

Base my case on argument that Services are a class apart.

Figures: 9% etc. We cd. defend it. But if some sacrifice must be

imposed, do it in 2 bites. Tho’ this wd. w’hold £14 m. for

12 mos. They wd. lose it for all time.


S.Ll. Guilleband was similar undertakg. to rlwaymen.

But fear we must honour this.

Need we do it from ¼. Better give whole amount 9% from 1/10.
H.W. Services wd. then lose 7 months of their pay.
H.B. Admitted he accepted inclusion of marriage allowance.
M. Favour 9% from 1/10.
C. Accept this if it can be announced now.

& others
J.H. Enormous figure. H.W.’s plan goes away from Guilleband principle.


P.M. Let us consider which method is the better, as a matter

of presentation. Ty., M/D., M/L. and Ch.H.



C.C. 15(62). 22nd February, 1962.
1. Parliament. [Enter M.R.
I.M. Business for next week.

Mar. 5-6. Def. White Paper debate. H.W. to open 1st day:

P.T. 2nd day: who shd. reply to debate – H.W. speaking twice

or P.M.


Transport and Housing (Scotland) Bills are being obstructed in

Standing Cttee & guillotine will be required.


R.A.B. Time shd. not be given for motion on p. of m.
I.M. No risk.

[Enter Serv. Ministers.


2. Service Pay.
S.Ll. 3 possible courses. Original plan: or full settlement 1/7 or 1/10.

General view of Min. group (5:1) in favour of 2 instalment plan.


P.M. Presentn qua incomes policy shd. be ratio desiderata

Inescapable oblign: but ask them to make contribn of £14 m.

twds. success of wage restraint.
I.M. Public regard Service pay as in difft category.

Don’t rely much on prior commitment: there are many in

civil sector.
P.T. Will coincide with frozen arbitn awards which are well above 2½%.
J.H. Stress separateness: qualified only by £14 m. contn twds economic

crisis.


Agreed: two instalments.

[Exit C., J.A.


3. Public Expenditure.
S.Ll. Statement after Ques. Tuesday. Not in reply to P.Q.

No complete draft yet: will circulate it for comments by Monday

mid-day.

Defence Budget: comparing like with like will be up by £100 m.

wise to say that because criticisms from overseas tht. we aren’t

doing enough.

General grant: £85 m. up: mainly for education.

Gap – above 2½% - remains at £111 m.

Presentation. Shd I see Lobby aftwds? Shd I leak some of it in
advance, to make it less sensational qua Zurich.
I.M. Generally known already. Has bn. helpful. Can ease it along when

I see Lobby to-day.


4. British Guiana.
R.M. Growing racial tension – Indians, Africans, Portuguese – exploded

because of Kaldori budget. Troops sent in. Law and order

has bn. restored: enough troops there. But what next: how do

we extricate ourselves? Await Govr.’s advice.

U.S. view: not so easy.
H.W. Must thin out as soon as we can.

C.C. 16(62). 26th February, 1962.
1. Federation of Rhodesia & Nyasaland. [Enter M.R., J.P.
P.M. Agreed last time we must reach concln. D.S. to consult R.W. on

proposal tht. we shd. either have 4% + Asian seat or 12½%

entailing abolition of A. seat. D.S. persuaded him tht. difft

standard of hurdle for Eur. & African was not defensible –

out of tune with present circs. R.W. prepd to accept

equalisation at 4% or 12½%; but not willing to accept

abolition of Asian seat.

Discussions with R.W. widened out into future of Fedn. Later

realised tht. almost any variant of N.Rh. constitution will

produce Govts. wh. are anti-Federation. This, coupled with

prospect tht. new Nyasaland Govt. will insist on secession,

opens up whole future of Fedn. Tho’ N. not economic asset, its

departure may pave the way for secession of other constituent

territories.

Possibility of entirely new arrangement – but no ques. of its being a

proposal: mere aide-memoire of discn.

