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ACT 2000

3. Firemen’s Wages. [Enter R.W., P.M.G.

P.M. Alternative drafts prepared.
S.Ll. Favour 1st Jan. – in order to help with resistance of other claims.

Prefer alternative III.

P.M. R.A.B. ready to leave it to Cab. but, if Jan. 1. is to be the date, he wd.

prefer alternative II.

Discussion – agreed we can’t support date of 8/12.
On choice of 1962 dates – no argument for ½: (J.H.)
I.M. I see advantage in ½. Press are watching this: we have a weapon

here (grant): we must use it: will seem silly to use it for mere

difference betwn. 8/12 and 1/1.
P.M. Public won’t have date of 8/12. If Council can’t settle for that, will

they disclose it.

H.W. Argument for 1/1 is tht. pre-pause element is here & we have a

precedent in W. Council decisions.

E.M. This increase is 20/. Bad effect on rlway claim.
D.E. Genl. grant argument quickly becomes political issue – as shown by

attempt to prevent l.a.’s from hiring people for school meals.

H.B. Unavoidable. If we don’t use genl. grant, employers will go back

to 31/10.

S.Ll. On precedents only 2 dates – 1st Jan. or 2nd April.
Agreed 1) Alternative III, as amended, to be handed to

leader of l.a. repves on Joint Council.

2) If Council settle on earlier date, this to be publd.

If they settle on 1/1., effect of 1st para. to be

made known in guidance to Press. If no

decision, no Govt. announcement.

[Exit Renton.

4. Wages Policy.

S.Ll. Agreed generally tht. statement of genl. policy shd. be made & soon.

ii) We cd. indicate amount available from increased production for

increases of incomes – not more than £500 m. and much already

predicated. Therefore, next year must be one of moderate pause.

Figure wd. be about 3%.

i) This wd. be alternative to guiding light method: as in offl. report.

iii) Just stick to the pause. But don’t believe that wd. be practicable.

Timing: must have early talks with 2 sides of industry. Shd be

initiated before Xmas. Let them reject guiding light, if it has to

be rejected. If we can’t get agreed wages policy with industry,

say we mean to work twds. it – m’while my view of economy

F.E. Accept need for early statement.

Guiding light – irrelevant to employers: employed in negotn.

My preference: reject “policy” on wages: promise to disinflate

so tht. employers can’t increase wages. Restrain demand:

increase competn by lowering tariffs. A few paras. on those lines.

M. Real problem: annual round of wage increases.

Opposed to g. light. It wd. become minimum – even for rate.

Merit in S. Ll.’s (ii) – figures showing what we can & can’t afford.

Beeching y’day told us S.Ll. shd. say still need for restraint & we

y/ must concentrate mainly on cases of injustice.

Statement of 25/7 foreshadowed statement early in N. Year reportg.

results of production.
I.M. Employers outbidding competitors for labour – earnings therefore

exceed rate.

G. light wd. become minimum. Every award above it wd. be a

political defeat.

Policy related to y/ wd. be much easier to defend.
Hail. Criticisms of draft W. Paper are conclusive.

But pause policy won’t last much longer.

Planning may be eventual answer. What we want now is interim

statement to bridge that interval.

Hope he will say 2½% is as much as we can afford. Sanction.

Cdn’t taxation be threatened in reln to wages as well as profits?

Why not? Must have some teeth in a statement.
H.W. No wage restraint is practicable unless accepted as fair.

Shd. Govt. not concentrate on stable prices - & then argue for no

wage increases.

Set up planning body & put genl. figures to it.

Must be scope to deal with injustice.

Can’t abandon comparability.

Prefer to say: main Govt contn is stability in c/living.

D.E. Turning point in econ. policy. Monetary & fiscal measures are not

enough to control wages. In 1960 we secured steady prices

but largest rise in incomes!

Must find wages policy. S.Ll. says can’t be based on sanctions &

controls. Must therefore be a guide. No chance of controlling

wages if Budg. & fiscal measures going in other directions.

If we rely on public support, can’t do another surtax operation.

If you have a guiding light & it’s ignored there’s obvious case

for financial methods of protecting £.

Insistent demand for answers to ques. – when is pause to end, what

will policy be.

