review was not concerned w i t h Northern I r e l a n d s i n c e the 
 
development of B e l f a s t A i r p o r t does not impinge upon the 
 

p r o v i s i o n of a i r p o r t c a p a c i t y i n Great B r i t a i n . 
                                                                                                 N e i t h e r was 
                                                                                                                       i t 
                                                                                                                            

concerned w i t h the 
                       Channel I s l a n d s o r 
                                              the I s l e of 
                                                            Man. 
                                                                   

## Consultations On Airports Policy

3 
     The R o s k i l l Commission produced one of 
                                            the 
                                                most thorough  

examinations ever undertaken of 
                                the 
                                    o p t i o n s f o r a major p r o j e c t  

of p u b l i c investment. 
                            Yet 
                                 the 
                                     c o n c l u s i o n s 
                                                    of 
                                                       the 
                                                            Commission, i n a changing economic c l i m a t e , were shown w i t h i n a few years  

t o be based on assumptions of r a t e s of growth of a i r t r a f f i c  

which were u n l i k e l y t o 
                        be achieved, w h i l e t h e 
                                                 pace of 
                                                          

t e c h n o l o g i c a l development and i t s e f f e c t s had been more r a p i d than expected. 
                 Moreover, the 
                                recommendation of 
                                                  t h e 
                                                       Commission, 
                                                                   

f o r a new a i r p o r t on an i n l a n d s i t e at C u b l i n g t o n , was i t s e l f  

r e j e c t e d by t h e 
                               Government. 
                                                           T h i s experience suggested a  

c e r t a i n c a u t i o n , and 
                                         the 
                                                need t o r e c o g n i s e t h e 
                                                                                            wider i m p l i c a t i o n

i n the 
             case of p r o j e c t s i n v o l v i n g the 
                                                                         commitment of vast p u b l i c  

resources and a f f e c t i n g many m i l l i o n s of people.  

4
- 
     The Government decided t h a t , f o r the f u t u r e , i t 
                                                   was 

e s s e n t i a l t o ensure t h a t d e c i s i o n s concerning the 
                                                                                                   development 

of p a r t i c u l a r a i r p o r t s were reached a f t e r t a k i n g f u l l account of the 
        views of a l l 
                       those who use, work a t , o r 
                                                       a r e 
                                                            a f f e c t e d by, 

them. 
        To f a c i l i t a t e t h i s p r o c e s s , and 
                                        t o ensure a wider 

understanding of 
                 t h e i s s u e s the 
                                Government produced a two p a r t 

c o n s u l t a t i o n document " A i r p o r t S t r a t e g y f o r Great B r i t a i n " . 

P a r t 1, p u b l i s h e d i n 
                                       November 1975, 
                                                                   covered the 
                                                                                         London area 

a i r p o r t s and P a r t 2 p u b l i s h e d i n 
                                                                June 1976 d e a l t w i t h the r e g i o

n * * 

CP(78) 1 -
A n n u a l R e v i e w of A g r i c u l t u r e 1978. 
Note by the M i n i s t e r of A g r i c u l t u r e , 
F i s h e r i e s and F o o d 
2 
-
M e m o r a n d u m for L i a i s o n C o m m i t t e e on Exchange C o n t r o l . 
Note by the 
C h a n c e l l o r of the E x c h e q u e r 
3 
-
T h e G r e e n Pound. 
M e m o r a n d u m by the M i n i s t e r of A g r i c u l t u r e , 
F i s h e r i e s 
and F o o d 
4 
-
White P a p e r on A i r p o r t s P o l i c y . 
M e m o r a n d u m by the S e c r e t a r y of State 
for T r a d e 
5 
-
F u t u r e P a y P o l i c y . 
M e m o r a n d u m by the C h a n c e l l o r of the E x c h e q u e r and 
the S e c r e t a r y of State for 
E m p l o y m e n t 
6 
-
S p e c i a l E m p l o y m e n t M e a s u r e s 1978-79. 
M e m o r a n d u m by the S e c r e t a r y of 
State for E m p l o y m e n t 
? 
-
Benefits of N o r t h Sea O i l . 
Note by the S e c r e t a r y of the Cabinet 
8 
-
C o m m o n F i s h e r i e s P o l i c y . 
Note by the M i n i s t e r of A g r i c u l t u r e , 
F i s h e r i e s 
and F o o d and the S e c r e t a r y of State for 
Scotland 
9 
-
Special E m p l o y m e n t M e a s u r e s . 
M e m o r a n d u m by the S e c r e t a r y of State for 
E d u c a t i o n and Science and P a y m a s t e r G e n e r a l 
10 
-
E c o n o m i c Outlook: 
Case for Reflation and Increase in P u b l i c Expenditure. 
M e m o r a n d u m by the S e c r e t a r y of State for Social S e r v i c e s and the 
M i n i s t e r for Social S e c u r i t y 
11 
-
Statement on the Defence E s t i m a t e s 1978. 
Note by the S e c r e t a r y of State 
for Defence 
12 
-
T h e E c o n o m i c P r o s p e c t and P o l i c i e s . 
M e m o r a n d u m by the C h a n c e l l o r of 
the 
E x c h e q u e r 
13 
-
D r a f t White P a p e r on the N a t i o n a l i s e d Industries. 
Note by the C h a n c e l l o r 
of the E x c h e q u e r 
14 
-
Second R e p o r t f r o m the Select C o m m i t t e e on the  P C A , S e s s i o n 1976-77: 
G o v e r n m e n t O b s e r v a t i o n s . 
Note by the L o r d P r i v y . 
15 
-
N o r t h Sea Development 
F u n d . 
Note by the S e c r e t a r y of the Cabinet 
16 
-
Benefits of North Sea O i l . 
Note by the S e c r e t a r y of the Cabinet 
17 
­
^ ,ratios 
Note b  the S e c r e t a r y of
Developments in the E u r o p e a n C o m m u n i t i e s . 
wot
y
y 
State for F o r e i g n and C o m m o n w e a l t h A f i a i r s 
-
, the S e c r e t a r y of State for N
o t e b v

North Sea O i l Development 
F u n d . 
Note 
Y
 S e c r e t a r y of
t
 
a
n
d
 t
h
e
E n e r g y , the S e c r e t a r y of State i o r tne a 
State for Scotland 
P(78) 19 
­ 
F u l l E m p l o y m e n t , 
C o m p e t i t i v e n e s s 
and T a x Relief.
C h a n c e l l o r of the Duchy of L a n c a s t e r 
20 
- 
N o r t h Sea O i l White P a p e r . 
Note by the S e c r e t a r y of the Cabinet 
21 
- 
C a p i t a l P u n i s h m e n t in the Dependent O v e r s e a s
by the L o r d P r e s i d e n t of the C o u n c i l 
22 
-
D r a f t G o v e r n m e n t Response to the
C i v i l S e r v i c e . 
Note by the L o r d
23 
-
B a s i s for p r e p a r i n g the 1978 P u b l i c Expenditure S u r v e y .
the C h i e f S e c r e t a r y , 
T r e a s u r y 
 E x p e n d i t u r e P r i o r i t i e s . 
M e m o r a n d u m by the C e n t r a l P o l i c y 
Review 
24 
-
P u b l i c
Staff 
 B o a r d M e m b e r s and Senior Staff. 
Note by 
25 
-
P a y of N a t i o n a l i s e d Industries'
the L o r d P r i v y Seal 
 
M e m o r a n d u m by the 
 
T e r r i t o r i e s . 
M e m o r a n d u m 
 C o m m i t t e e R e p o r t on the 
 Expenditure
 P r i v y Seal 
 
M e m o r a n d u m by 
C P ( 7 8 ) 1 
C O P Y **N O** 
8
0 
11 J a n u a r y 1978 
C A B I N E T 
A N N U A L R E V I E W O F A G R I C U L T U R E 1978 
Note by the M i n i s t e r of A g r i c u l t u r e , F i s h e r i e s and F o o d 
1. 

A t t a c h e d is a Confidential F i n a l R e v i s e copy of the White P a p e r on the A n n u a l R e v i e w of A g r i c u l t u r e 1978 which is c i r c u l a t e d for the i n f o r m a t i o n of m y colleagues. 

It is p r o p o s e d to lay this before P a r l i a m e n t on T h u r s d a y 12 J a n u a r y and to announce its publication by m e a n s of a W r i t t e n P a r l i a m e n t a r y Question. 

2. 

T h e White P a p e r i s a factual account of the e c o n o m i c situation i n the industry; 
1 w i l l circulate separately p r o p o s a l s on f a r m p r i c e s for 
1978-79. 

J S 
M i n i s t r y of A g r i c u l t u r e , F i s h e r i e s and F o o d 
11 J a n u a r y 1978 

# C O N F I D E N T I A L - F I N A L Revise

[to be published as Command 7058 by 
  Her Majesty 
                 's Stationery Office 
          Price £1.25 net] 

## Agriculture Act 1947

# Annual Review Of Agriculture 1978

Paragraphs 
INTRODUCTION 
1-2 
PART I - S T A T E OF THE INDUSTRY 
3-6 
PART H - C O M M O D I T Y 
 TRENDS 
Cereals 
 
7 
8 
Oilseed Rape 
 
9-10 
Potatoes 
 
11-12 
Sugar **Beet** 
 
13 
Horticulture 
 
14 
Hops 
Seeds 
 
15-16 
Beef and **Milk** 
 
17-21 
Sheep and **Wool** 
 
22-24 
Pigs 
 
25-26 
Poultrymeat 
 
27 
Eggs 
 
28 
PART m - G E N E R A L DEVELOPMENTS 
Farm structure 
29-31 
Index of net product 
32 
Labour productivity 
33 
Net income of the industry 
34-37 
Cost changes 
38 
Gross capital formation 
39 
Agricultural land prices 
40 
Farm rents 
41 
Farm workers' earnings 
42 
Public expenditure 
... 
43-44 

## Appendix

Page 
Statistical tables—general **note** 
 
1
1 
Table No. 
1. Agriculture **in the national economy** 
 
12-13 
2. 
Crop **areas and livestock numbers** 
 
14-15 
3. Numbers and size **of holdings and enterprises** 
 
16-18 
4. Number of persons engaged in agriculture 
 
19 
5. Estimated average yields of crops and livestock products 
... 
20 
6. 
Concentrated feedingstuffs 
 
20 
7. Cereals supplies 
 
21-22 
8. Oilseed rape supplies 
 
23 
9. Potato supplies 
 
24 
10. Sugar supplies 
 
25 
11. Supplies of certain horticultural **crops** 
 
26-27 
12. Hops supplies 
 
28 
13. Supplies of herbage **seeds** 
 
28 
14. Meat supplies 
 
29-30 
15. 
Milk **production** 
 
31 
16. 
Milk **product supplies** 
 
32-33 
17. Egg supplies 
 
34 
18. 
Wool **supplies** 
 
34 
19. Net income, net product and labour productivity 
 
35 
20. Average earnings and hours of agricultural **workers** 
 
35 
21. Output, input and net income 
 
36-38 
22. 
Farm **rents** 
 
38 
23. 
 Gross capital formation 
38 
24. 
 
Specimen net incomes for different types of farm 
39-40 
25. 
 Public expenditure under the common agricultural policy **(CAP)**  
and on national grants and subsidies 
40-42 
26. 
 Aggregate cost changes since the 1977 Annual Review 
42 
27. 
 Commodity price trends 
43-44 

## Annual Review Of Agriculture 1978 Introduction

1. This White Paper sets out the data considered during the Annual Review of the economic condition and prospects of the United Kingdom agricultural industry. It provides information which can be drawn on by the Government in responding to the proposals by the EEC Commission for agricultural support in 
1978/79 and when decisions are taken on support arrangements which remain within our national competence. As in 1977, these decisions will be announced separately. 

2. Information in the Statistical Appendix has in most cases been moved on to a calendar year basis, mainly in order to bring it into line with practice in the European Economic Community, but also to reduce the number of different years to which the information relates and the element of forecasting. In most cases the forecasts for 1977 reflect the position as seen at November 1977. 