R.W. seeking now to hold up any N.Rh. constitution until we have

discussed larger issue. Suggest therefore we discuss that issue

first: then consider wtr. we can p’pone N.Rh. issue in hope of

reconciling it w’in wider framework. Recall Fed. Review concln

tht. progress must be made in constituent territies before we can

review future of Fedn.


D.S. R.W. said he was arriving to-morrow. Told H. Commr. stiffly tht. this

wd. do no good. He has now decided not to leave to-night.

3 connected issues – i) constn of N.Rh: ii) N.’s demand to secede:

iii) future of Fedn.

i) In Salisbury sought to clarify i) first. We had assumed tht., if he

preferred 12½%, he wd. not want Asian seat retained. But he

continues to attach importce to it esp. as he had conceded in

return addn of 500 Africans to upper roll. Referred back to Cab.

Decided to defer decn until my return. He also asked for 6 vice 4

racial reservation out of 7 seats. He wd. take 10% of votes cast.

Thus, he will agree to abolition of numerical alternative if

equality given at 10% of votes cast – plus Asian seat & 6 vice 4.

But he now wants radical review of future of Fedn – and puts that fwd.

as reason for p’poning constitn for N.Rh.

ii) R.W. urges we must hold N. in Fedn by force. I expld no future in that,

at the end secession wd. still be inevitable. Saw this eventually

& said ready to accept N.’s secession if satisfied it wd. not lead

to secession of N.R.

iii) Vague ideas of extending franchise & surrendering powers to

territories. Whitehead’s idea: hold together multi-racial kernel

i.e. S.Rh. plus Copper Belt and line of rail. N.Rh. wd. be

divided into Barotseland (wh. wants separation), n.e. areas

inhabited by Africans, central area incldg. all economic life &

most of Europeans and Asians. Hold S.R. + centre of N.R., and

allow remainder to secede but to join in a looser economic

association.

Existg. Fedn – regarded as imposed, design to perpetuate Europn

domination, identified with R.W. to whom Africans are

implacably hostile. Any new deal must be by voluntary action.

R.W. unwilling to concede right of secession even to S.Rh., with

its Eur. majority. At end we agreed to differ.

Problem of N. will be on our laps v. soon. B. comes Ldn. Apl. to ask

for secession. He wants principle accepted: recognises much

techn. work wd. then have to be done, possibly 9 mos. work – so

no actual separation for about a year. If we rejected principles,

B. wd. w’draw. from govt: we wd. have to resume direct rule

and serious security sitn wd. arise. Hope Cab. will agree no

future in trying to “fight it out” with B. in N. If Fedl Govt.

accepted principle, no gt. diffy. If R.W. decides to fight it, we

face diff. choices. We cd. i) join him in doing so; ii) give

self-govt. to N. at once & leave R.W. to fight it alone, with

police on B.’s side. This wd. be repd as betrayal. iii) Legn here

in oppn to Salisbury’s wishes. We must therefore do utmost to

carry R.W. with us in conceding principle of secession.

Delay of N.Rh. constitution because new regime will restrict

manoeuvre on Fedn. Accept R.W.’s view on this: with new

constitn Fedn will disintegrate. But maybe it’s doomed,

irrespective of what we do on N.Rh. as a pol. association. A year

ago, there mght. have bn. a chance. But it’s only now tht. R.W.

has bn. willing to consider wider issue. I believe it’s not

practicable to throw all into melting pot again. We must

therefore announce decn on N.Rh.

Concln: go ahead on N.R; try to get R.W. to co-operate in conceding

principle of secession to N.


R.M. x Agree can’t delay N.Rh.

R.W., if co-operative on N., wd. seek unacceptable condns on

N.Rh. No hope of central Rh. plan with consent of N.Rh.
R.A.B. If Fedn is doomed, what will happen when S.R. is alone?
D.S. They will try to stand as independent state – few wd. want union with

S.A. tho’ ties wd. be made closer.