Favour early statement i) April 2: end of Pause ii) policy for

remainder of 1962. iii) invite industry to discuss longer-term

policy after end 1962.

“Minimum will be exceeded.” Say tht. anything higher shd. be

x/ related to period longer than 1 Year.

G. light for not more than 1 yr. at a time.

I.M. What sanction behind x/.?
J.H. Thghts. on offl. report are only basis for this in democratic system.

M’while, what holding operation?

Sure tht. g. light wd. be minimum.

Attracted by S.Ll.’s (ii). But agree with Hail. there must be teeth:

Must indicate alternative – use of fiscal measures, even tho’

this does temporarily check growth.

Timing. Can’t wait until January. Announcemt. before Xmas.

But shd. not include i) in D.E.’s remarks.

Immedte consultns with industry – next week.
E.M. G. light is wrong because affects only basic rate. Earnings are what

matter. Carpenters on H’smith earned 75% more than

roster. They get scarcity wages.

We must therefore tolerate inflation or get more unemployment.

Only where there is unemploymt. (e.g. labourers at Helburn) do

earnings correspond to rate.

Support S.Ll.’s (ii). Statement before Xmas. essential to hold posn.

Can’t get rid of comparability. W’out it, can’t operate e.g. rlways.

because man-power will move out.

Pause has created injustices. First need is to put those right.

Why not consult T.U.C. privately on that. E.g. motormen:

take-home pay only £15.10.0 incldg. overtime – as cpd. with

over £20 for e.g. steel-fixers.
K. Distinguish between short-term policy & long. Pause temporary

expedient. Promise given to proceed to policy of growth. On

that must have consultn with 2 sides of industry. Talk of

machinery for that: but lack so far is knowledge of what it is

to do. Must have a policy – and a statement of it.

Impressed by offl.’s draft. May be derided as exhortn. But unless

this guidance is heeded, we shd. have to invoke fiscal sanctions.

Must have statement soon if we are to get opinion behind us.

How indicate what you want unless you give some guidance.
P.M.G. Must try to make g. light work. Early talks with industry.

Presentn. i) must assure T.U.’s on stable prices.

ii) must enlist support of p. opinion.
J.M. Sympathy with E.M. on over-full emplt. Need for selective fiscal

measures to shield areas where unemplt. is high.

Cdn’t we time announcemt. on this to co-incide with that of H.B.’s

economy measures.

Ch.H. Holding statement before Xmas. Offl. report contains much to

encourage restraint. Diffies derive mainly fr. stating things in

%age terms. Better therefore to go for S.Ll.’s (ii): but adding

warning of determn to use fiscal measures to correct excesses.

Don’t despise exhortation. Can’t be avoided in free society.
S.Ll. Can’t say anythg. of substance before Xmas because can’t do that

w’out consultn with T.U.’s.

5. Railway Wages.
E.M. B.T.C. waiting for Unions to ask for a date for mtg. to hear B.T.C.

reply. They are not hurrying. A.S.L.E.F. are not mtg. until

after Xmas.

Unions are seeking 10%. Beeching says 10-11% on Guilleband.

But 6% wd. be reasonable. And, but for pause, he wd. offer

6% from ¼. Arbitn wd. cost more.

No need therefore for Govt. decision to-day. [Exit E.H.
4. Wages Policy (resumed).
C.S. S.Ll.’s (ii) is better presentn. But has no more chance of success.

If it can’t succeed, we must disinflate – to get unemplt. This

is turning point. In Europe they have got across the idea tht.
excessive wage increases are not in natl interest. We must get

it understood here that alternative to self-discipline =

R.W. Agree with C.S. on Europe: brght. out in offl. report.

We must do more to bring it home. Method (ii).

D.E. What disinflationary measures?
F.E. Tight rein on home demand.
S.Ll. If wages rise, c/living will rise: what measures do you use then?
P.M. How square this circle. Over-full emplt: v. high c/living: currency

dependent on oversea trade.

First: get new planning organn going. Won’t bring that off if you

give impn tht. wage restraint is its main purpose.

I wd. start at other end. Put its function as increasg. size of the cake. Stress creative & constructive function.

Second: Distribn of the cake. Let that grow out of first.

