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M.R. If Govt. are coming down on non-intervention, sooner they say so the

better.
P.M. As no powers, better say so soon.

Before Election, we must have a philosophy on it.

Make statement early next week (Tuesday): non-

intervention.

No harm if B/T. appeared to have bn. getting further

informn m’while.

Re-draft statement so as to suggest some foundations for

a new philosophy. I.M., M. and P.T. to help F.E. in

its preparation.


After further discussion – better prs. to have short statement

indicatg. tht. after going into it all we see no ground to intervene.

Reserve wider considns for debate.

F.E. appeared to dissent.

*Better to give Chambers & H. Williams another opportunity to make

any repns.


2. Parliament. [Enter R.A.B.
I.M. Mon. 29/1. Economic Policy debate. Will include wages

policy. J.H. & H.B.

Mon. 5.2. Debate on U.N. H.’s speech.
S.Ll. If Mon. debate is on industrial relations, Ty. Ministers might

disengage.

Shd. not I.M. speak?
P.M. Prefer that: widen the field, beyond the details of wage claim.
3. Economic Situation.
S.Ll. Reply of T.U.C. on N.E.D.C. Satisfactory.
4. Government Expenditure. [Enter E.P., J.B-C.

[Exit E.M.


H.B. Large rise in Estimates. How are we to present these? Whatever decns

on milk & meals (which need not be taken to-day) we are well

above S.Ll.’s pledge. Long-term decisions are even more

important.

Real need is to avoid commitment to forward expanding p’mmes.

Urgent ques. here: education: because M/E. is overdue in telling

l.e.a.’s what p’mme will be for 1963/4.
K. Any chance of fulfilling S.Ll.’s 2½% pledge.
H.B. No. £36 m. on meals & milk. No other policy decisions in view

which wd. close remaining gap. Confidence in £ must therefore

rest on apparent success in bringing forward expenditure under

control.
D.S. What was basis for pledge?


S.Ll. Assumed a lower transport deficit, and less expenditure on

agriculture. These 2 developments have knocked the props

from under it.
Hail. The big stuff seems out of our control. Those which are at

discretion are small & politically painful.


H.B. Changes in agric. policy w’in our pledges for this Parlt. are marginal.

That problem therefore remains with us.


C.S. £50 m. saving, however, on meat prices, slowing rise in c/living.
P.M. Open-ended commitments – agriculture and railways.

We must give B.T.C. full support for his economies – e.g. closing

branch lines whatever political diffies.
5. Education Investment.
H.B. Difference of philosophy. We agree success in wage policy will

favour long-term growth. D.E. argues therefore no interference

with anything which interferes with long-term growth. I believe

we can’t go on w’out assurance of getting thro’ next few years:

if we fail then, no growth thereafter.

D.E. wants 4.6% expansion when g.n.p. will give only 3%. In short

run educn doesn’t contribute to growth. Allocation of resources:

we shd. not draw too much away from private enterprise &

exports.

I wish to slow down rate of interest. D.E. wants to rise to £131 m.

I believe we can’t afford more than £121 m. If my view

accepted, he must at once warn l.e.a.’s tht. provisional p’mme

for 63/64 won’t be fully implemented; and p’mme for 64/65

must also be smaller.


D.E. Para. 4 of C. 4 includes p’ponement of some training coll. projects.

Minor works. I agreed to cut by 1/3rd.

Other parts – all known & announced. I can’t accept p’ponement of

teacher training p’mme, which is too late & too little. I have

arranged 1 year slip under cover: anything more wd. have to be

announced. Result: clear we shd. be doing v. little to reduce

size of classes. On techn. training: any cut wd. mean telling

l.e.a.’s they must p’pone. Therefore any cut must come on

schools p’mme. This is not ‘provisional’: it is progress under

1958 W. Paper wh. promised £300 m. building over 5 years –

and, with increased prices, wd. now be £320 m. starts £64, £65, £66, £70, £70 over 5 years. I assume we don’t announce we are w’drawg. from W. Paper. Short of that I cd. offer £60 in next 2 years, 1963/4 and 1964/5. Over 3 years average of work done would then be £131 m. To get down to £121 m. we shd. have to push £10-15 m. starts out of 1st year and £18-20 m. in 2nd. This wd. involve starting-date procedure and stopping some work wh. is ready to go.