## Part I - S T A T E Of The Industry

3. The main feature of agricultural production in 1977 has been the dramatic recovery from the setbacks caused by the weather in the two preceding years. 

The index of agricultural net product, which in the drought-hit year of 1976 had fallen to 89, reached 112 in 1977—almost as high as the previous best year of 
1974. This improvement was largely the result of good weather which had a particularly marked effect on the production of milk and cereals. The industry's cost increases in the period since the last Annual Review are set at £322-5 million compared with £895 million in the previous year. Agricultural net income excluding stock appreciation is expected to rise from £1,158 million in 1976 to 
£1,348 million in 1977. This represents little change in real terms. The volume of new fixed investment in agriculture is expected to show a reduction in 1977, especially in buildings and works. 

4. There was a small increase in the size of the dairy herd in 1977 and this combined with substantially improved yields led to an increase in total sales of milk through the Milk Marketing Boards of 4-5% over 1976. Beef production is in the downward phase of the cycle; the beef breeding herd fell by a further 
4% and home production of beef is expected to be 5% down on 1976. Although production of sheepmeat is expected to be 4% lower than in 1976, there are signs of an increase in the breeding flock. The pig breeding herd fell by 7% 
between June 1976 and June 1977 as a result of difficulties encountered in this sector but returns to producers are expected to recover in 1978. Little change is expected in the size of the egg-laying flock and the production of eggs is expected to increase marginally. Poultrymeat production is also likely to increase slightly in 1977. 

5. In the arable sector the 1977 cereals crop is forecast to be some 3-7 million tonnes greater than the 13-26 million tonnes produced in 1976; most of the increase arises from higher yields. Potato plantings were higher than in 1976 
and, with yields recovering from the low, drought-affected levels of 1976, supplies should be more than adequate to meet requirements. The area of sugar beet harvested in 1977 is no greater than in 1976 but yields have recovered from the low levels of the last three years and production of white sugar is forecast to amount to nearly 1 million tonnes. The area sown to oilseed rape has continued to expand and yields have improved over the last few years. There was a further slight fall in 1977 in the area of certified herbage seed. 

6. The value of horticultural output continued to increase, despite the reductions in yields of vegetables in the first half of the year and losses of orchard and soft fruit, which were more than offset by higher prices. The review of the horticultural industry which was carried out by the Government and the Farmers' Unions early in 1977 forecast a brighter future for the industry than was generally thought possible five years ago. Increased efficiency and the pro­
tective effect of the depreciation of sterling have been important factors contributing to the profitability of horticulture. 

## Part Ii-Commodity Trends Cereals (Tables 2, 5,7 And 27)

7. The area of cereals harvested in 1977 was 3-71 million hectares, slightly above the 3-68 million hectares in the previous year. Production is expected to total nearly 17 million tonnes, some 3-7 million tonnes above the 13-26 million tonnes in 1976. The wet autumn of 1976 led to a decrease in the area sown to wheat which was largely offset by an increase in the barley area. The harvest was delayed by a cold, wet spring but the favourable growing conditions in the summer led to exceptionally high yields, particularly in comparison with 1976 
when yields were unusually low because of drought. In the south, rain in mid-
August reduced the quality of the crops, especially wheat, to well below average. 

Market prices, which rose rapidly in the autumn of 1976, continued to rise during the first half of 1977 to around threshold levels. Following the harvest, while breadmaking wheat and malting barley remained at a premium, the prices for feed grains fell to near intervention levels. Owing to ideal conditions this autumn the sowing of winter cereals is well advanced. 

## Oilseed Rape (Tables 2, 5, 8 And 27)

8. Production of oilseed rape in 1977 again reached a new record level owing partly to a slight improvement in yields but largely to the increased area sown to the crop. Prices towards the end of the 1976/77 marketing year were good but have since fallen following the announcement of a record soya crop in the USA with which rapeseed is in direct competition on the world market. 

## Potatoes (Tables 2, 5,9 And 27)

9. In 1977 the target area of 210,000 hectares was exceeded by some 20,000 
hectares but the yield was at a lower level than would normally have been 
"expected, and depending on the extent to which consumption levels return to normal, a small surplus can be expected. In view of low producer prices at the beginning of the season, the Potato Marketing Board, with Exchequer assist­
ance, undertook a market support programme in the autumn with the purpose of influencing market prices, so that the average for the season would achieve the guaranteed price of £45-77 per tonne. 

10. Proposals for an EEC regime for potatoes have continued to be discussed, but it is not certain that agreement can be reached in time for common arrange­
ments to apply to the 1978 crop. Consideration is currently being given to the appropriate form of marketing and support arrangements for that crop in the absence of a common regime. 

## Sugar Beet (Tables 2, 5,10 And 27)

11. For 1977 the British Sugar Corporation contracted to purchase the beet from 206,000 hectares. Some 201,000 hectares are expected to be harvested, about the same as in 1976. Weather during the growing season was generally good, yields of beet per hectare are slightly up and sugar content is showing a substantial improvement on last year. Assuming that harvesting and processing proceed as planned, the crop should yield between 900,000 and 1 million tonnes of white sugar. 

12. Contracts for 1978 have not yet been completed but the Corporation aims to increase its contracted area. 

## Horticulture (Tables 2, 5,11 And 27)

13. The area devoted to horticulture was 289,000 hectares at June 1976 and the provisional figure for 1977 shows no change in the total area. Details are given for the four commodities grown in the U  
K which are affected by Com­
munity intervention arrangements in the fruit and vegetables sector. 

(a) 
 Apples. The area of apple orchards (excluding cider apples) continues 
to decline slowly and in 1977 is estimated at 31,600 hectares. Produc­
tion capacity, however, has changed very little because of more 
intensive new orchard planting. The long-term effects of the 1976 
drought combined with this year's cold spring led to reduced yields in 
1977. Supplies from major apple-exporting countries were also lower 
than usual. Prices in the U 
K have consequently been much higher than 
in 1976. 
(b) 
 Pears. The area under pears (excluding perry pears) has changed very 
little in recent years and is estimated at 5,200 hectares in 1977. This 
year's crop is slightly below average and substantially below the high level of 1976. Prices are likely to be higher than in 1976, because of 
both the lighter pear crop and the higher apple prices. 
(c) 
 Cauliflowers. The area under cauliflowers continues to decline from the 
peak in the late 1960s and is estimated to be 14,000 hectares in 1977. 
The cold, wet weather in late 1976 and early 1977 reduced production of 
winter 
cauliflowers but better 
weather 
later in 
the year 
resulted in an overall 
increase in output in 1977 compared with 1976. Prices remained high 
until the late summer of 1977 and the sharp drop since then is not likely to be sufficient to reduce the average price for 1977 below that for 
1976. 
(d) 
 Tomatoes. About 950 hectares of glasshouse area were used for tomato 
production in 1977. This figure has remained fairly constant for some 
years. Poor light conditions reduced yields in 1977 and output is 
slightly down on the high levels of 1976. Prices are expected to be significantly higher than last year. 

## Hops (Tables 2, 5, 12 And 27)

14. The area under hops remained stable in 1977 at about 6,000 hectares. 

There has been a gradual long-term decline in area resulting from the improved utilisation of hops by brewers and increased yields from new varieties. The cold, wet weather early in the year reduced yields to well below those in 1976, which were themselves adversely affected by the drought. Prices for hops in 1977 are similar to those in 1976. 

## Seeds (Table 13)

15. The area of certified herbage seed which had fallen substantially in both 
1975 and 1976 showed only a very slight further fall (1%) in 1977. Yields in general are good with mainly firm prices which are showing an increase on 1976 
levels. A notable exception is Italian Ryegrass where increased production has resulted in depressed prices. Home production of herbage seed normally meets 
55 % of total requirements but abnormal weather conditions resulted in increased imports. 

16. The area of certified field bean seed is down by 15% in 1977 but is still excessive in the light of the demand for certified seed for cropping. The expansion of the area sown for the production of certified field pea seed—although small— 
continues at a high rate and the sharp upward trend is expected to continue. 

The area of certified seed of linseed rose sharply in 1976 but fell back again in 
1977 almost to 1975 levels. 

## Beef And Milk (Tables 2,5,14,15,16 And 27)

17. The 1977 June census for the U  
K showed a levelling out of the decline in the total breeding herd. Numbers were only marginally lower than in June 
1976; the dairy herd—about 66% of all breeding cows—showed an increase of 
1 % but the beef herd was 4 % smaller. In England and Wales the September sample census indicated a fall of 1 % in the total herd compared with the previous year, due entirely to a further decline in the beef breeding herd. 

18. Home production of beef in 1977 is expected to be about 5 % less than in 
1976, but this decline has been balanced by an increase in imports and decrease in exports in trade with other EE 
C countries so that total supplies available for consumption are likely to be about the same as in 1976. Average market prices for certified cattle in the U  
K remained above the weekly target prices until the end of July 1977, reaching a peak of 63-17p per live kg in mid-June. There­
after, variable premiums were payable in most weeks as market prices underwent a seasonal decline into the autumn. Throughout this period the market was underpinned by a moderate amount of intervention. 

19. The average milk yield per cow in 1977 is expected to show an improve­
ment of 3-5% on the 1976 level while the average size of the national dairy herd is expected to increase by about 1 % over the previous year. As a result, milk production in 1977 is expected to show an increase of about 4-5% over that for 1976. The amount of milk sold for liquid consumption in 1977 is expected to be lower than in 1976, whilst the availability of milk for manu­
facture increases appreciably. Cheese production in 1977 is expected to increase slightly over the previous year's level and butter production is forecast to increase substantially over the 1976 level. Increases in the guaranteed price for milk and the standard quantity at the 1977 Annual Review led to an increase of almost 6 % in the guaranteed price for milk for the period 1 April to 31 December. 

20. As required by the Treaty of Accession the guaranteed price arrangements for milk producers ended on 31 December 1977 and producer returns from 
1 January 1978 depend on the returns the Milk Marketing Boards obtain from the liquid and manufacturing milk markets. 

21. The average size of the national dairy herd in 1978 is expected to decline slightly, so that any improvement in milk production in 1978 will depend on whether yields continue to improve. 

## Sheep And Wool (Tables 2,14,18 And 27)

22. Between June 1976 and June 1977 there was a small increase (0-2%) in the total U  
K breeding flock, the increase in the number of shearling ewes more than compensating for the drop in older ewe numbers. Although the lamb crop was just over 2% smaller than the record crop of 1976, with fewer slaughter­ ings in 1977 the breedingflock is expected to increase in 1978. 

23. U  
K home production of sheepmeat is expected to be about 4 % lower in 
1977 than in 1976, while at the same time imports are expected to drop by 
3-5% and exports to increase by 16%, resulting in a drop in available supplies to the U  
K home market of just over 5%. In 1977 prices for fat sheep have been above the guarantee, except for 6 weeks between June and August, averaging about 20 % above last year's levels. Prices paid for store lambs and hill ewes have again risen well above those paid the previous year. 

24. Production of wool in 1977 again declined very marginally. Prices were especially strong in 1976 owing to the fall in the value of sterling and rose to reach a peak of 126p per kg in February 1977. U  
K prices then declined by 
15-20% in line with a general weakening of world markets. On average, auction prices for the 1977 clip are expected to be below the guarantee but producers' returns will be made good from the stabilising fund built up during last season's high-priced sales. 

## Pigs (Tables 2,14 And 27)

25. The decline in profitability which began in 1976 continued into 1977 and led to a fall of 7% in the pig breeding herd between June 1976 and June 1977. 

This is being reflected in lower supplies of pigmeat and production in 1978 is expected to be lower than in 1977. 

26. The resulting increase in pig prices together with a reduction in feed costs from the highest levels of 1976/77 may encourage some modest expansion in the breeding herd during 1978. 

## Poultrymeat (Tables 2, 14 And 27)

27. Output of poultrymeat is expected to show a small increase in 1977. 

Turkey prices have increased but other poultry prices remained generally steady over the year. 

