SECRET T HlS D °CUMENT IS THE PROPERTY OF HER 3RITANNIC MAJESTY'S GOVERNMENT >.) 13th 7Q Elusions COPY NO CABINET CONCLUSIONS of a Meeting of the Cabinet held at 10 Downing Street on THURSDAY 1 APRIL 1982 at 9. 30 am PRESENT The Rt Hon Margaret Thatcher MP Prime Minister S Hon Wte Willi The Rt Hon Lord Hailsham ta am White law MP r V of State for the Home Department Lord Chancellor V c , n Sir Geoffrey Howe QC MP The Rt Hon Sir Keith Joseph MP Cell°r of the Exchequer Secretary of State for Education and Science n Fr W<j p ° ancis Pym MP The Rt Hon James Prior MP re siden t of the Council Secretary of State for Northern Ireland ^cte* H ° n J ° h n Nott M P The Rt Hon Michael Heseltine MP ary of state for Defence Secretary of State for the Environment tHe Rt H Ss n c fe r ° George Younger MP The Rt Hon Nicholas Edwards MP - e> Secretary of State for Wales y of State for Scotland Io ^r* tj °n n HumHumphre; y Atkins MP The Rt Hon John Biff en MP riv Y Seal Secretary of State for Trade 1 III* Hon-avi D d Howell MP The Rt Hon Norman Fowler MP arY of State for Transport Secretary of State for Social Services C W; H o n Leon Brittan GC MP The Rt Hon Baroness Young 1 oecretary— , Treasury Chancellor of the Duchy of Lancaster % n N i g e l La The Rt Hon Norman Tebbit MP ^ v ° f w SO n MP o f State for Energy Secretary of State for Employment The Rt Hon Cecil Parkinson MP Paymaster General SECRET SECRET ALSO PRESENT The Rt Hon Michael Jopling M P Parliamentary Secretary, Treasury SECRETARIAT Sir Robert Armstrong Mr P L Gregson (Item 5) Mr D M Elliott (Items 2 and 3) Mr D J L Moore (Item 5) Mr R L L Facer (Items 2-4) Mr D H J Hilary (Item 1) Mr L J Harris (Item 1) Mr D H Colvin (Item 4) CONTENTS Subject Pag e 1. PARLIAMENTARY AFFAIRS 1 Role of Comptroller and Auditor General 1 2. FOREIGN AFFAIRS El Salvador 2 Falkland Islands •a Nuclear Weapons COMMUNITY AFFAIRS 4. 29/30 March European Council 3 5. NORTHERN IRELAND ­ CONSTITUTIONAL DEVELOPMENT 5 1982 PUBLIC EXPENDITURE SURVEY 8 ii SECRET CONFIDENTIAL 1. The Cabinet were informed of the business to be taken in the House of Commons during the following week. 01* of THE CHANCELLOR OF THE EXCHEQUER said that Mr Joel Barnett and Mr Edward du Cann had with the support of other members pf Nudito r the Public Accounts Committee tabled an amendment to the Local n*ra l Government Finance (No 2) Bill which would require the Audit Commission to undertake studies of the impact on local authority administration of statutory provisions and of guidance and instruc­ tions issued to them by Ministers, would give the Comptroller and Auditor General (C and AG) access to all documents and records held by the Commission relating to any such studies, and would require him to report the results of his examination of them to Parliament. This was an indirect way of pursuing the Public Accounts Committee's recommendations for extending the role of the C and AG. If the amendment were accepted, it would lead to further pressure for giving the C and A G access to the records of nationalised industries. The principle of strengthening the powers of Parliament to investigate public sector administration generally would command widespread support in Parliament, and it could be difficult to defeat the amendment. On the other hand, the local authority associations and their Parliamentary supporters could be expected to have strong reservations about giving the C and A G power to duplicate part of the work of the Audit Commission and access to documents of individual local authorities; this would run counter to the case which had been made throughout the discussions on the Local Government Finance (No 2) Bill and its predecessor against excessive central Government interference in local administiation. The amendment as it stood war imprecise and unacceptable, and should be resisted. If a compromise proved to be necessary to avoid defeat, the Government might have to con­ sider accepting the principle of the amendment on condition that the C and A G would not have access to papers of or relating to individual local authorities held by the Audit Commission. This would make it easier to hold the line subsequently on access to the records of nationalised industries. THE PRIME MINISTER, summing up a short discussion, said that the amendment would result in wholly unnecessary bureaucratic activity, which would duplicate the work of the Audit Commission. The Secretary of State for the Environment should in the course of that afternoon seek to establish from the sponsors of the amendment precisely how they expected it to work in practice, and how far they might be prepared to modify it to meet the points made in discussion In the light of these consultations, she would consider further with the Ministers directly concerned how the amendment should be handled. 