Prize we seek now is change of attitude – restraint in incomes, by

about 50% of what they are now used to. Public won’t accept

unless it’s seen tht. growth is in forefront of our p’mme.

H.B.’s plan wd. have no effect on no. of teachers – no limit on that –

and that is what affects current expenditure. W’out that we

can’t get below 4.6% expansion on current expre.
S.Ll. x| Starts: £131 m. in 24 months (D.E.) shd. be spread over 28 months.

| Is that such a large request?


D.E. Even this small amount involves starting-date control because of size

of bldg. in pipe-line.


H.B. What is diffy of phasing out? Others have done it.

Was July ’60 p’mme provisional? I can’t accept that it wasn’t. My plan would slow down expansion so as to reduce current

expre to 4.25%.
D.E. Only if you p’pone techn. & teacher training parts of p’mme, which

I can’t accept.


H.B. I don’t insist on any particular allocation. Tho’ big expansion of

t. training p’mme is already well under weigh: we shd. only be

phasing out the last small part.
S.Ll. Adding expre on Universities, which we shd., the figures for

expansion of investment expre is v. large indeed.


Hail. Agree we shd. look at it all: for Univ. expansion is even more

important.


H.B. i) Putting too many people etc., in education will strengthen our posn

in 1970’s. But won’t help us thro’ 60’s. Analogy of M.A.P.

in 1940.

ii) Will other p’mmes be cut to make room for expanding educn

p’mme.
H. Is a spread of 4 months over 2 yrs. so difficult?
H.B. Can’t he say tht. since p’sional p’mme announced, econ. crisis:

therefore the starts will have to be phased out: & same in

following year.
R.A.B. As we can’t redeem 2½% pledge, we must show we are making

impact on longer term. We shall have to show we are doing

something to curb investment expre on education as well as

other p’mmes.


H.B. 63/64 p’mmes ought to come down by £50 m. Hard on all. But can’t

be achieved unless M/E. contributes £15 m. D.E. offers

only £5 m.
P.M. We can’t hope to redeem pledge on current expre.

Investment expenditure. Totality: not all production. Relation to

private sector. Shd we not control non-productive investment

in private sector? Can we justify starting dates for schools

w’out having establd that?

Cd R.A.B. try to work out practical plan with H.B. and D.E. – or

alternative proposals. On educational investment, taking account

of Universities.

Will S.Ll. also consider need for bldg. controls – if this industry is to

be leader in inflation.


Hail. Discouragement, short of physical controls.
E.H. How wd. that succeed in private sector, when we can’t fix priorities

even for public investment. Ty. talks of fair shares: we ought

to think in terms of priorities.
R.A.B. Can I proceed on assumptn that Edn must make a contribn twds.

long-term expenditure.


P.M. Yes: and consider form of a general announcement in which

education wd. form part.

[Exit S.Ll., E.P., J.B-C.

6. Angola.


P.M. Are we ready to vote for a resoln critical of Portugal.
H. My concln is tht. we can – indicatg. that some of its language is

exaggerated. We shall be with the majority.

If we don’t we shall be in minority with S.A. & Portugal.
Adjourned until 5.30 p.m., H/C.

C.C. 9(62). 25th January, 1962.
1. Angola. [Enter M.R., Perth.
H. Moderates among Afro-Asians regard this as victory for them.

No sanction: doesn’t ask for new action: no direct

disapproval of P. Sponsored already by 40 countries.

If we put fwd. resoln of our own, we shd. be with S.A. & P. only.

We have tried to separate ourselves from P.’s colonial policy.

Tho’ I detest the language, I conclude we shd. vote for it because of

our wider interests.
P.M. Para. 5 not so dangerous: 2 is distasteful: 9 we can wear because

we give P. arms only for N.A.T.O. purposes.

What of U.S.?
H. They will prob. vote for it. If they don’t, we need not.
D.S. Support H.’s concln. Many resolns we can’t wholly support. We must

vote for resolns of wh. broad substance is acceptable to us.