## Eggs (Tables 2, 5,17 And 27)

28. Both the annual average size of the laying flock and output are expected to show a small increase in 1977 and higher yields per bird may be reflected in a further marginal increase in production in 1978. Egg prices havefluctuated but over the year as a whole average producer prices are expected to be higher than in 1976. 

## Part I N - G E N E R A L Developments Farm Structure (Table 3)

29. The number of farms in the U  
K continues to decline. Because the standard labour requirements for crops and livestock have been revised in line with current labour usage, comparative figures of holdings by size of business are not available for years before 1975. In 1977 the total number of holdings was 261,000, that is 3 % lower than in 1975. Among relatively small changes over this period, the percentage fall in numbers has been most marked among the smaller full-time businesses. Just over 50% of holdings have businesses capable of providing work for at least one man (now defined as those of 250 
revised standard man-days or more) but these account for 90% of total output 
(though in Northern Ireland and Wales the output of part-time farms is rather more significant than in other parts of the UK), while large businesses (1,000 
standard man-days or more), though only about 10% of the total number, produce about a half of total output. 

30. The average size of farms is increasing. Full-time businesses averaged 
113 hectares (total area including rough grazings) in 1977 compared with 111 
hectares in 1975. The trend to greater specialisation continues with the number of enterprises (eg dairy herds) declining and their average size increasing. 

Between 1975 and 1977 the average area of cereals has increased from 30 to 32 
hectares; the average dairy herd has risen from 40 to 44 cows though the average beef breeding herd at 1
8 cows may have declined slightly; the average ewe flock has increased from 164 to 167 breeding sheep and the average pig breeding herd rose from 23 to 25 sows. 

31. In Great Britain 62% of the holdings were wholly or mainly owner­
occupied in 1977 compared with 54% in 1960/61. The proportion of the total area held by owner-occupiers has increased from 52% in 1960/61 to 57% in 
1977. In Northern Ireland virtually all farmers are owner-occupiers. 

## Index Of Net Product (Table 19)

32. With the change to calendar year accounts, the index has been re-based on 1975=100. It fell to 89 in 1976 because of the drought in that year and the continuing effects of the dry weather of 1975. In 1977, however, it is expected to have recovered to 112-almost back to the average 1972-74 level-as a result of the record cereals harvest, the more normal potato crop and increased milk yields. 

## Labour Productivity (Tables 4 And 19)

33. The adverse weather in 1975 and 1976 reduced the volume of output and this is reflected in reduced labour productivity (the volume of gross product per person engaged) for these two years but a substantial recovery to a record level is forecast for 1977. Over the past ten years labour productivity has increased at nearly 4 % per annum, only a little below the average of 4 % to 5 % per annum in the late 1960s and early 1970s. The outflow of regular whole-time workers has continued. In 1976 and 1977 the rate was just over 3£% per annum respectively compared with 5 % to 6 % per annum in the 1960s. 

## Net Income Of The Industry (Tables 19,21 And 24)

34. Excluding stock appreciation, aggregate net income, which increased by 
25% to £1,158 million in 1976, is expected to show a further increase of 16% 
to £1,348 million in 1977. In real terms the increase between 1975 and 1976 was 
7% and little change is likely in 1977. When stock appreciation is included, aggregate net income increased by 28 % to £1,835 million in 1976 and is expected to have fallen by 2% to £1,796 million in 1977. In real terms a 10% increase between 1975 and 1976 is expected to be followed by a fall of 15-5% in 1977. 

35. The other main scries of farm incomes data examined at the Annual Review is based on samples of full time accounts. They show the impact of the drought and other factors on net income per farm in 1976/77 in the different sectors and regions of the UK. The accounts end on average in February and this year net income excludes stock appreciation of breeding livestock. For this and other reasons the farm accounts results show different changes in income from the aggregate series. Average net income of all types (excluding horti­
culture) went up in 1976/77 in all countries but at a much lower rate than in the previous year. In England income rose by 4%, in Wales by 28 %, in Scotland by 10 % and in Northern Ireland by 21 %. Higher prices for most crops more than compensated in England and Wales for lower yields caused by the drought and the value of crop output rose by nearly a quarter. The value of output of most livestock was also up, particularly of sheep. Feed prices rose sharply and in England and Wales the poor growth of grass and fodder crops during the drought led to heavier feed bills. 

36. On dairy farms higher milk prices and larger herds contributed to in­
creases in income, although in England the rise was less than elsewhere with the drought reducing milk yields and pushing up feed purchases. Sheep farms achieved the largest increase in income. Cattle farms generally had better incomes but for some cattle fatteners income was reduced by heavier feed bills and smaller margins between store and fat prices. Higher prices for many crops contributed to larger incomes on cropping farms in most regions, although in Scotland the increase over the record level of 1975/76 was small. The sharp rise in feed prices and only a small increase in output of pigs and poultry reduced incomes on farms with substantial pig and poultry enterprises, except in Northern Ireland. In real terms income fell in England and also in Scotland where it had reached a record level in 1975/76. In Wales and in Northern Ireland there was a further but much smaller increase. 

37. Forecasts of trends in 1977/78 indicate a small rise in average income in England and Wales and Northern Ireland but a fall in Scotland. The record cereals harvest is expected to offset lower prices and the value of cereals output in England and Wales should rise. But the sharp drop in prices will reduce the value of potato output, particularly in areas which had good crops in the previous year. Lower feed prices and, in England and Wales, more plentiful supplies this year of home grown cereals, grass and fodder crops will generally reduce feed bills and benefit incomes of livestock producers. Milk yields have recovered in England and Wales and with generally higher prices for calves and cull cows, dairy incomes should go up in most areas of the UK. Prices for both fat and store sheep have generally been buoyant and a further rise in income is likely on sheep farms. Suckled calf prices were mostly lower than last year's high levels at the autumn sales and the increase in fat cattle prices has not been sufficient to offset higher costs: incomes of many cattle enterprises may therefore drop, despite lower feed prices and in Great Britain more plentiful fodder. With substantially lower potato revenue, incomes on many general cropping and mixed farms are likely to decline, particularly in Scotland and Northern Ireland which had benefited most from the high potato prices in the previous two years, but higher cereal yields in England and Wales are likely to lead to an increase on specialist cereal farms there. A good recovery in incomes on pig and poultry holdings is expected. In real terms average incomes in 1977/78 are forecast to fall, particularly in Scotland. 

## Cost Changes (Table 26)

38. Net cost increases since 1976 are assessed at about £322-5 million for all products. The main increases are for machinery depreciation (£127 million), labour (£112 million), miscellaneous expenditure (£58 million) and fertilisers and lime (£49 million). There are estimated reductions in the costs of animal feedingstuffs (£62 million), interest (£58 million) and seeds (£25 million). 

## Gross Capital Formation (Table 23)

39. It is estimated that there will be a further increase in the value of new investment in 1977. Total gross capital formation in landlord and tenant-type physical assets together is estimated to be £1,596 million in 1977; of this £614 
million is estimated to be in plant, machinery and vehicles, ie a rise of 23% 
over the amount invested in 1976, and £724 million in additions to stocks and work-in-progress. New investment in buildings and works (landlord-type assets) 
is expected to amount to £258 million. In volume terms new investment in 1977 in plant, machinery and vehicles is expected to be between 1 % and 2 % lower than in 1976. The volume of investment in buildings and works has continued the downward trend begun in 1973 and in 1977 was 5% lower than in 1976. The physical level of stocks and work-in-progress in 1977 is expected to be higher than in 1976 reflecting larger stocks of harvested crops including fodder. Despite the improvements in conditions, coverage and rates of grants from 1 June 1976, the number of applications estimated for 1977 under the Farm Capital Grants Schemes is likely to be 1
1 % below the number received in 1976. Most of this work would be for completion in 1978 and later years. Under the Farm and Horticulture Development Scheme, however, initial eligibility applications rose sharply after the June changes and nearly 7,000 plans are estimated to be approved in 1977 compared with 479 in 1975 and 1,953 in 1976. Investment under the Scheme takes place in the framework of development plans which can vary in length from one to six years. 

## Agricultural Land Prices

40. The average price for all sales of agricultural land of 4 hectares and over in England and Wales, as reported to the Inland Revenue, was £1,295 per hectare for the six-month period ended September 1977. This compares with a price of £1,287 per hectare for the period ended March 1977 and £1,086 per hectare for the period ended September 1976. Because of the delay between a sale being agreed and its notification to the Inland Revenue, this series is subject to a time lag of several months. More up-to-date informationfromtheADAS/AMC 
series, which is less comprehensive and relates only to vacant possession sales, indicated that there was a substantial increase in prices in the middle of 1977. 

The average price of vacant possession land in the three-month period ended September 1977, shown by this series, was £2,406 per hectare. There have also been significant increases in agricultural land prices in Scotland and Northern Ireland. 

## Farm Rents (Table 22)

41. Farm rents in the U 
K are estimated to have increased by an average of 
15-9% in 1977. This estimate is based on the provisional results of the annual ADAS Rent Enquiry in England and Wales and on field enquiries in Scotland. This increase compares with increases of 19-3% in 1976, 16-8% in 1975 and 
8-7% in 1974. 

## Farm Workers' Earnings (Table 20)

42. In the calendar year 1976 the average earnings of whole-time hired men in the U  
K were £50-27 per week, including the £6 increases in minimum rates awarded in the winter of 1975/76. Compared with 1975 this is a rise of 17% in money terms and of 0-5% in real terms. In 1977 average whole-time earnings are forecast at about £54 per week, a rise of 7-5 % in money terms but a reduction in real terms. 

## Public Expenditure (Table 25)

43. In 1977/78 the estimated outturn for expenditure in the U  
K on price guarantees, grants and subsidies (excluding the brucellosis incentives and payments connected with the milk subsidy) is about £204 million. The corn­
parable figure for 1976/77 is about £207 million. Expenditure on hill livestock compensatory allowances is expected to be lower than in 1976/77, when the outturn was inflated by payments carried over from 1975/76. This decrease is expected to be partly offset by payments under the capital grant schemes and the new Milk Non-Marketing and Conversion Premium Scheme. 

44. Expenditure under the common market organisation of the EE 
C is estimated to increase by some £33 million to about £204 million in 1977/78 
compared with expenditure of £171 million in 1976/77. This expenditure by the Intervention Board for Agricultural Produce includes the Beef Variable Premium Scheme, import and export refunds, certain production subsidies, the gross cost of aids to private storage and the net cost of commodities bought into intervention and subsequently sold. Some of this expenditure benefits consumers and overseas exporting interests rather than producers. The addi­
tional expenditure in 1977/78 is mainly due to increased purchases into inter­
vention of skimmed milk powder and butter. Whilst these and other variations account for an increase of some £61 million this has been partly offset by a reduc­
tion of about £28 million in the net cost of import and export refunds. 

## Appendix Statistical Tables

The tables cover largely the same ground as those in last ycar's White Paper except that Table 27 on Commodity Price Trends has been simplified. Two changes in presentation have, however, been made; the columns showing equivalents in imperial units no longer appear and, with the exceptions of tables relating to fixed dates and those on Herbage Seeds (Table 13), Specimen Net Incomes (Table 24) and Public Expenditure (Table 25), information is now shown on a calendar year basis. Forecasts, which arc as at November 1977 unless otherwise indicated, generally refer to the position up to the end of 1977. For some commodities the move to a calendar year basis has involved the introduction of stock figures into the supply tables. 

Calendar year figures arc not available before 1967 and the three-year averages arc therefore given for the period 1967 to 1969. New base years have been introduced for some of the indices in Tables 1, 19 and 22. 

Even where there has been no change in the basis of the tables, some of the figures in this Appendix differ from those in previous Annual Review White Papers because of later information, changes in the scope and nature of available data and improvements in statistical methods. 

Al l figures relate to the United Kingdom, unless otherwise stated. 

Figures for imports from and exports to the Eight relate throughout to the countries of the enlarged European Economic Community (Belgium, Denmark, France, West Germany, the Irish Republic, Italy, Luxembourg and the Netherlands). 

