C O N F I D E N T I A L

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CONCLUSIONS of a Meeting of the Cabinet held at 10 Downing Street on

THURSDAY 13 SEPTEMBER 1984 at 10.00 am

P R E S E N T

The Rt Hon Margaret Thatcher MP Prime Minister

T h e Rt »

L ° r d V i s C 0 u n t The Rt Hon Lord HailshamP r ! v \ Whitelaw

I d e * te

of the Council Lord Chancellor th

The Rt Hon Leon Brittan QC MPS t a r ^ J ̂ G e ° « « y Hove QC

S U t c""•onueai!; f ° r Foreign an Secretary of State for the Home Department 0 0 » « U h A f f a i r .(Items 2-5)

The N i g e l L a w s o n ^ Rt Hon S ir Keith Joseph MP o f the Exchequer tary of State for Education and Science

The ' ^ t a ^ ^ e r Walker MP on Michael Heseltine MP

ary of State foi Energy of State for Defence

Rt Hon NicholasSeCr ta " r ? ° l a s Edwards MP The P^^affoatrick Jenkin MP r vy o tary of StatState fe for Wales Secretary^OTVState for the Environment

^ c Rt^t H 0 n John Biffen MPl o t ( i Privy Se " The Rt Horî jt5*mAn Fowler MP

al Secretary ofSsra-pe for Social Services

Rt

c The Rt Hon Tombing MP

n a f S t a tV / * for Trade and Secretary of State for Employment r e Rt C h e l

The Rt Hon Peter ReeS ^ ? * * l i n g MP Chief Secretary, TreasRood A &r 3 -culture, Fisheries

^e R ,tS 6 C t e t ° l a s The Rt Hon Douglas Hurd MP^ o f ^ h ^dley MP

: eland° £ State for- T ' Secretary of State for Nort

* * t He

y

e for Transport ĥa *VL ôn p

C e l o fU o o J r Gowrie The Rt Hon David Youngr0 the Duchy of Lancaster Minister without Portfolio

C O N F I D E N T I A L

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THE FOLLOWING WERE ALSO PRESENT

John Wakeham MP »ry Secretary, Treasury

SECRETARIAT

S i r Robert A ^ s t r Mr P L Gregson£ D F Williamson

B G CartledgeMr M S Buckley

C O N T E N T S

Subject

M r

1.

MEMBERSHIP OF CAB

2 . FOREIGN AFFAIRS

Soviet Union

Hong Kong

Mines i n the Red Sea

Iran/Ira q 3.

COMMUNITY AFFAIRS

Nominations to the European Co

Enlargement of the Community

Mr John Gummer MP Paymaster General

° f I t e m s 4 a n d 5) J J - * ™ " , N3

Items

Items

(Items 3 5)

(Items 2-5)

Page

1

1

1

2

2

2

2

Community Budget and United K i n g d o m ^ * 3

Fis h 3

Milk Quotas 4

INDUSTRIAL AFFAIRS

Coal Industry Dispute 4

Dock Strik e 5

Industria l Action i n the Railways 6

ECONOMIC AFFAIRS 6

I I

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* 5

s0 i e t Onion

2 h^ 8 i 0 t

H i , - ^ s i o

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1 • THE PRIME MINISTER welcomed the Secretary of State for Northern Ireland (Mr Hurd) , the Chancellor of the Duchy of Lancaster (the Earl of Gowrie) and the Minister without Portfolio (Mr Young) as new members of the Cabinet.

e PRIME MINISTER said that Lord Cockfield had left the Government

pn accepting her invitation to be nominated as the senior

ish member of the Commission of the European Community_from

ry 1985. The Cabinet would wish to put on record their warm

ion of a l l the work which Lord Cockfield had done, and the^ gre^&ntr ibut ion he had made to the development of the Government s po l lc>£?and the furtherance of i t s achievements, as Secretary of State%^)rrade and as Chancellor of the Duchy of Lancaster. _ The C a b i n e t ̂ V w also recognise the sp ir i t of public service which had prompted his acceptance of nomination to be a member of the Commission of the European Community. I t was a measure of the importance which attached to this office that a Cabinet Minister of Lord Cockfield's standing and experience should be nominated; there was no doubt th^tTtk would make a very able and formidable Commissioner.