Cd we not get in earlier on drafting so as to influence wording.
P. In terms of our territories such a resoln wd. put us in gt. diffies.

cf. para. 4. – Kenyatta, Bandi etc. Para. 3 also.

If we support this, what do we do when we are put in same dock.

Hope we shall abstain.


D.S. Abstention won’t prevent them from tabling similar resoln about our

Colonies.


H. Ready to vote v. resoln containg. sanctions.

They will hunt us. But, if we go along over this, some of them will be

more likely to support us – when our turn comes.
D.S. Some Africans are beginning to distinguish betwn. our Colonies & the

Portuguese.


P.T. Can’t ignore P.’s view.

Is it right to support this resoln v. our oldest Ally, recently the

victim of aggression by one of its sponsors.

Cd we not table our own resoln. Better be alone & right than wrong in

a great company.
D.E. Angola is part of metropolitan Portugal. Why support para. 5 – which

doesn’t apply even in P. itself.


R.A.B. What of future of Alliance, in view of S. speech?
H. Think we shall have to review 1899 Agreement, even if we leave

Treaty. This resoln wdn’t affect that.

P. On earlier resolns we abstained.
H. Abstention did us so much damage tht. I said in Parlt. tht. in future we

wd. apply ourselves to the substance of resolns, not wording.


D.S. In U.N. & the world this resoln will be taken to mean only tht. we don’t

approve of P.’s Colonial policy.


S.Ll. Reservations wd. be made on particular points e.g. para. 4.
H. Yes.
F.E. Our friends have probably made this much easier for us. [Exit R.A.B.
I.M. Agree. Cpd. with many other resolns, this is mild. Wd not wish to be

alone with S.A. & P. in standing aside from it.


P.M. Take it broadly – is it more in accord with our image to vote with or

v. this.
H. x| Suggest P.D. recalls my speech in H/L. in reln to substance; make

| exception for 3, 4 and “speedy” in 7; and then vote for it.
P. Second condition would help me.

Agreed: as at x/.


2. United Nations: Bond Issue.
H. Favour statement as in para. 3 – amended.

Timing. We cd. wait until debate if you send message to Mr K.

asking him not to make request to us which might leak.

M’while, F.O. spokesman wd. say we supported this plan in

principle: don’t yet say what we will buy or not.
P.M. Make it conditional also on contns being f’coming from others.

Amendment suggested and approved.


E.H. Announce in reply to P.Q. – on day of debate.

C.C. 10(62). 1st February, 1962.
1. Parliament. [Enter M.R.
I.M. Business next week.

Monday: U.N. P.M. and E.H. to speak.


2. Nuclear Tests.
P.M. Agreed with Mr K. text of statement. Wd have bn. make this week.

But have bn. trying to get France associated with it. Must get

it out next week – want it to cover our Nevada test.

On veto: we have devised formula: neither govt. wd. stand in way

of the other.
3. Common Market.
E.H. Articles in Times & Guardian will be taken to reflect offl. view –

acceptance of delay. Incorrect. Moreover, we have succeeded in

getting acceleration, of offl. discussions. We don’t accept delay:

we don’t agree they shd. settle agricultl policy first & alone.

Will Ministers, if asked, deny these inferences & put emphasis the

other way. We will give guidance from F.O. – to Press and to

Govts. of Six.

Out of date: danger now removed: in work of last 2 days.


D.E. Can we have memo. showg. what policy of Six on agriculture is.
E.H. Offl. text won’t be available until end/Feb. But M/Ag. is working on

provisional Fr. text. He cd. circulate early memo.


4. Incomes Policy. [Enter R.M.
S.Ll. Postscript to speeches in Monday’s debate. Promised by leader H/C.

Want to get it out to-morrow – before next phase opens.

Contains nothing which hasn’t bn. said already.
D.E. V. important paper. We are trying to fix in public mind what pause

policy is: will condn minds of negotiators on claims etc.