Significant items of Channel Islands trade are shown separately in the tables. 

Figures for exports include re-exports. In some cases figures may not add to the totals shown because of roundings. 

Symbols: 

- 
means " n i l " 
... 
means "negligible" (less than half the last digit shown) 
.. 
means "not available" or "not applicable". 

## Agriculture In The National Economy Calendar Years

1973 
1974 
1975 
1976 
1977 
(provisional) 
Average 
of 
1967-69 
3,165 
1,861 
2-5 
Agriculture^ contribution to 
gross domestic product (a) 
£million ... percentage 
1,064 
2-9 
1,770 
2-8 
2,302 
2-5 
2,760 
2-5 
872 
613 
3-0 
726 
31 
559 
3-3 
Agriculture^ share of gross 
fixed capital formation (b)
£million ... 
percentage 
219 
2-7 
441 
31 
661 
662 
808 
704 
678 
Manpower engaged in agri­
culture (c)('000) 
669 
id) 
2-7 
Percentage of total manpower 
in all occupations 
2-9 
3-3 
2-7 
2-7 
2-7 
Agricultural price index 
(1970 ­ 100) 
AH products-sales (*)(/) ... 
92-8 
146-9 
1660 
205-7 
264-6 
272-5 
160-8 
127-2 122-5 150-2 
1310 
209-2 
177-6 178-6 
194-7 1590 
89-5 98-4 94-5 84-6 88-4 
207-5 211-4 
215-9 
245-4 200-4 
257-5 226-7 
265-7 292-7 235-3 
304-5 
260-5 
320-0 317-7 291-5 
Inputs—selected indicators (J)
FeedingstufTs(^) 
Fertilisers (excl. lime) (/;)... 
Fuel(0 
Labour Machinery (J) 
(Jan.-Sept. 
only) 
4,854 
3,990 
4,480 
5,215 
1,881 
3,205 
1050 
97-4 
96-9 
102-2 
100-4 
102-9 
301-3 
200-9 
223-8 
89 1 
151-2 
248-4 
Imports of food, feed & 
alcoholic beverages (k)
£million ... 
Import volume index (1970 = 
100) 
Import price index (1970 
100) 
(Jan.-Sept. 
only) 
1,508 
1,620 
1,048 
1,366 
399 
853 
162-4 
1560 
143-8 
155-4 
87-2 
137-3 
212-6 
150-8 
178-3 
253-9 
930 
126-2 
Exports of food, feed & 
alcoholic beverages (k)
£million ... 
Export volume index (1970 = 
100) 
Export price index (1970 = 
100) 
(prov.) 
(Jan.-June 
only) 
8,427 
13,122 
15,191 
11,650 
22,182 
18,729 
30-8 
290 
29-7 
301 
Consumers' expenditure on 
food and alcoholic bever­
ages(0 
... 
... 
£million ... 
Percentage 
of 
total 
con­
sumcrs'expenditure 
29-2 
29-5 
257-2 
184-9 
222-4 
Retail price index 
(January 1970 ­ 100) 
Food (/) (m) Alcoholic beverages (/) (m) Al 
l items(/)(m) 
(Jan.-Scpt. 
only) 
304-5 
2110 255 1 
92-3 90-6 
92-6 
144-7 144-8 132-4 
170-7 127-3 153-7 
214-5 
156-9 190-8 

(a) 
 Excluding appreciation in value of work-in-progress and stocks. 
(6) All fixed assets (excluding work-in-progress and stocks). 
(c) 
 Total manpower engaged in agriculture between 1973 and 1977 comprises the numbers of self-employed, 
employers and employees in employment, (excluding farmers' spouses) given in the June censuses conducted 
by the Agricultural Departments of England and Wales, Scotland and Northern Ireland. The average figures 
for 1967 to 1969 are based on the Department of Employment series of the count of national insurance cards and the population census, adjusted by the ratio in 1971 of this aeries to the Agricultural Departments 
series. 
(d) See footnote *it)* to **Table** **4.**  
(e**) Based on prices after addition of subsidy or grant, where payable.**  
(/) 
Annual **averages.**  
(g) Based on representative prices for compound and straight feedingstuffs.  
(*) Department of Industry's Wholesale Price Index-excluding Value Added **Tax.**  
(0 
Department of Energy s Indices and Department of Industrys Wholesale Price Indices-excluding Value  
Added Tax. 
U) 
Department of Industry's Wholesale Price Index-excluding Value Added Tax. 
(A) 
 Includes oilseeds and nuts, animal oils and fats, citric acid, food dyes, essences, starches, edible gelatin. 
albumen and casings. 
(/) 
Includes caterers' expenditure on food, 
(m) Source: Department of Employment. 

## Crop Areas And Livestock Numbers (A)

Average 
1973 
1974 
1975 
1976 
1977 
1967-69 
(provisional) 
A. Crop *areas* ('000 hectares) 
Total area 
19,515 
18,988 
19,010 
18,978 
18,987 
18,899 
of which: Wheat 
915 
1,146 
1,233 
1,034 
1,231 
1,072 
Barley 
2,418 
2,267 
2,214 
2,345 
2,182 
2,412 
Oats 
391 
281 
253 
232 
235 
193 
Mixed corn 
48 
51 
42 
35 
28 
24 
Rye 
4 
5 
5 
6 
8 
11 
Maize 
1 
1 
1 
1 
1 
Total cereals (b) ... 
3,776 
3,752 
3,747 
3,653 
3,685 
3,713 
Potatoes 
272 
225 
215 
204 
222 
230 
Sugar beet 
186 
194 
195 
198 
206 
202 
Oilseed rape 
14 
25 
39 
48 
55 
Hops 
7 
7 
7 
7 
6 
6 
Vegetables grown in 
the open 
176 
187 
194 
198 
206 
209 
Orchard fruit 
71 
57 
55 
53 
52 
50 
Soft fruit (c) 
18 
18 
18 
17 
17 
16 
Ornamentals (d) 
... 
14 
16 
16 
15 
14 
12 
Total 
horticulture (e) 
280 
281 
285 
285 
289 
289 
Total tillage(f) 
... 
4,981 
4,818 
4,838 
4,816 
4,821 
4,853 
All grasses under five 
years old (g) (h) ... 
2,372 
2,346 
2,316 
2,138 
2,154 
2,137 
Total arable 
7,353 
7,164 
7,154 
6,954 
6,975 
6,990 
All grasses five years 
old and over (/) ... 
4,974 
4,914 
4,920 
5,074 
5,081 
5,050 
Rough grazing (jf)... 
7,115 
6,605 
6,564 
6,555 
6,513 
6,409 
Other land (AT) 
305 
372 
395 
419 
450 
B. Livestock *numbers* ('000 head) 
Total cattle and calves 
12,289 
14,445 
15,203 
14,717 
14,069 
13,899 
of which: Dairy cows 
3,238 
3,436 
3,394 
3,242 
3,228 
3,264 
Beef cows 
1,168 
1,678 
1,887 
1,899 
1,764 
1,694 
Heifers in calf 
821 
988 
1,041 
903 
939 
830 
Total sheep and lambs 
27,831 
27,943 
28,498 
28,270 
28,265 
28,030 
of which: Ewes 
11,374 
10,921 
11,192 
11,279 
11,298 
11,198 
Shearlings 
2,429 
2,733 
2,673 
2,471 
2,369 
2,499 
Total pigs 
7,425 
8,979 
8,544 
7,532 
7,947 
7,665 
of which: Sows in pig and 
... 
other sows for 
breeding 
732 
859 
783 
710 
747 
720 
Gilts in pig 
143 
156 
107 
104 
137 
100 
Total poultry 
126,532 
144,079 
139,672 
136,572 
142,222 
137,434 
of which: Table 
fowls (inch 
broilers) 
38,971 
58,366 
56,701 
56,708 
61,325 
57,725 
Laying fowls 
52,478 
51,766 
49,924 
49,359 
49,085 
48,824 
Growing pullets 
... 
22,572 
18,808 
18,958 
18,195 
18,383 
17,503 

(a) 
 The coverage Tor 1973 and onwards includes all known holdings in the United Kingdom with 40 standard man-days or more fa standard man-day (smd) represents 8 hours' productive work by an adult male worker under average conditions). All holdings with less than 40 smd in Scotland are excluded. In England and Wales and Northern Ireland holdings with less than 40 smd arc excluded only if they have less than 4 hectares 
(10 acres) of crops and grass and no regular whole-time worker. The same criteria applied in Great Britain in the years 1970 to 1972, except that the threshold for standard labour requirements in those years was 
26 smd. 

The 1967-69 figures related to all known agricultural holdings exceeding one acre (0-4 hectares) in extent. 

The figures for Northern Ireland for these years related to holdings of one acre (0-4 hectares) or more, except for numbers of livestock, which were collected from all owners, irrespective of the size of the holding, as well as from landless stockholders. 

The Introduction of the changes of definition in Northern Ireland in 1973, following similar changes in Great Britain which excluded some 14.000 statistically insignificant holdings in 1970 and about 8,000 In 1973, had the net result of eliminating about 6,000 or so holdings from the Northern Ireland census. 

(6) **For threshing.**  
(c) 
 Includes small area of soft fruit grown under orchard trees in England **and Wales.**  
(d) Hardy **nursery stock, bulbs and flowers.**  
(?) Most of the difference between total horticultural area and the sum of individual sectors **is made up by the**  
glasshouse area. 

(/) 
Includes areas of other crops and bare fallow not shown in the table. 

(g) 
 Includes lucerne. 

(A) 
 Before 1975 collected as: 
in England and Wales—"clover, sainfoin and temporary grasses"; in Scotland—"grass under seven years old"; 
in Northern Ireland—"1st, 2nd and 3rd year". 
(/) 
Before 1975 collected as: 
in England and Wales—"permanent grass"; in Scotland-"grass seven years old and over"; 
in Northern Ireland—"4th year or older". 
U) Includes common rough grazings. (*) Returns of "other land" were collected for the first time in England and Wales in June 1969. From June 1969 
to June 1973 "other land" in Great Britain was collected as woodland and areas under roads, yards, buildings, 
etc, the use of which was ancillary to the farming of the land; in Northern Ireland it included land within 
agricultural holdings which was under bog, water, roads, buildings, etc., and waste land not used for agriculture. In June 1974 the definition was changed in England and Wales to include all other land forming part of the holding and in Scotland it was extended to include ponds and derelict land. The Northern Ireland 
definition is unchanged. 
At June of each year 

| 1975                | 1977                                           |
|---------------------|------------------------------------------------|
| (provi­              |                                                |
| sional)             |                                                |
| Crop                | Crop                                           |
| gras                | gras                                           |
| Numbe               | Number                                         |
| 01 to               | 19-9                                           |
| 20                  | to                                             |
| 50                  | to 99-9 hectares                               |
| 100                 | hectares and over                              |
| 1120                |                                                |
| 71-4                |                                                |
| 41-5                |                                                |
| 29-4                |                                                |
| 119-9               |                                                |
| 73-2                |                                                |
| 41-7                |                                                |
| 29-3                |                                                |
| Total               |                                                |
| 264-1               |                                                |
| 254-3               |                                                |
| 45-2                |                                                |
| 46-9                |                                                |
| Average             | crops and grass area per                       |
| Per                 | cent of total crops and grass area on holdings |
| 0                   | 1                                              |
| 100                 | hectares and over                              |
| 7-7%                |                                                |
| 48-5%               |                                                |
| 8-2%                |                                                |
| 47-4%               |                                                |
| Siz                 | Siz                                            |
| Numbe               | Number                                         |
| Under               | 250 smd                                        |
| busines             | busines                                        |
| 250                 | to 499 smd                                     |
| 1380                |                                                |
| 56-4                |                                                |
| 45-8                |                                                |
| 28-3                |                                                |
| (smd)(c)(rf         | (smd)(c)(rf                                    |
| 500                 | to 999 smd                                     |
| 1,000 smd and over  |                                                |
| 133-3               |                                                |
| 53-3                |                                                |
| 450                 |                                                |
| 28-9                |                                                |
| Total               |                                                |
| 268-6               | 260-6                                          |
| Holdings            | 250 smd and over                               |
| business (smd)      |                                                |
| 857                 |                                                |
| 891                 |                                                |
| Average             | total area                                     |
| per                 |                                                |
| holding             |                                                |
| (hectares)          | 111-3                                          |
| 90-8%               |                                                |
| 90-2%               |                                                |
| Contribution        | to total                                       |
| output (%)          |                                                |
| Tota                | Tota                                           |
| 01 to 19-9 hectares |                                                |
| 20                  | to 49-9 hectares                               |
| 50                  | hectares and over                              |
| 77-6                |                                                |
| 22-7                |                                                |
| 21-0                |                                                |
| 71-3                |                                                |
| 22-5                |                                                |
| 21-3                |                                                |
| Total               |                                                |
| 121-3               |                                                |
| 1151                |                                                |
| 30                  | 1                                              |
| Per                 | cent of                                        |
| and                 | over of cereals                                |
| 65-9%               |                                                |
| 55-9                | Potatoe                                        |
| Numbe               | Number                                         |
| 10                  | to 19-9 hectares                               |
| 20                  | hectares and over                              |
| 50-4                |                                                |
| 3-7                 |                                                |
| 1-9                 |                                                |
| 40                  |                                                |
| 2-2                 |                                                |
| Total               |                                                |
| 560                 |                                                |
| 62-2                |                                                |
| 3-6                 | 3-7                                            |
| Per                 | cent of                                        |
| and                 | over of potatoes                               |
| 33-6%               | 34-5%                                          |