Time isn’t quite ripe for a g. light.

Third: On E.M.’s figures a lesson for us. Dpts. are always trying

to add to demand for scarce labour. We ought to be reducg.

it, esp. in areas where there are shortages. This = result of

our own policies.

Fourth: Can’t cure this by disinfln, even if we cd. disinflate.

Must go for growth. Must create p. opinion v. excessive

money rewards regardless of economic cost. Sweden has

done this.

Fifth: All Govts. must do some stop & go. Budget is governor

of economy. Must use it. B. surplus is disinflating weapon. Sixth. No firm end of pause. Shade off.

[Exit R.W., P.M.G.
6. Congo.
H. Irish, Malays, Swedes in real danger in K. Only way in which they

can be helped, is by air operations – to keep communications

open. Can we give them limited no. of bombs – use restricted

to opns to safeguard lives of U.N. troops.

Meeting Thursday 10.15 p.m.

C.C. 69(61). 7th December, 1961.

(10.15 p.m.)

(a) Bombs.
H. Uncertain whether India have any. They expect us to give them:

Indian troops at risk. Propose to supply: on condition used

only for protection of U.N. troops in danger and raking out

a runway used for attack on them.

K. C.R.O. support. Indian feeling is very strong. G.B. no reason to

believe Indians have any bombs.

H.W. Believe they have. But don’t dissent from H.’s view.
H. Will get specific assurance from Bunche re use of bombs.
(b) Policy in Katanga.
H. U Thant says this is only local action to protect U.N. troops and keep

communications open. More difficult than they think. But U.T.

pledged to P.D. that it won’t develop into attack on K. as such

and that he wishes T. remain P.M. there because sees no-one

else who could do it.

His object: re-integrate Congo by conciliation.

He won’t seek out mercenaries in hiding.

If this action is so limited, we could not fail to assist it: can’t allow

U.N. troops to be massacred and must keep l/c. open.

Spaak thought we should do more to get A. and T. together. Their

statements over months show very little difference between

them. Both favour confederal solution: each ready for pooling

of money. K. willing contribute. S. suggests we and U.S. go to

A. and invite him negotiate for a solution on this basis. Worth

trying. Will suggest to Rusk in Paris.
P.M. (1) On content little between them. (2) But they may dislike one

another. If so they won’t agree. (3) Location of meeting.

U.S. as paymasters could force A. to negotiate.
R.A.B. Bombs – seems inevitable. But must not go contrary to L.P.S.

statement that we won’t support U.N. in co-ercing Katanga.

Ch.H. As soon as news leaks re bombs, we must be able to publish

assurances given by U.N.

P.M. U.N. are beginning to see problems of Colonialism.
S.Ll. Will support if H. think it right, but goes against the grain.
P.M. F.O. and M/D. to work out number and character of

bombs and assurances required as to their use.

Policy - resumed.
H. Renewed efforts to get A. and T. together, perhaps with a third person.

Possibly courier as go between until they are close enough to

warrant meeting (e.g. with Bunche) to clinch it.
L. A.’s pride could surely be over-ruled if U.N. people on spot were

tough enough with him. Fear U.N. officials may be even

encouraging him.
H. U.S. might give them a push.

C.C. 70(61). 11th December, 1961.
[Enter M.R., J.A.,

Congo. Devonshire.
P.M. Cabinet’s decision of Thursday p.m. – communicated to U.N.

Secretariat that night.

E.H. U.N. thght. 8-9 days requd to take delivery of bombs – wh. are

nr. N.hampton. Bunche had prev. said use wd. be restricted to

aircraft & airports. H. asked for this assurance in writing. They

then said (Fri.) they had in mind to use for wider purposes. We

said we cdn’t supply for those purposes. They then accepted

our request for narrow assurances. They promised to give

instns accordingly to U.N. Commanders.

Sunday: concerned at statement attribd to Linner [Tel. 276 from

Stockholm]. Asked Sec. Genl. to repudiate this. He issued

statement (N.Yk. Tel. 2443) which recites U.N. policy but w’out

repudiating statements by his subordinates. Second part of

para. 4. seems to disclose intention to gain control of Katanga as

a whole. U. Thant in final sentences pf para. 4 seems to invite

someone to mediate between Tshombe and U.N.