The Cabinet

1 • Unanimous warmly endorsed the Prime Minister's expressions of w to the new members of the Cabinet and of appreciation o Cockfield's services.

2. Instructed the ary of the Cabinet to convey their sentiments to Lord Co

2 - THE FOREIGN AND COMMONWEALTHS TARY reported on recent developments in the Soviet Union, . t icular the removal of the Chief of the General Staff, Marshal . v, from his post and the Prolonged absence from public view o resident, Mr Chernenko. There was no firm evidence as to the icance of these developments a ^d i t was not possible at this stage t K a s s e s s their implications. The willingness of the Soviet Foreign Minister, Mr Gromyko, to meet President Reagan during his forthcoming v i s i t to the United States to attend the United Nations General Ass^rnWy probably indicated a desire on the part of the Soviet UMon))to re-establisl i ts status as a super power. This development^ ^monstrated that Mr Gromyko remained in control of Soviet fo i policy which was however, at present pursuing a rather uncerta rse.

THE FOREIGN AND COMMONWEALTH SECRETARY said that negoti

the Government of the People's Republic of China on the

°ng Kong were moving forward reasonably well . Progress h

made on most of the problems which remained to be resolved

the in i t i a l l ing of an agreement, which was l ike ly to take pla^ ppy

yo weeks' time, although the Chinese side continued to create lfgly\

^nute th°"-nute d i f f i cu l t i e sd i f f i cu l t i e s .. ThThee membermemberss ooff the Hong Kong Executive Counpp^.

woulwouldd bbee comincomingg ttoo LondoLondonn oonn Septemb1199 September and the draft agreement wo*r>a

e considered by the Cabinet, prior to i n i t i a l l i n g , on 20 September^^^^

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THE FOREIGN AND COMMONWEALTH SECRETARY said that Royal Navy ships, together with mine-sweepers from the French, United States and I ta l ian navies, were continuing to help in the search for mines in the Red Sea, following the damage caused to a number of ships by explosions there before mid-August. No mines had so far been 'iscovered. I t was possible that the explosions had been caused

devices placed on the seabed and equipped with self-destruct

anisms. Responsibility for the explosions probably lay with

or possibly with Iran . The operation would be completed in a

ks' time and the Royal Navy ships would return to the United

THE FORE^W^ND COMMONWEALTH SECRETARY said that there had been no significant change in the state of the war between Iran and Iraq. No Iranian^offensive had materialised and there had been no further attempts at mediation. Attacks on shipping in the Gulf by both sides were continuing. There was increasing evidence of lack of unity in the I r M a W leadership although the situation was not clear cut. The threat^£D^d>e security of the Gulf had not been removed but could be said to have Receded.

The Cabinet -

Took note.

3 - THE PRIME MINISTER info Cabinet that Lord Cockfield had been nominated as the Uni dom's senior European Commissioner from January 1985 ssion to Mr Tugendhat. As the United Kingdom Government ha en wil l ing to renominate Mr Richard, Mr Clinton Davis had bee minated as the second United Kingdom Commissioner, on the of the Leader of the Opposition.

THE FOREIGN AND COMMONWEALTH SECRETARY said that the Council of Ministers (Foreign Affairs) on 3 September, wh i^^ad been specially convened to deal with outstanding problems on li tiations W l t h Spain and Portugal for accession to the Cor had solved nothing. Following further discussions in the meeting ofFo- r eign Ministers on 11 September, the package of i ^ rould be

hefore the Council again on 17-18 September. Unresol; ters

°f speciaspecia ll interesinterestt ttoo ththee UniteUnitedd KingdomKingdom,, includinincludingg t

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THE FOREIGN AND COMMONWEALTH SECRETARY said that the package of issues associated with the draft supplementary Community budget for 1984 and the preliminary draft Community budget for 1985 had been fully discussed in the Council of Ministers (Budget) on 6-7 September *nd subsequently by finance o f f i c i a l s . A further reduction in the

^ e of the proposed supplementary budget for 1984 had been achieved, other issues, including the United Kingdom's 1983 and 1984 •tes, the text of the revised Own Resources Decision and the

>n of budget discipline had not been f inal ly resolved. The Lor of the Exchequer would be dealing with some of the points

>formal meeting of Finance Ministers on 15-16 September, and .situation would be on the agenda of the Council of .Foreign Affairs) on 17-18 September. I t was not possible

low much headway would be made but he remained convinced cage could be achieved.