At June of each year 

| 1975                 |               |
|----------------------|---------------|
| 1977                 |               |
| (provi­               |               |
| sional)              |               |
| Suga                 | Suga          |
| bee                  | bee           |
| Numbe                | Number o      |
| to                   | to            |
| 9-7                  |               |
| 3-2                  |               |
| 2-8                  |               |
| 8-5                  |               |
| 31                   |               |
| 30                   |               |
| 0-1 to 9-9           | hectares      |
| 10 to 19-9           | hectares      |
| 20                   | hectares      |
| 14-6                 |               |
| 15-7                 |               |
| Total                |               |
| 12-5                 |               |
| 59-6%                |               |
| Average              | area          |
| Per                  | cent          |
| 20                   | hectares      |
| on                   | holdings with |
| )eet                 |               |
| 55-9%                |               |
| Dair                 | Dair          |
| 331                  |               |
| 22-2                 |               |
| 18-7                 |               |
| 1 to 29              |               |
| 30 to 59             |               |
| 60 and over          |               |
| 39-9                 |               |
| 23-4                 |               |
| 17-6                 |               |
| 740                  |               |
| Total                |               |
| 810                  |               |
| Average size of herd |               |
| Per                  | cent          |
| 44                   |               |
| 57-3%                |               |
| 40                   |               |
| 53-3%                |               |
| Bee                  | Bee           |
| 66-4                 |               |
| 18-5                 |               |
| 8-2                  |               |
| 72-5                 |               |
| 20-8                 |               |
| 91                   |               |
| Numbe                | Number o      |
| 1 to 19              |               |
| 20 to 49             |               |
| 50 and over          |               |
| 93-1                 |               |
| 102-4                |               |
| Total                |               |
| Average size of herd |               |
| Per                  | cent          |
| 18                   |               |
| 41-2%                |               |
| 19                   |               |
| 41-6%                |               |
| Breedin              | Breedin       |
| shee                 | shee          |
| 440                  |               |
| 28-9                 |               |
| 5-7                  |               |
| Numbe                | Number o      |
| 1 to 99              |               |
| 100 to 499           |               |
| 500 and over         |               |
| 45-3                 |               |
| 29-8                 |               |
| 5-6                  |               |
| 78-6                 |               |
| Total                |               |
| 80-7                 |               |
| Average size of      | flock         |
| Per                  | cent          |
| 167                  |               |
| 38-7%                |               |
| 164                  |               |
| 37-6%                |               |
| Breedin              | Breedin       |
| Pig                  | Pig           |
| Numbe                | Number o      |
| ('000                | ('000)        |
| 1 to 19              |               |
| 20 to 49             |               |
| 50 and over          |               |
| 23-2                 |               |
| 4-7                  |               |
| 4-5                  |               |
| 26-2                 |               |
| 50                   |               |
| 4-4                  |               |
| 32-3                 |               |
| Total                |               |
| 35-6                 |               |
| 25                   |               |
| 67-5%                |               |
| Average size of herd |               |
| Per                  | cent          |
| 23                   |               |
| 63-6%                |               |
| 22-7                 |               |
| Fattenin             | Fattenin      |
| pig                  | pig           |
| 19-8                 |               |
| 4-5                  |               |
| 0-9                  |               |
| 4-7                  |               |
| 0-8                  |               |
| Numbe                | Number o      |
| 200 to 999           |               |
| 1,000 and over       |               |
| 25-2                 |               |
| 28-2                 |               |
| Total                |               |
| Average size of herd |               |
| Per                  | cent          |
| 178                  |               |
| 37-5%                |               |
| 156                  |               |
| 33-5%                |               |

At June of each year 

1975 
1977 
(provi­
sional) 
Laying fowls 
Number of holdings ('000) with 
1 to 4,999 
5,000 to 19,999 
20,000 and over 
820 
1-6 
0-4 
73-3 
1-5 
0-5 
Total 
84 1 
75-3 
587 
47-1% 
648 
53-4% 
Average size of flock Per cent of total laying fowls in flocks of 20,000 and over 
Broiler
Broiler
Broilers (A
(A
(A) 
Numbe
Number o
of holding
holdings ('000
('000) wit
with 
1 to 9,999 
1-7 
1-7 
10,000 to 99,999 
0-6 
0-7 
100,000 and over 
01 
0-1 
2-4 
Total  
2-4 
Average size of flock 
23,403 23,437 
Per cent of total broilers in flocks of 100,000 and over 
59-9% 
56-7% 

(a) 
 Because of the revisions to size groups following metrication, and the revision of smd values in 1976, it is no longer possible to give comparative data for a span of five years. Although the figures quoted for 197S 
and 1977 are strictly comparable, great caution must be exercised in comparing them with figures quoted in earlier Annual Review White Papers. The figures included for Northern Ireland in the first two sections for both years relate only to holdings with 50 smd or more. The average size of holding based on total area was—
(
*
) 
1975 66-1 hectares of which 45-2 hectares were crops and **gnus**  
1977 67-4 hectares of which 46-9 hectares were **crops and grass**  
(c) These figures include holdings with no crops and grass area which are excluded from the first section of the table. 

(d) Revised standard man day groups have been adopted and the lower group of under 250 smd applies through­
out the UK 
. The change in smd values has meant a general shift of holdings into lower size groups and this movement is particularly marked in Northern Ireland as the following figures show:— 

| Holdings           |  In    |
|--------------------|--------|
| ("000)             |        |
| Based              | on     |
| Based              | on     |
| old smd            | values |
| new smd            | values |
| 50-199             | smd    |
| 160                |        |
| 50-249             | smd    |
| 200                |        |
| 200-599            | smd    |
| 12-6               |        |
| 250-499            | smd    |
| 6-9                |        |
| 600-1,199          | smd    |
| 3-8                |        |
| 500-999            | smd    |
| 2-8                |        |
| 1,200 smd and over |        |
| 1-2                |        |
| 1,000 smd and over |        |
| 0-7                |        |
| T                  |        |
| OTAL               |        |
| T                  |        |
| OTAL               |        |
| 30-4               |        |
| 33-6               |        |

As a result of this change, the figures shown in this table are not comparable with those in previous White Papers. 

(r) Figures relate to England **and Wales only.**  
CO Figures included for Scotland and Northern Ireland relate to the December censuses **in 1974 and 1976.**  
(g) **Figures included for Northern Ireland relate to pig holdings which had fattening pigs only.**  
(A) 
 Figures for Scotland, and figures for Northern Ireland in 1977 only, include small numbers of other table fowls. 

## Number Of Persons Engaged In Agriculture (A)

| At             |  June         |  of      |  each    |  year   |       |
|----------------|---------------|----------|----------|---------|-------|
| Average        |               |          |          |         |       |
| 1973           | 1974          | 1975     | 1976     |         |       |
| 1977           |               |          |          |         |       |
| of             |               |          |          |         |       |
| (provisional)  |               |          |          |         |       |
| 1967-69        |               |          |          |         |       |
| Workers        |               |          |          |         |       |
| Regular        | Whole-time:   |          |          |         |       |
| Hired:         |               | male     |          |         |       |
| -              |               |          |          |         |       |
| 171            | 164           |          |          |         |       |
| 157            | 154           | 148      |          |         |       |
| female         |               |          |          |         |       |
| 16             | 16            |          |          |         |       |
| 15             |               |          |          |         |       |
| 13             | 12            |          |          |         |       |
| Family:        | male          |          |          |         |       |
| female         |               |          |          |         |       |
| 39             |               |          |          |         |       |
| 14             |               |          |          |         |       |
| r              |               | *        |          |         |       |
| i              |               |          |          |         |       |
| 45             |               |          |          |         |       |
| 15             |               |          |          |         |       |
| Al             | l             | male     |          |         |       |
| 297            |               |          |          |         |       |
| 216            | 203           |          |          |         |       |
| 194            | 189           | 186      |          |         |       |
| Al             | l             | female   |          |         |       |
| 29             |               |          |          |         |       |
| 31             | 30            | 28       | 25       |         |       |
| 20             |               |          |          |         |       |
| (233)          |               |          |          |         |       |
| (326)          |               |          |          |         |       |
| (247)          |               |          |          |         |       |
| 24             |               |          |          |         |       |
| 25             |               |          |          |         |       |
| Total          |               |          |          |         |       |
| Regular        | Part-time:    |          |          |         |       |
| Hired:         |               | male     |          |         |       |
| female         |               |          |          |         |       |
| 26             |               |          |          |         |       |
| 27             | 26            |          |          |         |       |
| 26             |               |          |          |         |       |
| 24             |               |          |          |         |       |
| Family:        | male          |          |          |         |       |
| female         |               |          |          |         |       |
| 16             |               |          |          |         |       |
| 18             |               |          |          |         |       |
| 15             |               |          |          |         |       |
| 17             |               |          |          |         |       |
| Al             | l             | male     |          |         |       |
| 37             |               |          |          |         |       |
| 41             | 39            | 36       | 35       |         |       |
| 36             |               |          |          |         |       |
| Al             | l             | female   |          |         |       |
| Total          |               |          |          |         |       |
| 24             |               |          |          |         |       |
| (62)           | (c)           |          |          |         |       |
| 44             |               |          |          |         |       |
| (85)           | (c)           |          |          |         |       |
| 44             |               |          |          |         |       |
| (83)           | (c)           |          |          |         |       |
| Seasonal       | or            | Casual:  | ...      |         |       |
| All            | male          |          |          |         |       |
| 34             | 40            |          |          |         |       |
| 39             | 41            |          |          |         |       |
| 45             | 53            |          |          |         |       |
| All            | female        |          |          |         |       |
| 35             |               |          |          |         |       |
| 38             |               |          |          |         |       |
| 36             | 32            |          |          |         |       |
| 35             |               |          |          |         |       |
| 41             |               |          |          |         |       |
| Total          |               |          |          |         |       |
| (69)(rf)       |               |          |          |         |       |
| (78)           |               |          |          |         |       |
| (d)            |               |          |          |         |       |
| (74)           | (rf)          |          |          |         |       |
| (73)           |               |          |          |         |       |
| (80)           |               |          |          |         |       |
| (94)           |               |          |          |         |       |
| Salaried       | managers (6): |          |          |         |       |
| 6              |               |          |          |         |       |
| 7              |               |          |          |         |       |
| 7              |               |          |          |         |       |
| 7              |               |          |          |         |       |
| 8              |               |          |          |         |       |
| Total          | employed      |          |          |         |       |
| 456            |               |          |          |         |       |
| 416            | 398           | 382      |          |         |       |
| 377            |               |          |          |         |       |
| 375            |               |          |          |         |       |
| Farmers,       | Farmers,      | partners | partners | and     | and   |
| directors      | directors     |          |          |         |       |
| Whole-tim      | Whole-time    | 22       | 222      | 21      | 214   |
| 21             | 212           | 219(e    | 219(e)   | 21      | 212   |
| Part-tim       | Part-time     | 66       | 66       |         |       |
| 68             | 72            |          |          |         |       |
| (e)            | (e)           |          |          |         |       |
| 73             |               |          |          |         |       |
| Tota           | Total         | (288     | (288)    | (280    | (280) |
| (280           | (280)         | (292     | (292)    | (285    | (285) |
| Total          |               |          |          |         |       |
| 704            |               |          |          |         |       |
| 678            |               |          |          |         |       |
| 662            | 669           | 661      |          |         |       |
| Wives/Husbands |               | of       |          |         |       |
| farmers,       | partners and  |          |          |         |       |
| directors      | (engaged      | in       |          |         |       |
| farm           | work)         |          |          |         |       |
| 82             |               |          |          |         |       |

(a) 
 The figures are based on returns in the agricultural census. They include some estimates for figures not direcUy obtainable from the Scottish census results and for that reason they differ slightly from some of the published United Kingdom census results. Because of changes in the census categories in England and Wales in 1970 and 1972, numbers returned for earlier years are not available on the same basis as those for the most recent years. Before 1977 the figures do not include the wives/husbands of farmers, partners and directors, even though the wives/husbands themselves may be partners or directors. In 1977 wives/husbands of farmers, partners and directors were returned separately, but only if they were engaged in farm work. 