H. Two dangers in Africa. i) Afr. revolt because impatient.

ii) Eur., if driven, mght. re-act – eventually

union of Angola, Katanga, Rhodesia. Dread effect on multi-

racial concept.

x Can’t p’pone decn on N.Rh. constitn.

Future of fedn depends on Fedl Govt. conceding right to secede.

But rapid secession of N. will mean chaotic transfer & slum on our

hands. If he has bn. given right to seceded, we cd. deal with

revolt if any. Shd we not revert to Monckton. Orderly transfer of

power to territies; and thereafter right to secede. B. cd. hardly

excite support for opposn to that p’mme. Wd take 2/3 yrs. to

transfer the powers: longer prs. for N.Rh. With that delay they

mght. choose some form of continuing assocn. Cd we not make

decln on these lines?


R.M. This underestimates Afr. detestn of Salisbury & R.W. personally.

Only hope for a Fedn is to give B. right at once & sufficient

gesture to N.Rh.
I.M. Mght. have done this, if we had moved to Monckton at once. Now it

is too late.

Line of rail plan is not practicable – obvious gift of all econ. value to

Europeans.

Announce N.Rh. Take few wks. to work out plan for N.
M. Right of consent of Fedl Govt. before right of secession granted?
D.S. No: we are only Parlt. that can do it. Tho’ violent row.

We cd. secure secession of N. – Fedl Govt. wd. not actively

resist. Sooner we give N. added responsibility more likely they

are to consider some form of economic association.


H. My plan would give us longer over N.Rh.
R.M. B. will say tht. his electorate has decided already in favour of

secession.


P.M. What R.W. really mean by c. Rh. plan is not what Monckton meant.

What they mean is – N. shd. secede: Barotseland go off alone

with appropriate African constitn: central N.Rh. (where racial

ratio is same as S.Rh.) shd. have same kind of constitn as in

S.Rh. – essentially multi-racial: then all 5 cd. join economic

association.


H. Other view: if we can get 8 yrs. for N.Rh., Fedl Govt. cd. bind them in.
[Murmurs of dissent]
P.M. No moral basis now for central African alliance plan.
R.A.B. Any alternative arrangemt. must be discussed by conference and

secured by consent. E.W. contemplates action by existing Govts.


D.S. Cd accept it as decn of self-governing Govts.
H. That is not what E.W. wants.
K. On N. can’t we find via media between R.M. and H.’s view – which

we cd. persuade R.W. to accept. We can’t carry Party in forcing

this v. unwilling R.W.
P.M. We are powerless. Cdn’t govern N. by force for long. Cdn’t restrain

Europeans fr. seizing Copper Belt.


P.M. Can’t avoid now an early decn on N.Rh. constitution?

x/ Indications of general agreement.


D.E. Hopeful sign in all this is that R.W. and E.W. have come to think

Fedn can’t last. They may now become more practical.

Better now to lean on E.W. than on R.W. – who is much more widely

disliked. [Exit K.


R.A.B. Agree to x/ as we can’t settle future of Fedn until we have elected

Govts.
P.M. Given decn on x/. we must consider N.Rh. ques. – what do we do?

R.W. has accepted equal hurdle for each: when shd. it be put?
R.M. African Parties won’t co-operate unless they have a chance of winning.

They oppose both numerical alternative and Asian seat.

Equality of %age is necessary & I favour high figure of 12½%.

With that Africans wd. co-operate if Asian seat abolished. Can’t

now defend it: Asians don’t want it: awkward to m’tain it in

face of their disclaimer.

Can’t hold revolt unless it appears we have offered reasonable

solution.