THE CHANCELLOR OF THE EXCHEQUER said that the Economic Secretary, Treasury, had dojje^yery well to cut back the proposed supplementarybudget for 1984 lbstantial ly . I t now seemed probable that a satisfactory re lid be found on the implementation of the United Kingdom1s debate. The Council of Ministers had also accepted that pres lould be put on the European Parliament to remove the block on nent of the United Kingdom's 1983 refund, We now had to see wha be obtained on budget disc ipl ine . The United Kingdom sought a Ly binding arrangement. In this negotiation, however, th i not be obtainable. Other member states were prepared to rough the po l i t i ca l commitment oncanbudget discipl ine but he di link that they would be prepared to agree to a legally bindin gement. I f so, i t would be desirable that the best negoti suit should be given additional weight through endorsement by th ean Council in December. At the Foreign Affairs Council on 1 tember the United Kingdom might be as near as i t would ever the best outcome of the negotiation. In discussion i t was out that, i f i t were proposed to seek the endorsement of ngement on budget discipline by the European Council, ca ould need to be taken not to imply that this meant a lesser status or other agreements reached by the Council of Ministers

THE MINISTER OF AGRICULTURE, FISHERIES AND FOOD̂ TJeJpi ed that at the Council of Ministers (Fisheries) on 10 September ^a ctory results bad been achieved on the herring quota and on sprat ere had, however, been a very di f f icul t negotiation on the Co ^ Proposal to change the by-catch rules applying to the 4*^9$ the

eNorth Sea known as the Norway pout box. The Commission g 9 g £ ^ p o s to increase the h frotromm I U p cent to 2B^pVr)pentpermittepermittedd by-catcby-catcn 10 per°n a permanent basis . The United Kingdom had been alone ing this proposal and had made i t known that we would invoke th bou compromise i f the proposal were put to the vote. In consequ

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further negotiation had taken place with a more satisfactor y result ; in part icular , the increase in the permitted by-catch was now on a temporary basis unt i l the end of May 1985. The permitted by-catch was now 18 per cent but for the more sensitive species, such as cod,

was only 8 per cent. In his view thi s was a good resul t of the otiation . Scottish fishermen, however, had c r i t i c i s e d the results,

TH^I>V;TER OF AGRICULTURE, FISHERIES AND FOOD said that the Comn^gii^i's report to the Council of Ministers on the implementation o f t h & ^ J X quota system would be available next week. I t would then be possi|sW to see whether other member states were applying the a r rangem^njb^fairly. The I ta l ia n Government had made statements which app^red to conflict with the rules and f a i r application of the system, within the United Kingdom about 50 per cent of dairy farmers n a d applied for treatment as special cases and sift in g of the applications and isions would now go forward. The outgoers scheme would be subscribed. This should make i t possible for the majority of sma! have quotas set at At present United quota leve l and i t a immediate future, I t that dairy farmers in o derogation from the payme confirmed that the amount quite adequate to meet the

The Cabinet -

Took note.

farmers who remained in milk production to broadly equivalent to thei r 1983 output, milk production was running below the total

that no levy would be payable in the refore, i n the United Kingdom's interest mber states should not be given any

ch they might have to make. He k available in the United Kingdom was

of the l iqui d milk market.

• THE SECRETARY OF STATE FOR ENERGY r^drte d to the Cabinet on the latest position in the coal industry dispute. The Cabinet's discussion i s recorded separately.

on.

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THE SECRETARY OF STATE FOR TRANSPORT said that the attempt of the Transport and General Workers Union (TGWU) to c a l l a second national dock strik e on 24 August, only a few weeks after the end of the previous strik e in July , had met with only limited success. The

)Pr°P°rtion of registered dock workers on strike had fa l le n from ° n c l U s Per cent at the beginning of the stoppage to 57 per cent, and a l l rons a small number of non-registered dock workers had remained at

About half the ports covered by the National Dock Labour were at work and v ir tua l l y a l l the non-Scheme ports. Trade

to be flowing at at least two-thirds of normal leve ls , jnuity was being deployed in diverting trade through working

jven in some of the strikin g ports a few ships were being Tilbury the low leve l of support for the s tr ik e had