1 CONFIDENTIAL CONFIDENTIAL The Cabinet - Invited the Secretary of State for the Environment to discuss the proposed amendment to the Local Government Finance (No 2) Bill with Mr Joel Barnett and Mr EdwardDu Cann, as indicated in the Prime Minister's summing up of their discussion, and to report the outcome to the Prime Minister. 2. THE LORD PRIVY SEAL said that in the recent elections in El Salvador the Christian Democratic Party led by President Duarte had secured only some 40 per cent of the votes. If the various right wing parties were able to combine, the Christian Democrats would be kept out of the Government, but the situation was still confused. The British observers would return to the United Kingdom on the following day, and their report was likely to be published by the end of the month, although a shortened version might be available sooner. THE LORD PRIVY SEAL said that 12 Argentinians were still ashore at Port Leith on the island of South Georgia, and there had been reports that more had recently arrived. Diplomatic efforts were continuing to persuade the Argentine Government to secure their departure. It was not clear whether the landing on South Georgia on 19 March had been contrived by the Argentine Government, but it should remain the British aim to reach a solution by diplomatic means rather than by action which might provoke a military response by Argentina. The Argentine press had reacted sharply to British press reports about naval movements. The United States Government had agreed to a request to intervene with the Argentine Government. The British Ambassador in Buenos Aires had also made representations on the previous day and would do so again today. It had been reported that Argentine naval forces had been deployed to the area of the Falkland Islands. Certain precautionary measures had been taken, but it would not be an easy task to defend a colony which was 8, 000 miles distant from the United Kingdom and 3, 500 miles from the nearest airfield of the use of which the British Government could be assured. THE PRIME MINISTER, summing up a brief discussion, said that the intensions of the Argentine Government were not known, but as a precaution HMS Endurance had been instructed to sail from South Georgia to Port Stanley. The best hope of avoiding a serious confron­ tation with Argentina lay in the influence which the United States could 2 CONFIDENTIAL CONFIDENTIAL bring to bear on the Argentine Government. In readily agreeing to intervene on our behalf, the United States Administration had recognised the support which the United Kingdom Government had given them in other areas. THE SECRETARY OF STATE FOR DEFENCE said that the meeting of the North Atlantic Treaty Organisation Nuclear Planning Group which he had attended in the United States the previous week had unanimously agreed a communique which supported the British decision to maintain an effective strategic nuclear deterrent. Even those members of the Alliance who were particularly nervous about current nuclear weapons issues had agreed to a reference in the communique that strategic nuclear forces were the ultimate guarantee of the security of the Alliance. THE PRIME MINISTER said that further efforts were needed to convince public opinion that the Government's decision on Trident was right. The d ecision had been a factor in the recent Hillhead by-election, but President Reagan's recent statement of his determination to engage the Soviet Union in disarmament talks, which would lead to a substantial reduction in strategic nuclear weapons, would be helpful. The Cabinet - Took note. 3. THE PRIME MINISTER said that discussion of the economic and social situation at the European Council on 29/30 March had been more realistic than on previous occasions, though the Danish, French and Irish representatives had found themselves out of step with the rest because of the damaging effects their domestic economic policies were having on their public sector deficits, their interest rates and their exchange rates. The European Council had also taken note of a statement by Mr Papandreou, the Greek Prime Minister, seeking more Community aid for Greece. As to the 30 May 1980 Mandate, it had been intended that only a short discussion should take place, leading to an instruction to Foreign Ministers to proceed with the negotiations at their meeting on 3 April on the basis of the proposed budget solution, put forward by the Presidents of the Council and the Commission at the last Council of Ministers (Foreign Affairs) on 23 March.