(ft) 
 Figures relate to Great Britain only. 

(c) 
 Includes seasonal or casual workers in Northern Ireland. See footnote (rf). 

(d) 
 Before 1975 seasonal or casual workers were not returned as a separate item in Northern Ireland, but were included with part-time workers. 

(r) 
 The increase in numbers of farmers, partners and directors in 1976 occurred in England and Wales and is thought to reflect a more complete enumeration in the agricultural census. 

(/) The decrease in the number of regular whole-time and part-time female workers in 1977 is thought to be explained by the separate return, for the first time in England and Wales, of farmers' wives, some of whom were probably returned previously as family workers. 

37 
13 
35 
12 
38 
7 (f) 
(222) 
(213) 
(206) 
22 
21 
21 
15 18 
14 17 
15 
8(/) 
44 
(80) 
42 
(77) 
32(/ 
)
(68)

## Estimated Average Yields Of Crops And Livestock Products

| Calendar      |  years         |
|---------------|----------------|
| Average       |                |
|               |                |
| of            |                |
|               |                |
| Unit          |                |
| 1967-69       |                |
| 1973          |                |
| 1974          |                |
| 1975          |                |
|               |                |
| 1976          | 1977           |
|               |                |
| (fbteepMD     |                |
|               |                |
| Cropj         |                |
|               |                |
| Wheat         | tonnes/hectare |
| 3-91          |                |
| 436           |                |
| 4-97          |                |
| 4-34          |                |
|               |                |
| Barley        | 3-61           |
|               |                |
| 385           |                |
| 4-92          |                |
|               |                |
| 3-51          | 4-45           |
|               |                |
| 3-25          | 4-15           |
|               |                |
| 21-6          | 28-6           |
|               |                |
| 4-2           | 5-8            |
|               |                |
| 2-3           | 2-5            |
|               |                |
| Oats          |                |
| M             |                |
| 3-33          | 3-84           |
| 3-42          |                |
|               |                |
| Potatoes      | 24-9           |
| 22-3          |                |
|               |                |
| Sugar         |                |
| id)           |                |
| 5-7           | 6-1            |
|               |                |
| Oilseed       | rape           |
| M             |                |
|               | I I            |
| 2-3           | 21             |
|               |                |
| Apples:       |                |
|               |                |
| Dessert       | (6)            |
|               |                |
| 9-59          |                |
| 12-81         |                |
| 9-57          |                |
| 11-65         |                |
|               |                |
| 10-90         | 7-2            |
|               |                |
| 12-09         | 11-2           |
|               |                |
| 12-70         |                |
| 8-2           |                |
|               |                |
| 137-3         |                |
| 133-9         |                |
|               |                |
| 16            | 5              |
|               |                |
| 1-35          | 1-23           |
|               |                |
| Culinary      | (6)            |
| ll            |                |
| 8-57          | 1362           |
|               |                |
| Pears         | (o)            |
| li            |                |
| 8-66          | 8-43           |
|               |                |
| Tomatoes      |                |
| ib)           |                |
| 966           | 117-8          |
|               |                |
| Cauliflowers  | (b)            |
| li            |                |
| 184           | 208            |
|               |                |
| Hops          | 1-46           |
|               |                |
| Livestock     | products       |
| Milk          | (c)            |
| Eggs          |                |
| id)           |                |
| no./bird      | 210-5          |
|               |                |
| 4.267         |                |
|               |                |
| it)           |                |
| 4,407         |                |
|               |                |
| 238-5         | (r)            |
|               |                |
| id)           |                |
| Sugar-in-beet | per            |
| (/'           | i              |
| ic)           |                |
| Yield         | per            |
| (d)           |                |
| Eggs          | per            |
| it)           |                |
|               | 366            |
|            |         | Concentrated   |  fcedingstufls    |
|------------|---------|----------------|-------------------|
| Calendar   | years   | million        | tonnes            |
| Average    |         |                |                   |
|            |         |                |                   |
| of         |         |                |                   |
|            |         |                |                   |
| 1967-69    |         |                |                   |
| 1973       |         |                |                   |
| 1974       |         |                |                   |
| 1975       |         |                |                   |
|            |         |                |                   |
| 1976       | 1977    |                |                   |
|            |         |                |                   |
| (forecast) |         |                |                   |
|            |         |                |                   |
| Usage      | Usage   | of             | of                |
| Coars      | Coarse  | grain          | grains            |
| 7          | 1       | 6-8            |                   |
|            |         |                |                   |
| Whea       | Wheat   | use            | used              |
| 1-7        | 2-6     | 2-3            | 2-                |
|            |         |                |                   |
| 6-6        |         |                |                   |
| 6-6        |         |                |                   |
|            |         |                |                   |
| 21         |         |                |                   |
| 2-2        |         |                |                   |
|            |         |                |                   |
| 4-2        |         |                |                   |
| 4-2        |         |                |                   |
|            |         |                |                   |
| Othe       | Other   | supplie        | supplies          |
| id)        | id)     |                |                   |
| 31         |         |                |                   |
| 3-         | 8       |                |                   |
| 3-         | 9       |                |                   |
| 3-         | 8       |                |                   |
|            |         |                |                   |
| 12-9       |         |                |                   |
| 130        |         |                |                   |
|            |         |                |                   |
| Tota       | Total   | hom            | home supplie      |
|            |         |                |                   |
| 12-2       | 14-5    |                |                   |
| 13-2       |         |                |                   |
| 13-4       |         |                |                   |
|            |         |                |                   |
| Usage      | Usage   | Usage          | of                |
| Coars      | Coars   | Coarse         | grain             |
| 2-2        |         |                |                   |
| 2-7        |         |                |                   |
| 2-4        |         |                |                   |
|            |         |                |                   |
| Whea       | Whea    | Wheat          | use               |
| 0-9        |         |                |                   |
| 0-         | 3       |                |                   |
| 0-         | 5       |                |                   |
|            |         |                |                   |
| 2-9        |         |                |                   |
| 3-1        |         |                |                   |
|            |         |                |                   |
| 0-8        |         |                |                   |
|            |         |                |                   |
| 0-         |         |                |                   |
| 5          |         |                |                   |
|            |         |                |                   |
| Protein    | Protein | Protein,       | molasse           |
| lancou     | lancou  | lancous        |                   |
| feed       | feed    | feeds          |                   |
|            |         |                |                   |
| 2-2        |         |                |                   |
| 1-9        | 1-      |                |                   |
| 6          |         |                |                   |
| 1-9        | 21      | 1-9            |                   |
|            |         |                |                   |
| Tota       | Tota    | Total          | importe           |
| 6-1        |         |                |                   |
| 5          | 0       |                |                   |
| 4-6        | 4-8     |                |                   |
|            |         |                |                   |
| 5-8        |         |                |                   |
| 5-5        |         |                |                   |
|            |         |                |                   |
| Total      | Total   | Total          | usage             |
| 18-3       |         |                |                   |
| 19-5       |         |                |                   |
| 17-8       |         |                |                   |
| 18-2       |         |                |                   |
|            |         |                |                   |
| 18-7       | 18-5    |                |                   |
|            |         |                |                   |
| of         | whic    | whic           | which home-grow   |
|            |         |                |                   |
| 3          | 6       | 3-9            |                   |
|            |         |                |                   |
| feed       | feed    | feeds          | retaine           |
| 3-8        |         |                |                   |
| 4-9        |         |                |                   |
| 3-8        |         |                |                   |
| 4-2        |         |                |                   |
|            |         |                |                   |

id) Including home-produced by-products from imported materials. 