P.M. Bomb ques. has brought to a head the difficulty we are in about the

policy of U.N. generally. Local U.N. people are inclining twds.

a tougher line than S. Genl.
E.H. H.’s believed Thurs. decn was right at the time: but diff. now to avoid

doubts about diffces in attitude betwn. us & U.N. We are inclined

J.A. Targets: a few light aircraft dispersed. These bombs wd. not be

effective save v. heavy concentn of aircraft. Nor useful v.

kind of runway in Katanga. These weapons are not suitable for

the purposes to wh. our conditions restrict them.

R.M. My impressions gained in Salisbury confirm this. High feeling.

If U.N. get these bombs, fear they will be used for other

P.M. If we go back on our decn, we shd. have to re-open policy ques.

in Sec. Council & mght. have to w’draw our support for U.N.

K. In Nigeria & Ghana there is already feeling we have not supported

U.N. U.S. are under-writing U. Thant. Welensky’s statement

is violently anti-American. If we appear to change our decision,

we shall be accused of dithering under pressure from

Katanga lobby.

S.Ll. Can we work for Anglo-U.S. offer of mediation?

E.H. U. Thant has suggested Dunnett (Consul in Elizabethville) as

mediator. He is ascertaining from his commanders their

minimum terms for cease-fire. And wd. then be ready to

empower D. to act. Diff. to associate U.S. Consul with him

because not on terms with Ts.

Wd prefer heavy outside figure.

S.Ll. E.g. an ex-President of U.N. – like Pearson.
J.H. Case for U. Thant going himself.
P.T. Confused accounts fr. K. – deferring despatch of bombs. Safer than

suggesting we have doubts re U.N. policy as a whole.

H.B. Linner’s statement is a new fact, which enables us to say we can’t

send bombs until sitn cleared up.

I.M. If L.P.S. can say bombs have not left & wdn’t in any event go for

several days, there will be no adjournment debate to-day.

For Thursday’s debate. We can’t reverse decn on bombs because

of techn. grds. which we shd. have bn. aware of then. Defend

decn on basis of assurances we asked for – grave decn to refuse

help to protect our C’wealth men etc., in U.N. forces. But

doubts have arisen since because statements made by

Linner etc.

J.A. Cd we rely on report tht. airfields are now clear. (N. Yk. 2401.)
P.M. W’ton 3348. Rusk’s statement of U.N. objectives. Acceptable to us.

We cd. say we stand on that.

R.A.B. Stick to E.H.’s statement of Mon. last – on political objectives.
K. If we are satisfied tht. U.N. in Katanga are in line with U.N. in

N. Yk. the bombs shd. be delivered.

P.M. To be used for purposes we stipulated if condns for that use shd. recur.
E.H. After spkg. to H. in N. Yk. Rusk’s view: U.N. Forces shd. take

purely defensive role. Pearson as conciliator. Suggd we say tht.

until sitn clarified (i) U.T.’s statement ii) on ground) bombs

won’t go. Agreed tht. we cd. say they cdn’t go before end/week:

m’while must get sitn clarified by debate in S. Council.
P.M. Say: decn stands: but must be satisfied tht. assumptns (N. Yk.)

& condns (Katanga) are fulfilled.

C.C. 71 (61) 12th December, 1961
1. Foreign Affairs. [Enter M.R.

  1. Portugal, Goa.

P.M. Note from Embassy, referring to 1899 agreement, & askg. how H.M.G. can make available joint means of defending Goa v. aggression by India.

E.H. We are pledged by that to help in defendg. P.’s colonies.
In ’54 when similar appeal made we said we cdn’t. engage in war v. a C’wealth

a. country. Presumably we stand on that, qua force. But

b. reprns to Delhi, assuming India wd. not use force – supplemented by P.M. message to Nehru. Also advice P. to raise it in Sc. Council (if they feel they really are threatened)

c. U.S. have warned India.

d. Overflying rights for P. to re-enforce Goa. Minimum: Mauritius.
Tho’ they have asked for Gau: wh. we have never conceded to anyone – even U.S.
Agreed: as at a.
P.M. ? Tell N. we have bn. approached by T: we have replied as at a., adding tht. we think it inconceivable tht. N. with his pacific reputn shd. make armed attack on Goa. Make this a public reply – or at least let it be known.