Positive side shd. be further developed. Growth is mentioned, but not

defined. (French are planning effectively for 5% growth next

(this ?) year.) Cd we not indicate what rewards wd. flow from

success of this policy in U.K. Shd not be left to N.E.D.C. – no

substitute for Govt. Let us define our aims.
S.Ll. That wd. need more thought. Want to get this out, to close negative

phase. Come to positive phase a little later, strengthened by

consultn.
H.W. Look fwd. to it – in para. 16.

R.A.B. Claim credit for getting N.E.D.C. off the ground.

Success in pay pause: figures on p. 5 of figures circulated by Ch.H.

Wd give more colour to it.


M. Para. 4. omit ‘restraining’ say ‘level’ vice growth. V. depressing.

Keep w’in productivity; not restraint as such.


Hail. Backward looking: too many references to old speeches.
P.T. Rather good memo. Confusion in H/C. re policy: this wd. help to

clear their minds.


S.Ll. Meant to be depressing. To sustain employers. To show we are

encouraging restraint. Unwise to raise excessive hopes based

on growth, before we have got it.
H.B. Cd add to para. 5 tht., if people tried, we cd. get production p. head

higher.


Agreed.
F.E. Effective work, not hard. Para 7. sacrifice of r. practices is wrong

tone: renunciation is what it is: acceptance of modern condns.


S.Ll. Wd J.H. now agree to omission of para. 10?
J.H. Yes: in view of what Woodcock has said.
P.M. On tone: remember we have bn. in office for 10 years: can’t afford

to say everything is all wrong and we are in crisis. Take credit

for what has bn. achieved esp. in raising standards of workers.

We have gone ahead a bit too fast: all we need do now is to halt

to consolidate before we go further ahead.

Remember politics, as well as economics.


J.H. These thoughts are for launching of N.E.D.C. – not rounding off

last Monday’s debate.


Hail. But don’t look so dreary & drab.
Ch.H. Narrower approach: public need to know what we mean by the

intermediate phase.


S.Ll. I agree: improve 1 & 16. Accept R.A.B. also M. on para. 4. Also

H.B. on 5. F.E., too. Omit 10.


Ch.H. Get P.M.’s theme put across by Ministers generally over next

3 months. Organised by Central Office. Campaign is ready

to go.

Put P.M.’s theme, initially, when N.E.D.C. is announced



(membership).

Hail. Why “Intermediate”.


H.B. The Next Phase. The Next Step (agreed).
M. Fear this will turn all T.U. leaders v. us: so gloomy.
D.E. Plight to give dose of gloom: can’t get more than 2½% growth

unless incomes policy is right: but if it is got right we can do

much better in 1963 onwards.
D.E. Para. 12. Penultimate sentence. Don’t want arbitn added to Burnham.

Cd this be confined to ‘existing’ arrangements.


5. Railways: The One-Day Strike.
R.A.B. x/ Shd we advise employers to allow some workers not to come to work

on Mon? Or do we want another chaos next Mon?


M. x/ wd. be a mistake. Must battle v. the diffies. Wrong phychology.
E.M. I take opposite view.
Ch.H. V. bad public relns to do x/. Sharing cars is better line.
R.A.B. Confine it to police warning not to come to Ldn. by car unless you

have to.


[Exit E.M.

6. Northern Rhodesia.


P.M. As in his brief.

Explained changes made in earlier discussions with R.W.

R.M., after visiting N. Rhodesia, put forward new proposals. After

much discussion with group of Ministers concerned have agreed

to put some changes to R.W. Shd keep race, vice roll voting: and

Asian seat. But criticisism has concentrated on fact tht. African

has to get 12½% whereas European has to get only 4% of votes

of other race. Difficult to justify it. We propose therefore to

suggest to R.W. that hurdle shd. be 4% for both or if he prefers at

12½% for both. If he has come to doubt wtr. his candidates will

get any African votes, he may prefer so high a figure that

virtually no-one will get elected to national seats.

Best thing for territory wd. be African majority of 1 – given that there

are 6 off. members. If R.W. had accepted parity when I

suggested it months ago, it wd. have worked in practice.

If R.W. prefers 12½%, he wd. be ready to abolish Asian seat. We

mght. substitute for this a seat for Barotseland people.

If we stand on June proposals, both Ministers fear v. serious trouble.