| Calendar     |  years               |
|--------------|----------------------|
| '000         | tonnes               |
| Average      |                      |
| of           |                      |
| 1967         |                      |
| -1969        | 1973                 |
| 1974         | 1975                 |
| 1976         |                      |
| ...          |                      |
| 3,579        |                      |
| 738          |                      |
| Wheat        | (a)                  |
| Production   |                      |
| Imports (6): | from                 |
| :            | from                 |
| Exports      |                      |
| 3,602        |                      |
| 8            |                      |
| 7            |                      |
| countries    |                      |
|              | : to the             |
| :            | to third countries   |
| Total        | new supply           |
| 7,904        |                      |
| 8,773        |                      |
| 8,952        | 7,870                |
| Production   | as % of total new    |
| supply       |                      |
| 45%          | 57%                  |
| 57%          | 56%                  |
| ...          |                      |
| ...          |                      |
| 1,987        |                      |
| 5,032        |                      |
| (1,610)      |                      |
| 2,469        |                      |
| (1,665)      |                      |
| 192          |                      |
| End          | December farm stocks |
| Disposals    |                      |
| (of          | which                |
| :            | animal feed          |
| (of          | which                |
| :            | seed                 |
| :            | other                |
| 251          |                      |
| 195          |                      |
| 197          | 217                  |
| Total        | Disposals            |
| (J)          |                      |
| 7,944        |                      |
| 9,083        |                      |
| 7,902        | 9,130                |
| 8,717        |                      |
| 25           |                      |
| ..           |                      |
| Barley       |                      |
| Production   |                      |
| Imports      |                      |
| :            | from                 |
| :            | from                 |
| countries    |                      |
| 290          | 132                  |
| 128          | 75                   |
| Exports      | :                    |
| :            | to third countries   |
| 405          |                      |
| 108          |                      |
| Total        | new supply           |
| 11,200       |                      |
| Production   | as% of total new     |
| supply       |                      |
| 102%         | 100%                 |
| 93%          |                      |
| 107%         |                      |
| 94%          |                      |
| 96%          |                      |
| 4,700        |                      |
| 6,506        |                      |
| (6,267)      |                      |
| 1,391        |                      |
| (1,315)      |                      |
| 389          |                      |
| End          | December farm stocks |
| Disposals    |                      |
| (of          | which                |
| :            | brewing/distilling   |
| (of          | which                |
| :            | seed                 |
| 126          |                      |
| 8,412        |                      |
| :            | other                |
| Total        | Disposals            |
| (d)          |                      |
| 1,305        |                      |
| 18           |                      |
| 33           |                      |
| Oats         |                      |
| Production   |                      |
| Imports      |                      |
| (b)          |                      |
| :            | from                 |
| :            | from                 |
| countries    |                      |
| Exports      |                      |
| :            | to third countries   |
| Total        | new supply           |
| 1,290        |                      |
| 1,049        | 967                  |
| 820          |                      |
| 814          |                      |
| 850          |                      |
| Production   | as % of total new    |
| supply       |                      |
| 101%         |                      |
| 103%         |                      |
| 99%          |                      |
| 97%          |                      |
| 94%          |                      |
| 95%          |                      |
|              | ...                  |
|              | ...                  |
| End          | December farm stocks |
| Disposals    |                      |
| (of          | which                |
| :            | millers              |
| (of          | which                |
| :            | seed                 |
| 753          |                      |
| 998          |                      |
| (991)        |                      |
| 119          |                      |
| (108)        |                      |
| 90           |                      |
| :            | other                |
| 26           |                      |
| 26           |                      |
| 21           |                      |
| 20           | 17                   |
| 20           |                      |
| Total        | Disposals            |
| (d)          |                      |
| 1,233        |                      |
| 1,149        |                      |
| 997          |                      |
| 940          | 844                  |
| 820          |                      |
| 1977         |                      |
| (fore­        |                      |
| cast)        |                      |
| 5,280        |                      |
| 2,355        |                      |
| 4,488        |                      |
| 1,179        |                      |
| 4.740        |                      |
| 1,915        |                      |
| 6,130        |                      |
| 933          |                      |
| 5,002        |                      |
| 583          |                      |
| 1,940        |                      |
| 9            |                      |
| 42           |                      |
| 2,455        |                      |
| 195          |                      |
| 57           |                      |
| 1,505        |                      |
| 75           |                      |
| 40           |                      |
| 1,894        |                      |
| 30           |                      |
| 97           |                      |
| 3,220        |                      |
| 17           |                      |
| 15           |                      |
| 3,580        |                      |
| 4,921        |                      |
| (2,312)      |                      |
| 2,576        |                      |
| (2,312)      |                      |
| 208          |                      |
| 2,320        |                      |
| 5,289        |                      |
| (2,404)      |                      |
| 3,392        |                      |
| (2,845)      |                      |
| 232          |                      |
| 2.300        |                      |
| 5,161        |                      |
| (2,289)      |                      |
| 2,855        |                      |
| (2,017)      |                      |
| 215          |                      |
| 2,850        |                      |
| 5,170        |                      |
| (1,940)      |                      |
| 2,840        |                      |
| (2,295)      |                      |
| 230          |                      |
| 2,530        |                      |
| 5,024        |                      |
| (2,167)      |                      |
| 3,629        |                      |
| (2,683)      |                      |
| 235          |                      |
| 7,648        |                      |
| 301          |                      |
| 10,745       |                      |
| 505          |                      |
| 9,133        |                      |
| 684          |                      |
| 8,513        |                      |
| 427          |                      |
| 9,007        |                      |
| 160          |                      |
| 430          | 247                  |
| 22           |                      |
| 148          |                      |
| 16           |                      |
| 988          |                      |
| 80           |                      |
| 161          |                      |
| 37           |                      |
| 3,200        |                      |
| 6,375        |                      |
| (5,894)      |                      |
| 1,915        |                      |
| (1,759)      |                      |
| 395          |                      |
| 5,430        |                      |
| 6,710        |                      |
| (5,960)      |                      |
| 1,725        |                      |
| (1,590)      |                      |
| 375          |                      |
| 3,940        |                      |
| 6,260        |                      |
| (5,926)      |                      |
| 1,750        |                      |
| (1.655)      |                      |
| 358          |                      |
| 4,530        |                      |
| 6,858        |                      |
| (6,185)      |                      |
| 2,008        |                      |
| (1,869)      |                      |
| 389          |                      |
| 4,160        |                      |
| 7,121        |                      |
| (6,927)      |                      |
| 1,861        |                      |
| (1,763)      |                      |
| 365          |                      |
| 169          |                      |
| 8,537        |                      |
| 151          |                      |
| 8,836        |                      |
| 160          |                      |
| 8,970        |                      |
| 163          |                      |
| 9,510        |                      |
| 156          |                      |
| 9,411        |                      |
| 955          |                      |
| 805          |                      |
| 3            |                      |
| 795          |                      |
| 20           |                      |
| 764          |                      |
| 11           |                      |
| 1,080        |                      |
| 2            |                      |
| 47           |                      |
| 5            |                      |
| 42           |                      |
| 3            |                      |
| 9            |                      |
| 4            |                      |
| 17           |                      |
| 11           |                      |
| 2            |                      |
| 6            |                      |
| 30           |                      |
| 9            |                      |
| 450          |                      |
| 605          |                      |
| (595)        |                      |
| 155          |                      |
| (115)        |                      |
| 40           |                      |
| 600          |                      |
| 939          |                      |
| (934)        |                      |
| 124          |                      |
| (121)        |                      |
| 60           |                      |
| 450          |                      |
| 725          |                      |
| (714)        |                      |
| 140          |                      |
| (122)        |                      |
| 55           |                      |
| 420          |                      |
| 643          |                      |
| (621)        |                      |
| 139          |                      |
| (108)        |                      |
| 45           |                      |
| 570          |                      |
| 771          |                      |
| (765)        |                      |
| 150          |                      |
| (131)        |                      |
| 55           |                      |
| Averag     | Average              |
|------------|----------------------|
| of         |                      |
| 1977       |                      |
| 196        | 1967                 |
| (fore­      |                      |
| -196       | -1969                |
| 1975       |                      |
| 1976       |                      |
| cast)      |                      |
| Mixed      | Corn                 |
| Production |                      |
| 161        | 192                  |
| 146        | 118                  |
| 89         |                      |
| 90         |                      |
| Ryeif)     | Ryeif)               |
| Productio  | Production           |
| 11         |                      |
| 16         |                      |
| 15         | 19                   |
| 41         |                      |
| Import     | Imports              |
| (b)        | (b)                  |
| :          | :                    |
| 21         | 8                    |
| 18         | 8                    |
| 21         |                      |
| :          | fro                  |
| 12         |                      |
| 25         |                      |
| 9          |                      |
| 15         | 17                   |
| 3          |                      |
| Total      | new supply           |
| 23         | 62                   |
| 45         | 65                   |
| Production | as % of              |
| supply     |                      |
| 48%        |                      |
| 26%        |                      |
| 47%        | 37%                  |
| Maize      |                      |
| Production |                      |
| 6          | 3                    |
| Imports    |                      |
| (b)        | :                    |
| from       | the                  |
| 172        | 290                  |
| 666        | 527                  |
| :          | from                 |
| 3,378      |                      |
| 3,099      | 2,315                |
| 2,363      | 3,238                |
| Exports    |                      |
| 14         |                      |
| 14         | 19                   |
| 65         | 44                   |
| :          | to                   |
| Total      | new supply           |
| 3,536      | 3,381                |
| 3,723      | 3,647                |
| Sorghum    |                      |
| Imports    |                      |
| (b)        |                      |
| :          | from                 |
| 15         |                      |
| 24         | 65                   |
| :          | from                 |
| 168        |                      |
| 48         |                      |
| 360        |                      |
| 375        |                      |
| 220        |                      |
| 140        |                      |
| Exports    |                      |
| 1          |                      |
| 2          |                      |
| 27         |                      |
| 8          |                      |
| 1          |                      |
| :          | to                   |
| Total      | new                  |
| 183        |                      |
| 71         |                      |
| 423        | 448                  |
| Total      | cereals              |
| Production | 13,773               |
| 13,936     |                      |
| 13,263     | 16,963               |
| Imports    |                      |
| (b)        | :                    |
| from       | the                  |
| 2,410      |                      |
| 2,859      | 3,044                |
| :          | from                 |
| 7,468      | 6,530                |
| 5,292      |                      |
| 5,756      | 5.620                |
| Exports    |                      |
| 460        | 309                  |
| 1,279      |                      |
| 246        | 536                  |
| :          | to                   |
| 115        | 46                   |
| 137        |                      |
| 134        | 40                   |
| Total      | new                  |
| 21,616     | 22,558               |
| 23,557     |                      |
| 20,222     |                      |
| 21,498     |                      |
| 25,051     |                      |
| Productio  | Production           |
| suppl      | supply               |
| 64%        | 68%                  |
| 70%        | 69%                  |
| 68%        |                      |
| End        | December farm stocks |
| (g) ...    |                      |
| 7,400      |                      |
| 7,290      |                      |
| 8,680      | 6,710                |
| 5,920      | 8,730                |
| Total      | Disposals            |
| (h)        |                      |
| 21,492     |                      |
| 23,448     |                      |
| 22,167     |                      |
| 22,192     |                      |
| 22,288     | 22,241               |

(a) Includes flour under the heading of wheat imports and exports. 

(6) Countries of origin cannot be identified with certainty from the Overseas Trade Statistics but transhipments have, where possible, been allocated to country of origin. 

(c) 
 1973, 1974, 1975. 1976 and 1977 exclude 22,000. 49,000, 35,000, 41,000 and 40,000 tonnes respectively, of 
wheat milled and exported as flour. 
(d) 
 Total new supply adjusted for changes in December farm stocks. 
(e) 
 Import/export figures are not separately distinguished in Overseas Trade Statistics. 

(/) 
 
Export figures not separately distinguished in Overseas Trade Statistics before 1970 and not significant thereafter. 

(g) 
 In respect of wheat, barley and oats. 

(A) Total new supply adjusted for changes in December farm stocks of wheat, barley and oats. 

## Oilseed Rape Supplies

| 1973                                | 1974                 | 1975    |
|-------------------------------------|----------------------|---------|
| 1976                                |                      |         |
| 1977                                |                      |         |
| (fore­                               |                      |         |
| cast)                               |                      |         |
| Production                          |                      |         |
| 31                                  | 53                   | 67      |
| 135                                 |                      |         |
| 48                                  |                      |         |
| 67                                  |                      |         |
| 110                                 |                      |         |
| 90                                  |                      |         |
|                                     | ...                  |         |
| 33                                  |                      |         |
| 60                                  |                      |         |
| 34                                  |                      |         |
| 33                                  |                      |         |
| Imports: from the Eight             | ...                  |         |
| :                                   | from third countries |         |
| 17                                  |                      |         |
| 28                                  |                      |         |
| Exports                             |                      |         |
| 1                                   |                      |         |
| 3                                   |                      |         |
| 1                                   |                      |         |
| 1                                   |                      |         |
| Total                               | new supply           |         |
| 123                                 |                      |         |
| 117                                 | 112                  |         |
| 225                                 | 334                  |         |
| Production as % of total new supply |                      |         |
| 25%                                 | 45%                  | 60%     |
| 49%                                 |                      |         |
| 40%                                 |                      |         |
Average 
of 
1967 
1973 
1974 
1975 
1976 
1977 
-1969 
(fore­
cast) 
Production:  
early (a) 
543 
463 
458 
350 
371 
419  
maincrop 
6,220 
6,382 
6,333 
4,201 
4,418 
6,152  
Total production 
6,763 
6,845 
6,791 
4,551 
4,789 
6,571 
 
8 2 
201 
146 
144 
81 
97 
Exports: ware and seed 
to the Eight 
21 
6 
4 
3 
2
\ 
82
to third countries 
/
Crop available for human con­
sumption 
4,996 
5,299 
5,328 
3,659 
3,574 
5,058 
Potatoes unsold at 31 December 
2,164 
2,369 
2,332 
1,079 
1,320 
2,154 
Total Disposals of home crop for 
human consumption 
5,005 
5,175 
5,365 
4,912 
3,333 
4,224 
Supplies from Channel Islands 
(early) 
... 
45 
27 
23 
24 
15 
Imports for human consumption: 
Raw: (6) 
- 334 
early: 
from the Eight 
4 
21 
67 
12 
25 
from third countries 
225 
208 
167 
258 
346 
maincrop: 
from the Eight 
-
9 
- 
- 
134 
269 
86 
from third countries 
- 
- 
7 
90 
116 
Processed: (c)
from the Eight 
- 145 
47 
54 
54 
66 
42 
fro
from thir
third countrie
countries 
70 
46 
48 
398 
303 
Tota
Total ne
new suppl
supply fo
for huma
human con
con-
­
sumption 
5,493 
5,566 
5,721 
5,412 
4,450 
5,157 
of which: raw 
4,567 
4,557 
4,226 
3,032 
3,777 
processed (c) 
999 
1,164 
1,186 
1,418 
1,380 
Percentag
Percentage o
of tota
total ne
new suppl
supply fo
for 
human consumption derived 
from home crop 
91% 
93% 
94% 
91% 
75% 
82% 

(a) Up to 1968 all early varieties. As from 1969 potatoes lifted before 1 August in any year. (b) Excludes seed potatoes. (c) Raw.equivalent. 