To Portugal: inform as at a. On d: we can’t do that if we have taken public line as at a. Tho’ ? offer facilities if movement can be normal. Too dangerous perhaps.

Agreed: must reject d., as incompatible with efforts to check Indian action. Also Hindus in M’Tius.
On b. avoid personal message to Nehru – offl. thro’ G. Booth.

Tell Portuguese d. wd. make Nehru more likely to reject b.

  1. U.N. Chinese Representation.

P.M. Since Cab. last discn, seems there will be para. by para. vote on R. resoln.

We can vote on 3rd para.: against – and can take that chance to explain our posn on Formosa. Then vote for resoln as a whole.

Para. vote makes a new situation.

2. Common Market.
E.H. Brussels mtg. Friday. V. businesslike. Review of offl’s. work.
Two decns on procedure. Agreed no need to argue more on principles better to have details examined. i) This was applied to manufactured goods fr. C’wealth countries (under 2% of imports into U.K.) Canada mainly affected. ii) Rest of C’wealth produce. We suggested A.O.T. treatment for all. Six didn’t want that applied to India. Agreed we shd. examine countries separately in detail.

Chairman: to rotate, every 3 months – incldg. U.K. Diff. for us, but we accepted in principle – no pre-arranged order of roster: we cd. therefore avoid havg. take Chair critical phase

Looks as tho’ we can get whole field under study in a series of patterns w’out reachg. separate decns on each. This wd. avoid slippery slope.
3. Congo.
I.M. Danger of Thursday’s debate: it is on adjournment. Might therefore get all our opponents in lobby against us. Two difft. attitudes of criticism. Extremists (Hinchs etc.) are not to be appeased. Another group favours him we are trying to press on U.N. (Aquar etc.) Favour therefore motion which latter group cd. support. Cd announce that at 3.30 to-day: motion wd. have to be handed in before H/C rises to-night.
P.M. H. will return to Ldn. this p.m.

U.S. are declining to join us in appealing for cease-fire. Rush thinks opn shd. continue, so as to enable U.N. to get control.

Bomb ques. has opened wider issue of attitude to U.N.

  1. Some wd. like to have U.N. altogether & preserve our liberty. That we shd. avoid.

  2. We might consider dissociatg ourselves fr. this U.N. operation. But first we shd. try to get U.N. policy on Congo more into line with reality.

  3. On bomb: cd. we prs. say tht. sitn has changed to extent tht. we must reverse our decn. No sufft confidence in local U.N. leadership. Won’t send bombs until posn at N.Yk. has bn. clarified – as under b. If this showed U.N. were intendg. to co-erce K. by force, we cd. prob. w’draw our support of this operation.

Further (informal) discussion in H.C. this p.m. – with H.

[Exit P.M., E.H., I.M., M.R.

4. Public Expenditure. [Enter R.W., J.B-C., E.P., D.E.
H.B. Two pledges by S.Ll. a) Exp’re w’in q.n.p. b) The 21/2% increase for 62/3.

On long-term we are making some progress – e.g. roads, defence. But 2 gt. problems: agriculture & education. If we cd. get these [Agriculture: open-ended commitment: suppl. estimate of £78m because collapse in market for beef, mutton & pigmeat.] contd we cd. work out long-term policies within a).

But on b., first figures are alarming. They show increase for 62/63 of £398m or 71/2%. The 21/2% was “in real terms”: but even so to achieve this will need economies of £100m. We have £15m fr. minor admve savings. Nutritional memo. shows scope for £47 or so (?) wtr. fam. allowances or other means.

Add to C.199 this new informn re Estimates.

Out-turn will be about £150m. above Estimates for 61/62.
S.Ll. Surplus above line was £500m. Then regulator £130m added.
Giving overall surplus of

Supplies £205m. as like as not, in total. – less saving of £50. Net £155.

But another £50m. below line. Suggests overall deficit: and surplus above line much less than we forecast.

Effect on £ may be v. serious. I.M.F. attitude will be affected. All therefore will turn on evce tht. we shall stick to what we said on 21/2%.

