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(c) crown copyright Catalogue Reference:CAB/128/41 Image Reference:0042 THIS DOCUMENT IS THE PROPERTY OF HER BRITANNIC MAJESTY'S GOVERNMENT Printed for the Cabinet. September 1966 CC (66) Copy No. 3 7 42nd Conclusions CABINET CONCLUSIONS of a Meeting of the Cabinet held at 10 Downing Street, S.W.1, on Thursday, 4th August, 1966, i at 10 a.m. \ Present: The Right Hon. HAROLD WILSON, MP, Prime Minister The Right Hon. HERBERT BOWDEN, The Right Hon. LORD GARDINER, M P, Lord President of the Council Lord Chancellor The Right Hon. JAMES CALLAGHAN, The Right Hon. MICHAEL STEWART, MP, Chancellor of the Exchequer M p, Secretary of State for Foreign Affairs The Right Hon. DENIS HEALEY, M P, The Right Hon. ARTHUR BOTTOMLEY, Secretary of State for Defence M p, Secretary of State for Common­ wealth Affairs The Right Hon. ROY JENKINS, MP, The Right Hon. WILLIAM ROSS, M P, Secretary of State for the Home Secretary of State for Scotland Department The Right Hon. DOUGLAS HOUGHTON, The Right Hon. DOUGLAS JAY, MP , M p, Minister without Portfolio President of the Board of Trade The Right Hon. ANTHONY GREENWOOD, The Right Hon. ANTHONY CROSLAND, MP, Minister of Overseas Develop- M p, Secretary of State for Education ment and Science The Right Hon. RICHARD CROSSMAN, The Right Hon. THE EARL OF M P, Minister of Housing and Local LONGFORD, Lord Privy Seal Government The Right Hon. R. J. GUNTER, MP, The Right Hon. FRED PEART, M P, Minister of Labour Minister of Agriculture, Fisheries and Food (Items 1 and 2) The Right Hon. BARBARA CASTLE, MP, The Right Hon. RICHARD MARSH, MP, Minister of Transport Minister of Power The Right Hon. ANTHONY WEDGWOOD BENN, M P, Minister of Technology The following were also present: The Right Hon. EDWARD SHORT, M P Mr. AUSTEN ALBU, M P, Minister of Postmaster-General (Item 6) State, Department of Economic Affairs (Items 3-6) The Right Hon. JOHN SILKIN, MP, Parliamentary Secretary, Treasury Secretariat : Sir BURKE TREND Mr. P. ROGERS Miss J. J. NUNN Mr. L. ERRINGTON Mr. R . T . ARMSTRONG CONTENTS Subject PARLIAMENTARY BUSINESS OVERSEA AFFAIRS Indonesia China Rhodesia ECONOMIC SITUATION SHIPBUILDING INDUSTRY Geddes Report on Reorganisation PENAL REFORM ... Criminal Justice Bill BROADCASTING AND TELEVISION Broadcasting Policy: Draft White Pap SECRET Parliament 1. The Cabinet were informed of the business to be taken in the House of Commons in the following week. The Lord President said that if further difficulties arose in completing the remaining stages of the Prices and Incomes Bill it might be necessary to defer the Second Reading of the Industrial Reorganisation Corporation Bill until after the Summer Recess. SECRET Oversea 2. The Foreign Secretary said that there had been a number of Affairs recent developments in Indonesia, some of which were contrary to Indonesia our interests, but on balance the general trend of events appeared to (Previous be favourable to us. There had been a further incident in Sarawak Reference: CC (66) 40th in which a Gurkha soldier had been wounded and it appeared that Conclusions, Indonesian soldiers had been involved. We had agreed with the Minute 1) Malaysian Government how publicity for this incident should be handled and it was hoped that it would not result in any delay in the ratification of the Bangkok Agreement on the ending of confrontation. We were also discussing with the Malaysian Government how thereafter they should take over full military responsibility in the Borneo territories on the withdrawal of United Kingdom forces. President Sukarno had made a violent speech reaffirming confrontation on the swearing in of the new Cabinet on 28th July, but in the upshot this had redounded to our advantage in that it had led to sharp reactions in the Indonesian Press. It was also noteworthy that General Suharto, rather than President Sukarno, had taken the chair when the Cabinet subsequently met. The Foreign Minister, Mr. Malik, was still confident that the Bangkok Agreement would be ratified. China Four of the leading members of the Government of the People's (Previous Republic of China had recently been removed from office, while Reference: President Mao Tse-tung, who had been ill for some time, appeared CC (66) 24th Conclusions, now to have fully recovered his health, and retained his dominant Minute 2) position. These changes were part of a cultural revolution which had started the previous September. It did not appear that this would involve any change in China's external policy and the stress which was laid on the part to be played by the army in industry and agriculture suggested that there was no intention of their undertaking a military commitment in Vietnam. Rhodesia The Prime Minister said that the Ministers primarily concerned (Previous with Rhodesia had met the previous day to consider the handling of Reference: the next stage of events, with particular reference to the Meeting of CC (66) 34th Conclusions, Commonwealth Prime Ministers in September. Developments