Even under this constitn – govt. will only be advisory to Governor.
R.A.B. 500 Afr. on upper roll?
R.M. Tho’ conceded in exchange for Asian seat v. diff. to w’draw it now.
H. This plan gives Africans a good chance.
D.S. Choice of %age is between 10% and 12½%. I prefer 10% of votes

cast.
P.M. This choice raises no ques. of principle.

Asian seat. Recall history.
I.M. R.W.’s main pre-occupn was 12½% or 400. But in last resort he

suggd Asian seat & we had no reason to think Africans wd.

dislike it. We made bargain with R.W. adding this in return

for 500 Africans on upper roll.

Concession on %age – equalisation – is the bull point. For Africans

much more important than Asian seat. And there was a bargain.


If we abolished it, we wd. have to remove the 500 Africans. Can’t

really contemplate that.

Cd you retain it for one Parlt. only? It wd. be 2nd class status.
R.A.B. We cdn’t possibly w’draw the 500. Hope we can leave Asian seat.
D.S. In reply to ques: R.W. wd. accept with protest 10% plus m’tenance

of Asian seat.


Hail. Cd we not buy acquiescence under protest by both sides by

retaining Asian seat.


H.B. Why not try I.M.’s temporary idea.
P.T. If we drop Asian seat, we shall be attacked by both sides.
R.M. But how can I defend it to H/C. knowing tht. no-one in N.Rh. wants

it & its only reason was to prevent them voting R.W. in

other seats.
D.S. Bound to come out tht. there was a bargain. Will cause big row.
R.M. Both = minimum requd to secure African co-opn.
P.M. We have to weigh these considns:-

A. i) Avoid boycott. ii) Avoid revolt.

Two concessions wd. clearly be better than one. Obviously

better fr. R.M.’s angle.

B. European mood: faced with end of Fedn. Risk of exposing

ourselves to charge from them, in that mood, of breakg. bargain. C. Posn of U.K. Govt. & attitude of Party.

We cdn’t prevent a Boston tea-party: & under pressure fr. Eur.

we made concessions in June. Not wholly bound because circs.

change: but it was a bargain. We shd. be accused of

dishonourable act: I’m not prepared to be so accused. Our

reputation wd. be tarnished. And at beginning of this road to

secession of N., N.Rh. and break-down of Fedn.

Let R.M. consider how it could be presented.

Cab. wd. wish R.M. to let Asian seat stand. Many cdn’t reconcile

its retention w’out removing the 500. How wd. that be

presented publicly.



C.C. 17(62). 27th February, 1962.
1. Foreign Affairs. [Enter M.R.
(a) Berlin.
H. Since 22/2 R. harassing tactics have bn. dropped. Quiet.

Thompson is presenting another memo. R. showing no sign of

impatience or progress. Shall play it out until F.M.’s meet in

Geneva on disarmament.


(b) Congo.
H. A. and T. are going to meet – prob. w’out U.S. Amb. Looks as tho’

they want settlement. U.N. not pursuing m’while their plan to

put troops into these 2 places. If talks brk. down this will

revive - & may be resisted.


(c) Laos.
H. P.Lao are over cease-fire line, but fighting hasn’t broken out on any

scale. Phouma’s proposed Govt. still unacceptable to Phoumi.

But all are mtg. with King & there may be a settlement.
(d) Disarmament.
H. Looks as tho’ K. will allow F.M.’s to open Conference. Then likely to

be Summit – one way or other – around May – as foreshadowed

in P.M.’s letter.
(e) Europe.
E.H. Oct. 10. said we wd. open negotns with other 2 communities at appropte

time. Have taken soundings – agreed time is ripe. Propose to

submit formal apln at end/week: negotns wd. then begin

in 2 mos. time.


2. Education: Burnham Committee.
D.E. Outlined reasons for legn. L.a.’s don’t like it – wd. weaken their posn

& have said they wd. back teachers’ opposn unless clearly shown

to be in line with incomes policy. That can’t yet be shown. They

wd. press for arbitn, wh. wd. enforce comparability. Want to be

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