R.M. Assumes public & private exp’re continues at same rate. There is a case to be made for letting some factors in public go ahead & restraining private.
H.B. Agree qua public investment exp’re. But p. expendre of all kinds is nearly 45% of q.n.p. If that rises even further, effect on exports wd. be fatal unless Draconian measures taken to restrain private expend’re.
Hail. x| of para. 2. Unrealistic to imagine we can reduce taxation in these circs. We cdn’t cut defence for that reason.

Do you cure inflation by transferring money from poor parents to the general tax payer.

H.B. These decisions are necessary if we are to avoid increasing taxation.

But main issue is para. 4., not 2.

M. Reason for para. 3 – q.n.p. hasn’t risen. But can’t let this go on.
Memo. shows case for drastic action.
S.Ll. Must be some redn of tax for incentives – tho’ no decrease net.
R.M. Para. 4. Scope for fewer t.v. sets & more education.
H.B. That means higher taxation.
D.E. Agree there must be a level of p. exp’re wh. cd. be debilitating.
But as countries develop they naturally spend more in public sector.

We must therefore look now at total: & then its distribn. Objective: growth. Test items v. that criterion. Have we bn. sufficiently ruthless in eliminatg. elements that don’t promote growth?

Deficits on natd indies (£200m): excessive interest rates. Must be ruthless, but selectively so. Power of collective bargaining in full compl. is so great tht. we must limit it: can’t allow incomes to rise at rate of £500/600m p.a. With coherent policy made plain, we might get support. But deflationary policy in Budget with all it unpopularity combined with appeal for support for wages policy – no hope of success.
K. If you support policy of growth, surely you must support leaving more money for private investment. Again: you can expand technical educn to appoint which threatens immediate growth – by using investment money & teachers more urgently needed for export promotion.
D.E. No lack of private investment funds – we have raised interest rates to limit it.
R.M. Also shortage in industry is skill not bldgs.
H.B. Accept need for growth. But can’t afford simultaneously all projects justifiable by that test.

Moreover, we shall have to cut back in other directions.

R.A.B. In simple Budgetary terms we must find £85m of savings.
We must get down to short-term brass tacks.
5. Agricultural Policy.
C.S. Genl. picture of the year is good – apart fr. meat collapse. That apart, exp’re is only £10m above estimate.

Meat: market collapsed at start of year. Price fell May from 160/- to 90/- in a few months. Sheep followed because large production of lambs. Then Danish pigs flooded in & bacon/pork market collapsed. Small xmas improvement, but worried re future.

Diffies in cattle nos. slaughtered only .2%. Imports down. 2% increase in quantity produced fall of 14% in prices.

£67m increase in subsidies. £31m to farmers. £35m to consumers in retail prices. Balance to distribution (not all in profits because larger quantities handled).

W’in support system we can do nothg. to hold market up.
With free entry fr. Argentine, Denmark & N.Z., we cdn’t try to keep price steady – as other countries do.

Happened before on one or other item. This year on all meat.

Immediate tasks. i) a minus on Price Review. [Enter E.M.

ii) induce farmers to accept policies we shall have to

introduce if we go into Six.

{56m. increase in our subsidy

{160m increase in costs carried by farmers.

These are figures for period of years in wh. world shortages ruled. The policy has paid off. But it won’t do when world surplus of food.

We shall have to switch to new policy if we go into Six. We must now work out policy we shd. favour if we don’t. Fundamental (but different) changes. M’while ’57 Act will have to remain, for this Parlt.
R.A.B. Tho’ tough – can’t under recent pledge be more than 21/2%.
Moreover, can’t reasonably say in advance we shall rig review.
Unconstitutional. Throws over Act and pledge.
H.B. Avoid a specific figure. But indicate we shall have to be tougher.
P.T. Is para 19 (iii) realistic?
C.S. Not unless we legislate or went in for support of market by buying, or controlling imports.
J.M. Also breach of pledge re 21/2% p.a. in Review.
J.H. Also 4% for a particular item. And for this Parlt.
S.Ll. Not inconsistent with pledge to farmers if we shifted burden in part to consumers.
R.A.B. New system envisaged for Common market wd. take 11/2 yrs. to work out.
Hail. What about grants – ploughing, fertilisers. Is this sensible in present circs?
C.S. They are in Review: and are w’in the 21/2% pledge.