^-rrated by a ballo t conducted by the Electora l Reform Society M r the Port of London Authority. Although 300 workers had een on holiday, and there had been a campaign by the TGWU to boycott

ey ballot , 53 per cent of the total workforce, and a l l but a handful ° those voting, Jwd voted for a return to work. There was, however, a traditiona l refucrance to cross even light picket l ine s in the ocks, and only\^o*£CsA00 dockers were working at Tilbury and on the nameside wharves/( Ap)Bristol , where an unofficial meeting had voted

for a return to wo le 300 dockers were working. E a r l i e r in the week dockers at Gool- roted to return to work. Effort s by the General Secretary des of the TGWU, Mr Todd, i t s National Docks Officer, Mr Connolly, — General Secretary of the National Union of Railwaymen, Mr Knapp, to \de the dockers at Grimsby and Immingham to strik e had been vigoro M i f f e d . I t was notable that dockers at Immingham, whose refusal l i t the loading of iron ore in lorrie s for delivery to the jrpe steel plant had precipitated the July dock str ike , were no lg the ore themselves. The TGWU

yi^&SpTpute by agreeing quota

v

wished to find a way of ending through Hunterston arrangements for the supply of c o a ̂ 2 > " ° ° ° e n s c r a i g plant . The

to Steel Corp< the B r i t i s h Corporation's gjgSĴ SSSiS I n current osBSC were, however, resolutely °^ T^^^.Z the str ik e I f

levels of production and supply f . ^ t g S r o b a b l e that there would w e e Wcontinued into the following \ ^ s t ^ G W u from at leas t one port

be c i v i l action i n the courts » J " ^ 7 ^ f inancia l losses as e 8authority and other companies t i n u e to make w o u l d c o n

w oa resul t of the dispute. The port employer ^ . e g r o u n dt h s every effort to persuade dockers to return t o w y * t h a n Q n that the strik e had been cal le d to support ^ g g g ^ f o r t h e a genuine docks issue . Meanwhile i t ™ " b « Government to maintain a low profi l e i n the media\ e next few days.

The Cabinet

! • Took note.

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THE SECRETARY OF STATE FOR TRANSPORT said that the national work to rule on B r i t i s h Rai l (BR) threatened for 10 September and the oneday strik e on BR i n the London area and on London Regional Transport's jCLRT's) buses and underground service s threatened for 12 September

both been calle d off. Thi s had been the resul t of sk i l fu l otiatio n by the Boards of BR and LRT i n which no concessions of

tance had been made. He would discreetl y convey the Government's ciatio n to the Chairmen of the two Boards.

% A 1 R S 5 - THE CITANCELLOR OF THE EXCHEQUER reported to the Cabinet that the economic positio n remained sound. The Cabinet's discussio n i s recorded separate]

Cabinet Office

1 3 September 1984

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LIMITED CIRCULATION ANNEX

CC(84) 30th Conclusions, Minute 4

/ Thursday 13 September 1984 at 10.00 am

THE SECRETARY OF STATE FOR ENERGY said that 45 pit s were working normallyTnine were turning some coal , 15 had some men present, and 83 were on strik e or picketed out. Twenty-two pit s were on holiday. Good le^ls of production were being attained. Coal movements were (JlsoMgood. I n the previous week stocks at power stations had ac lSat f^ncrease d marginally and in the current week i t was hoped thaTuacIl coal movements might exceed 800,000 tonnes. I t would, h o w e v e r ^ # # w i s e to draw thi s fact to public attention in case i t induced tWy& s p o r t trade unions " increase their efforts h

s. to hamper coal moveme&gV^alks between the National Coal Board (NCB) and the National Union^fH&worker s (NUM) were s t i l l in trai n but had made l i t t l e progress.

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o n l y a handful, were at work. In most areas this created no d i f f i cu l ty . However, in Yorkshire, where there was heavy picketing at certain pits a t which only a very few men were working, members of NACODS had to pass through several thousand pickets of local members of the NUM and faced the prospect of intimidation both then and later . The NCB would need to deal with this situation f lexibly .