If we change them, risk tht. R.W. will level charge of breach/

faith. But believe we cd. justify change now envisaged.


R.M. R.W. likely to prefer 12½% & loss of Asian seat. On 4% real change

of a no. of Africans being elected. On 12½% Africans will gain

little. But just enough to avoid v. serious violence: or at least to

give us moral position in which we cd. take action to suppress it.


D.S. V. diff. issue with R.W. The June arrangement was based on our fear

of what R.W. could do – taking over N. Rhodesia: effect on

referendum in S.R. We did therefore make a package deal with

him. We are bound to be charged with bad faith if we go

back on it now. Tho’ in Oct/Nov. we made it plain to him tht.

some concession wd. have to be made to Africans, if we were to

keep order there. Two main African demands are abolition of

numerical alternative and Asian seat. We must concede one:

But R.W. will say we have broken faith.

How far shd. we go twds. merging this into wider issue of Fedn future?

This is what R.W. is worrying about. If 2 of 3 territories have

anti-Fedn Govts., Fedn will collapse. My view is tht. Fedn can’t

continue unchanged. Is R.W. coming round to view tht. its

existence depends on its being acceptable to African

majority? Unless he makes some dramatic move with this in

view, Fedn will disintegrate. Banda will begin to separate off –

by obstructg. Fedn activities & officials. I am therefore

proposing to go out soon to discuss all this with R.W. I want

to move in direction of putting on R.W. the responsibility for

finding basis of agreement with African leaders on future running

of Fedn. If I cd. convince him of that, he shd. see there is no

point in alienating African opinion over N.R. constitution. Can’t

express view on that yet. But if R.W. does explode over this

N.R. ques., it means he won’t save Federation.

My plan therefore is to put proposal to R.W. (on N.R.) – either before

or when I go to see him on wider issues. Don’t believe he will

accept N.R. proposal save in wider context.
P.M. Let Alport open it, with knowledge you are coming out next week.
K. Can we be accused of breach of faith? I conclude we can’t. True tht.

June proposals resulted fr. hard bargaining with R.W. They

were publd – I.M. supporting them. Re-actions locally were

unexpectedly violent. Sept. Col. Secy. said we wd. not listen

to any repns until law & order restored – but we committed

ourselves to consider these repns w’in limits of statements of

Feb. & June on 2 points now at issue. R.M. went out: support

Govr.’s view tht. if we make no change violence worse than

Sept. This justifies us in makg. minimum alterations necessary

to avert bloodshed in territory for wh. we are still responsible.

I’m prepared to defend such a decision v. Salisbury’s attack.
R.A.B. We really crossed this bridge when we promised in Sept. to consider

any repns made w’in a limited field w’in which changes now

proposed in fact fall.

On the merits this is also a better plan.


H. June amounted to an agreement. But posn now is governed by Sept.

We shd. not be at liberty to make proposals drastically different

from June, but I don’t believe this is.

R.W. can’t choose 4%. If he chooses 12½%, he can’t make

multi-racial policy work. Believe therefore he will explode

& come over.

Weakness of our posn in dealing with him. We are always asking him

for concessions on franchise in 2 northern territies but never tell

him our intentions for Fedn’s future. Can D.S. work out with

R.W. some practical plan for enabling Fedn to survive. That is a

real Br. interest. I wd. therefore merge the 2 issues – in talks by

D.S. in Salisbury.


R.M. No hope for present Fedn – whatever R.W. does. Even moderate

opinion in 2 northern territories is now critical of Fedn.


D.S. I wd. sooner broach this in course of my talks on wider issues.
R.M. Less confusing to put them thro’ Alport in advance.

Less danger of misunderstanding. [Exit E.H.


P.M. R.W. must have a clear aide-memoire of Govt. proposals on N.R.

wtr. it is handed to him by Alport or by D.S.

Ques. is wtr. it is handed to him in advance or during D.S. talks.

In any event he must have it in writing before D.S. leaves.



C.C. 11(62). 6th February, 1962.
1. The Queen. [Enter M.R.
Message on 10th Anniversary of Accession.
2. Foreign Affairs.
a) Laos.
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