These have bn. used because diffy. of m’taining farm income without raising commodity prices too high. Also less risky – not open-ended.

H.B. Accepting pledge is inviolate, cdn’t we ask offls. to study what cd. be done to safeguard Exchequer.
C.S. Yes. But avoid damage to good policies for sake of [Exit S.Ll., H.W.

our years’ diffies. Some grants we cd. continue to pay, even in Six – e.g. hill-farm subsidy, farm improvement grants. Don’t throw them away now because immediate diffies. Other grants (fertiliser, calves, ploughing) wd. have to go under Six.

R.A.B. Agree i) suitable public warning of stiff Review.

ii) good explann of reasons for Supplementary.

iii) study by *officials, as at X/, of possible savings in 1962/63

Ty., M/Ag, Sc.Off., B/T.

C.S. Doubt if I can say v. much in presenting Supplementary Estimates on Monday.
J.M. And, while ready to examine (3), doubt if there is much we cd. do.
C.S. Only remedy for next year is to control amount of meat coming on to market.
This wd. mean restrictg. imports – only means is by vol. agreement, which I can’t get if B/T. export aims are over-riding (e.g. Polish bacon) and also Govt. buying of home production.
H.B. If we can’t control exp’re elsewhere, we must act when we can. e.g. Farm Improvement etc.

C.C. 72 (61) 13th December, 1961
1. Nutritional Services. [Enter B.C., E.P.
Welfare Milk.
H.B. No Ty. reason for immediate decisions.

To get 21/2% target, we shall need some major cut – this is most promising field. Work of Offl. Cttee - £97m.

Best scheme in my view: school meals (para. 8) x.1. £27m saving at no nutritional cost. Coupled with para. 10 y.1. – w’drawing 4d pint subsidy on welfare milk save for larger families: £20m. saving.
No action on school milk, which wd. continue to be free.

If that were not accepted, I wd. have to press for legn on f. allowances – saving £35m. by terminating allowance for 2nd child & increasing if for 3rd and over. (B.C. That figure is not net of tax loss). Prs. 28-29m. Net.

Mp reference is for first course.
E.P. Believe y.1. is right. Tho’ I wd. include 3 child family all under 5. (at cost of £1m-2m.)

With that adjustmt., no nutritional loss.

This scheme is not defensible – subsidising milk bill of many families who wd. drink so much if there were no subsidy. We wd. do better to be more selective. I proposed a scheme of this kind a year ago.
V. ready to defend this, w’out regard to economy drive.
J.M. Broadly agree: wd. like to discuss with E.P. his modification in detail.
J.B.C. Slight adminve addl. cost in the modificn.
C.S. Food distn: we depend on distribution to handle this more complicated plan. Shd wish to consult them before announcement.
E.P. Subject to leaks.
H.B. Consumptn 198. Assumed tht. 60m. less wd. be consumed under this plan.
With modificn prs. 40m. maximum. This on assumption that the families will cut consumptn.
M/H. Doubt if they will.
D.E. [Need we continue to give free milk to independent schools. Costs £180m.]
I.M. Y.1. modified mght. cost £8m.

Y.2. wd. cost £12m. But wd. be simpler to administer & more popular.

Cd we keep this open?

E.P. Timing. Hosp. W. Paper due around 20/1. Awkward to do this about this time. Wd prefer to do this first – so tht. bad precedes good news.

J.M. Cd we not aim at genl. announcement of cuts?
H.B. See para. 12. Either y.1. or y.2. wd. be simpler to administer than present scheme.
E.P. Powers expire in 1964. Can’t hope to abolish all welfare milk then.
Easier to continue a scheme wh. is defensible nutritionally. This is an argument for y.1. modified.
R.A.B. We shall have to think in terms of y.l.a.
School Meals.
D.E. Merits. on nutrition: we believe 10-20% fall in up-take. Prs 1/2m. children wd. get some other meal – not necessarily so good. For many wd. go home: esp. in rural areas. Meals in cafès bad socially.

Not therefore to be assumed there wd. be no nutritional loss.