HOME SECRETARY said that the situation regarding law and order had changed greatly since the Cabinet's previous discussion. There

t i l l heavy picketing in some areas, particularly Yorkshire; but imum number of pickets at any one place was about 3.000 and was

ade up of local men. In most places, the numbers were much er^>This supported the view that the number of active pickets $*£t*d>: as they withdrew to ooncentrate on pits in Yorkshire,

o be available for picketing in other f ie lds . Although 1 ntimidavkjj»''continued, there were signs that the police action to counter ix\was beginning to bring resul ts . The number of arrests for serious offences against persons and property had increased substantially l n the week between 4 and 11 September. There was, however, delay in bringing the mos yrious cases to t r i a l . So far , there had been a total of rather MOT Ithan 6,000 arrests ; about 5,000 of the resulting court cases rema be tr ied . The Lord Chancellor had recently appointed an addit 10 stipendiary magistrates; but only two of them were s i t t ing , l i f f i cu l t i e s appeared to be either inabi l i t y or unwillingness of Levant local magistrates' committees to make courtrooms and other [es available or to l i s t cases for t r i a l by stipendiaries. I t s ils'o be borne in mind that the most serious cases entailed committal lings: i f defence counsel asked for use of the so-called 'section 0jtedure' delay was unavoidable.

THE SECRETARY OF STATE FOR T INDUSTRY said that in general industry was experiencing few as a result of the coal-miners' s tr ike , though there might be , Cefn§\resulting from a shortage of eoal for space-heating i f the weathe£>b£ came more severe. In the steel industry, the main problem was aal; however, there was Poss ibi l i t y that thi s could be overco a fy appropriate blending techniques.

Tn discussion the following main points were made_

a. The possibi l i t y of a strik e by NAC worrying. I f members of the union were not present no c could work. Although the union was tradit ional l y modera President was very sympathetic to Mr Scarg i l l ' s aims attempt to influence the membership to support him. I t wa possible that the members would believe that strike action by •î vsVlves would bring the current dispute to an end very quickiv^ i d would therefore cost them l i t t l e . Clearly , i f management^fedj ed members of NACODS to report for duty and they refused because of the presence of pickets, disciplinary actio have to be taken. But the NCB should not impose such a requ inflexibly and without good reason. I t was relevant tha a few men were in attendance at a pit they would normally employed on surface work; i t was not clear why the presence members of NACODS was essentia l in such circumstances, since cover was presumably not required.

2

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b. The continued delay in bringing cases of serious alleged offences to t r i a l was a matter for concern. Violence appeared to go undeterred; both the Government and the legal system risked being brought into disrepute. Consideration should be given to ways of bringing pressure on loca l magistrates' committees to make more effective use of the services of stipendiary magistrates, who could readily be made available : the Government might, for example, make i t known that the cause of delay was at local level and challenge the magistrates' committees to

more co-operative.

^ e / \ _ The effect of maintaining law and order on pickets' l ines

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LIMITED CIRCULATION ANNEX

CC(84) 30th Conclusions, Minute 5

^^ur^sda y 13 September 1984 at 10.00 am

THE CHANCELLOR OF THE EXCHEQUER said that the economic position remained sound. Prospects for output were good, although the effects °f the coal-miner&JL^strike would somewhat reduce the rate of growth; prospects for i i j.on were also good, despite the temporary increase result ] the r i s e in mortgage interes t rates . The main areas of conc^ ;re unemployment, which continued to r is e despite a steady i i in the numbers of people in work; and, in particular , public e>. Cure. A substantial overrun in public expenditure in 1984-85< l ike ly . The main causes were expenditure associated je coal-miners' s t r ike ; loca l authority expenditure, both current,^ ip i ta l ; and socia l security . Prospects for 1985-86 were" I disturbing and might put the Government's taxation strat risk. The effects of excessive public expenditure on the puttl :tor borrowing requirement seems l ikel y to be offset, at leas t _i-85 , by an increase in North ea o i l revenues due to the "strengrpy^f the United States dollar ,

l c h tended to rais e o i l prices as^e^ressed i n s ter l ing . But this could not be rel ie d on to continue^eii^er the dolla r or o i l prices m i 8h t weaken. CC^

*n discussion i t was noted that the r e l ^ d h s h i p between wage ^creases and increases . i n productivity %s worse than that in those countries which were the United Kingdom's major competitors. In the f i rs t quarter of 1984 unit wage and salary costs i n manufacturing

t h i sindustry were 4.5 per cent higher than a year *ffB$** compared with 3 per cent higher i n France, no change in ( ^ t ^ r m a n y , 3 per cent lower i n the United States and 5 per cent rafyer-^n Japan.

The Cabinet -

Took note.

Cab inet Office

14 September 1984

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