of Minute 2) any importance would, when worked out in detail, be brought before the Cabinet. Meanwhile, he proposed to make a statement in the House of Commons the following Monday on the resumption of talks between United Kingdom and Rhodesian officials in Salisbury. His statement would make it clear that the next round of talks would be devoted primarily to discussion of the fifth of the six principles which the Government had laid down for a settlement of the dispute (the fifth principle related to the acceptability of any new Constitution to the people of Rhodesia as a whole) and to the return to constitutional rule as a precursor to any formal negotiations. He would also state that no irrevocable step would be taken by the Government in respect of the Rhodesian situation except in circumstances when this could be considered by Parliament: if necessary Parliament would be recalled during the Recess to enable this to be done. The Zambian Government would be informed of this statement and the timing of the talks would be related to the resumption of negotiations with the Zambian Government on further United Kingdom aid. The Cabinet— Took note of these statements. SECRET Economic 3. The Cabinet resumed their discussion of the economic Situation situation. (Previous Reference: The Cabinets discussion and the conclusions reached are CC (66) 41st recorded separately in the bound volume of Most Confidential Records Conclusions, held by the Secretary of the Cabinet. Minute 2) CONFIDENTIAL Shipbuilding 4. The Cabinet considered a memorandum by the President of Industry th e Board o f Xrade (c (66) 126) on the reorganisation of the Geddes shipbuilding industry. Report on Reorganisation The President of the Board of Trade said that the Report of the Shipbuilding Inquiry Committee under the chairmanship of Mr. R. Geddes, which was published in March, had recommended a radical reorganisation of the shipbuilding industry and the abandonment of restrictive practices, with the creation of an independent Shipbuilding Industry Board with powers to make loans and grants out of public funds up to a total of £374- million over five years in order to facilitate the concentration of the existing 27 major yards into four or five large groups. An essential part of the Geddes Committee's proposals had been a timetable for their implementation, giving the two sides of industry three months to work out their considered reactions and providing for Government decisions shortly thereafter. The Ministerial Committee on Productivity had broadly agreed that the Government should accept the recommendations of the Geddes Report, and a place had been kept in the current year's legislative programme for the necessary legislation. Some members of the Committee had, however, taken the view that an announcement at the present time might be interpreted as being inconsistent with the Governments recent economic measures and could therefore be damaging to confidence in sterling. On the other hand, if an announcement of the Governments decision were delayed, the sense CONFIDENTIAL 5 of urgency in the industry would be lost, the fresh start in industrial relations which the industry had been trying to make would falter, and confidence in the industry's future would be sapped. The reorganisation of the shipbuilding industry could make a valuable contribution to economic recovery, and a Government announcement in this sense should not be damaging to confidence. The expenditure involved over the next one and a half to two years would be small, and there was no need at this stage for the Government to commit themselves to any particular figure of expenditure during this period. He therefore sought authority to announce before the Summer Recess that the Government had decided to set up the proposed Shipbuilding Industry Board and to provide the finance proposed by the Geddes Committee over a period of five years; that the necessary legislation would be introduced in the current session; that the Government would be putting into effect the concession on indirect taxation for which legislative powers had already been taken; and that the Government would be prepared to use naval procurement orders for the purpose of facilitating and encouraging reorganisation. In discussion it was pointed out that a decision to go ahead with the Geddes proposals involved a judgment on priorities in public expenditure before the latter could be considered as a whole. None the less there was general agreement that Government decisions, broadly in the sense described by the President of the Board of Trade, should be announced before the Summer Recess, with an emphasis on their relevance to economic recovery. The announcement should stress the measures which were being taken on both sides of industry to follow up the Geddes Report, and in particular the agreement on demarcation recently concluded by the unions which should be valuable in avoiding strikes on this score in future.
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