Educational disadvantages. Teachers accept duty to supervise meals because seen tht. it has educational advantage. With charge of 2/= teachers wd. be disposed to regard it as restaurant service, and decline to supervise.

If you have meals service, you must close the school mid-day break.

Mght. therefore have to pay for supervisors vice teachers. Hard to find them. Wd cost £1/2m p.a.

Parly Secy & P.M.G. (experienced in schools in Lpl.) think 2/= wd. be disastrous. At 1/6d I cd. still m’tain this was not restaurant service.

Wd want to work out a new kind of means-test.
H.B. This is most costly service £57m. V. large nos. of parents can afford to pay full cost. To make them do so will greatly ease our diffies elsewhere.

D.E.’s plan wd. at best save on £17m. Vice my £27m.

R.A.B. x.1. (b) is pretty difficult.
H.B. It wd. need detailed thought.
J.M. Earlier adjustmts. ’53. 2d increase: 65% drop in up-take.

’57. 2d increase: 14.7% drop.

They climb back, but v. slowly.

Concerned at risk tht. teachers won’t co-operate.

Not a v. serious nutritional ques., however. Mainly political – how much row can we face? Subject to that, ready to accept x.1.
H.B. ’51: 37% now 33%. Scotl. } despite changes

’51: 50% now 54% Engl. } in charges.

R.A.B. If only 1/6. can you charge 6d for school milk? (£7m)
D.E. No: for teachers wdn’t collect the money.
But ready to w’draw free milk fr. independent schools.
J.B.C. Is this a family income test? What of variation in earnings?
H.B. There is a test now for free meals.
J.B.C. That is left to discretion of l.a.’s.
I.M. Don’t believe x.1 is possible because of tensions with teachers. Also doubt if we can say there is not nutritional risk. Finally, diffy. of operatg. means test with incomes fluctuating.

X.2. wd. be much easier to do and to defend.

H.B. There is a test now for free meals. This system cd. extend to x.1. (b).
I accept argument about teachers.

But remember that ½ in E. & W. and 2/3rds don’t take these meals.

F.E. Why not face clerical assistce for this - & take it off the teachers.
D.E. We collect money by slot machine. It’s the supervision tht. teachers object to.

Means test. This wd. be major change in method.

Hail. Diff. in practice to have 2 difft charges for same meal in a school.
M. Will be hard to justify 100% increase. 50% much easier.
R.A.B. Led to feel, from discussion, that x.2. wd. meet most of critical comments.

Will Ty. put up revised proposals, in light of discussion.

H.B. If we adopt x.2., cd. we require all to pay 6d.
D.E. There wd. be have to be some exemptions – e.g. families on assistance.
Family Allowances.
H.B. Do you want me to consider this alternative?
Hail. No. Better to go for the other.
H.B. What we wd. have to do is: cut all allowance for 2nd child: add 2/= to 3 & 4 ch. family: 7/= to 5 ch. family: & more still for 6 child family.

J.B.C. doesn’t want legn: & disputes view of Ch.Whip tht. such a reform wd. be welcome to Party.

V. wide Bill because repercussions on N.I.
R.A.B. Let Ty. also include bare details of what wd. have to be done on this. J.B.C. to refrain from submittg. memo. on this.

C.C. 73 (61) 13th December, 1961 (
1. Education. [Enter M.R.

  1. Investment Expenditure.

H.B. G.n.p. rising by 2%-3%. Ty. seekg. agreement with Dpts. on limits of expansion of services. My proposal for educn is 3%p.a. cpd. with 21/2% agreed for N.H.S.

£694m. in current year. at my rate £779m in 4 yrs’ time. D.E. suggests £830m. by then viz. 4-6% p.a. If we allow for educn an expansion so much greater than q.n.p. rate, we shall have to cut heavily into other services.

D.E.’s suggen is related to investment p’mme as in para. 9 of my memo.

Ty. original plan: stabilise at present level. In July S.Ll. agreed to £120.5 i.e. increase of £3.3m p.a. This involved p‘ponement of some projects l.a.’s were expectg. to start in 1962/3.

Must fix a figure. L.c.a’s need to know scale of p’mme.

D.E. Tory success: & in acc. with Tory philosophy. Welcomed by country.
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