Average 
of 
1967 
1973 
1974 
1975 
1976 
1977 
-1969 
(fore­
cast) 
882 
975 
963 
568 
641 
695 
51 
1,990 
60 
1,907 
292 
1,870 
513 
1,712 
335 
1,480 
288 
1,713 
23 
220 
2 
300 
6 
343 
Production (a) Imports (6): 
from the Eight from third countries 
Exports (b): 
to the Eight 
to third countries 
2 
352 
5 
205 
16 
246 
Total new supply 
2,680 
2,581 
2,428 
2,512 
2,434 
2,580 
Production as % of total new 
supply 
33% 
37% 
23% 
25% 
29% 
38% 

(a) 
 Sugar coming out of the factory in the early part of the new year is regarded as being part of the previous 
calendar years production. 
(6) 
 Includes only sugar as such and takes no account of the sugar content of processed products. 

## Supplies Of Certain Horticultural Crops

Calendar years 

Average 
of 
1967 
-1969 
1973 
1974 
1975 
1976 
1977 
(fore­
cast) 
Apples (excludes cider apples)
Cropped area ('000 hectares)
Dessert 
23-25 
21-55 
21-24 
20-37 
20-35 
20-3 
Culinary 
15-48 
12-73 
12-64 
11-84 
11-69 
11-3 
C000 tonnes)
Output 
Dessert 
212 
257 
189 
22
224 
19
198 
14 140 
Culinar
Culinary
13 132 
12
126 
12
122 
Imports
Imports: fro
from th
the Eigh
Eight 
25
257 
24 240 
21
210 
: fro
from thir
third count
countnes 
169 
164 154 
138 
191 121 
120 
126 
74 
187 
125 
70 
Exports
Exports: t
to th
the Eigh
Eight ..
... 
: t
to thir
third countrie
countries 
)(*) 
12 
15 
13 
14 
1 
Total new supply 
590 
667 
673 
645 
711 
581 
Output as % of total new supply 
57% 
64% 
49% 
54% 
46% 
46% 
End December farm stocks ... 
78 
149 
100 
118 
104 
86 
Pears (excludes perry pears)
Cropped area ('000 hectares)... 
5-83 
5-22 
5-21 
5-20 
5-10 
5-2 
0000 tonnes)
Output Imports: from the Eight 
: from third countries 
43 
23 
25 
27 
36 
15 
47 28 
32 
46 
30 
18 
59 28 20 
41 
25 
17 
1 
1 
Exports: to the Eight 
: to third countries 
... 
1 
1 
2 
1 
2 
1 
Total new supply 
105 
89 
92 
84 
94 
85 
Output as % of total new supply 
45% 
48% 
50% 
32% 
63% 
48% 
End December farm stocks 
9 
13 
14 
7 
17 
12 
Cauliflowers 
Cropped area ('000 hectares)... 
17-93 
16-33 
15-96 
15-70 
14-39 
1404 
297 
8 
16 
255 
7 
25 
312 
15 
32 
313 
15 
14 
3 
('000 tonnes)
Output 
Supplies from Channel Islands Imports: from the Eight 
: from third countries 
274 
5 
22 
4 
216 
11 
20 
4 
Total new supply 
359 
321 
345 
287 
251 
305 
Output as % of total new supply 
87% 
93% 
91% 
89% 
86% 
90% 

## Supplies Of Certain Horticultural Crops Calendar Years

| 1973                            |                         | 1974    |           |
|---------------------------------|-------------------------|---------|-----------|
| Average                         |                         |         |           |
| of                              |                         |         |           |
| 1967                            |                         |         |           |
| -1969                           |                         |         |           |
| 1975                            | 1976                    | 1977    |           |
| (fore­                           |                         |         |           |
| cast)                           |                         |         |           |
| Tomatoes                        |                         |         |           |
| 1 02                            | 099                     |         |           |
| Cropped                         | area                    | COOO    | hectares) |
| 0-95                            |                         |         |           |
| 0-95                            |                         |         |           |
| 117                             |                         |         |           |
| 61                              |                         |         |           |
| 35                              |                         |         |           |
| 121                             |                         |         |           |
| 58                              |                         |         |           |
| 42                              |                         |         |           |
| 0000                            | tonnes)                 |         |           |
| Output                          |                         |         |           |
| Supplies from Channel           | Islands                 |         |           |
| Imports: from the Eight         |                         |         |           |
| 98                              |                         |         |           |
| 69                              |                         |         |           |
| 53                              |                         |         |           |
| 110                             |                         |         |           |
| 122                             | 128                     | 124     |           |
| 61                              | 58                      | 55      |           |
| 46                              | 32                      | 33      |           |
| 95                              | 94                      | 95      |           |
| :                               | from third countries... |         |           |
| Exports                         |                         |         |           |
| 107                             |                         |         |           |
| 1                               |                         |         |           |
| 113                             |                         |         |           |
| 1                               |                         |         |           |
| 1                               | 3                       |         |           |
| 2                               |                         |         |           |
| Total                           | new supply              |         |           |
| 330                             |                         |         |           |
| 319                             |                         | 333     |           |
| 323                             | 309                     | 305     |           |
| Output as % of total new supply |                         |         |           |
| 30%                             |                         |         |           |
| 37%                             | 36%                     |         |           |
| 38%                             |                         |         |           |
| 41%                             |                         |         |           |
| 41%                             |                         |         |           |

(a) 
Not available-believed insignificant. 

Average 
of 
1967 
1973 
1974 
1975 
1976 
1977 
-1969 
(fore­
cast) 
Production 
106 
10-4 
102 
8-3 
80 
7-3 
Imports: from the Eight 
03 
0-8 
07 
0-7 
1-1 
1-3 
from third countries ... 
06 
0-5 
09 
06 
0-7 
07 
Exports: to the Eight 
0 
9 
0-7 
0 
6 
0-3 
0-4 
03 
to third countries 
0 1 
01 
01 
0-2 
0-2 
0-3 
Total new supply 
105 
109 
111 
91 
9-2 
8-7 
Production as % of total new 
supply 
101% 
95% 
92% 
91% 
87% 
84% 
| Supplies                                        |  of herbage              |  seeds         |
|-------------------------------------------------|--------------------------|----------------|
| (a)                                             |                          |                |
| June/May                                        | years                    |                |
| Average                                         |                          |                |
| of                                              |                          |                |
| 1966/67 1973/74 1974/75 1975/76 1976/77 1977/78 |                          |                |
| -1968/69                                        |                          |                |
| (fore­                                           |                          |                |
| cast)                                           |                          |                |
| Area                                            | ('000 hectares)          |                |
| (b)                                             |                          |                |
| 14-7                                            | 22-6                     | 240            |
| 17                                              | 0                        |                |
| 0000 tonnes)                                    |                          |                |
| Production—all                                  | seed                     | 14-2           |
| 16-4                                            | 10-5                     |                |
| 10-6                                            |                          |                |
| of                                              | which                    | certified seed |
| (9-5)                                           |                          |                |
| (16                                             | 1                        | )              |
| (15 2)                                          | (15-5)                   |                |
| (10-5)                                          |                          |                |
| (106)                                           |                          |                |
| Imports—all                                     | seed:                    |                |
| from                                            | the                      | Eight          |
| 8 1                                             | 7                        | 0              |
| 111                                             | 110                      |                |
| from                                            | third countries ...      | 8-5            |
| 109                                             |                          |                |
| 71                                              |                          |                |
| 51                                              | 9-4                      |                |
| )                                               | ­                         |                |
| Exports—all                                     | seed:                    |                |
| to the                                          | Eight                    | 10             |
| 11                                              | 09                       |                |
| 21                                              |                          |                |
| 2-2                                             |                          |                |
| to third countries                              |                          |                |
| 11                                              |                          |                |
| 0-5                                             |                          |                |
| 0-7                                             |                          |                |
| 0-5                                             | 0-2                      |                |
| ­                                                | )                        |                |
| Total                                           | supply                   |                |
| 30-5                                            | 38-6                     | 29-2           |
| 300                                             | 28-5                     |                |
| Production                                      | as % of total supply ... | 47%            |
| 55%                                             |                          |                |
| 57%                                             | 55 %                     | 37%            |
| (a) Grass and clover.                           |                          |                |

(6) Certified seed only. 

## Meat Supplies (A)

Average 
of 
1967­
1973 
1974 
1975 
1976 
1977 
1969 
(forecast) 
Beef and veal 
887 
1,086 
1,219 
1,069 
1,019 
946 
Production Imports ib):
from the Eight (c)
from third countries 
... 
116 
197 
74 
263 
208 
86 
208 
39 
187 
62 
234 
56 
52 
2 
97 
2 
Exports (live and meat): 
to the Eight 
to third countries 
96 
5 
75 
3 
134 
3 
112 
3 
Supplies to the Channel Islands 
2 
4 
4 
5 
4 
4 
Total new supply 
1,202 
1,119 
1,299 
1,324 
1,199 
1,206 
Production as % of total new 
supply 
79% 
79% 
84% 
92% 
89% 
84% 
Mutton and lamb 
Production 
244 
236 
253 
264 
248 
238 
Imports: from the Eight (c) 
... 
from third countries... 
7 
347 
2 
264 
1 
212 
2 
242 
1 
225 
1 
217 
41 
Exports (live and meat): 
to the Eight to third countries 
11 
1 
29 
1 
26 
2 
36 
2 
35 
3 
3 
Supplies to the Channel Islands 
1 
2 
1 
2 
2 
Total new supply 
586 
472 
436 
468 
434 
410 
Production as % of total new 
supply 
42% 
50% 
58% 
56% 
57% 
58% 
Pork 
Production 
587 
683 
695 
572 
584 
633 
Imports: from the Eight (c) 
... 
from third countries... 
3 
3 
14 
6 
6 
1 
14 
3 
12 
1 
13 
1 
14 
Exports (live and meat): 
to the Eight to third countries 
... 
8 
2 
14 
2 
24 
7 
10 
1 
Supplies to the Channel Islands 
1 
1 
" i 
"i 
3 
" i 
Total new supply 
583 
689 
675 
579 
583 
631 
Production as % of total new 
supply 
101% 
99% 
103% 
99% 
100% 
100% 
Bacon
Bacon
Bacon and
and
and ham
ham
ham 
Productio
Productio
Production 
220 
252 
243 
210 
222 
221 
Imports
Imports
Imports: fro
fro
from th
th
the Eigh
Eigh
Eight 
fro
fro
from thir
thir
third countries..
countries..
countries...
Export
Export
Exports 
240 
16 
2 2 
244 
18 
2 2 
265 
23 
2 
2 
335 
70 
1 1 
252 
21 
1 1 
276 
38 
1 1 
Supplie
Supplie
Supplies t
to th
th
the Channe
Channe Channel Island
Island
Islands 
Tota
Tota
Total ne
ne
new
w suppl
suppl
supply 
623 
564 
527 
482 
475 
479 
Productio
Productio
Production a
as %
% o
of tota
tota
total ne
ne
new 
suppl
suppl
supply 
35% 
45% 
46% 
44% 
47% 
46% 

## Meat Supplies (A)

Average 
of 
1967-
1973 
1974 
1975 
1976 
1977 
1969 
(forecast) 
Poultrymeat
Production 
509 
664 
652 
628 
663 
676 
Imports: from the Eight 
8 
7 
7 
7 
5 
7 
from third countries... 
3 
1 
1 
1 
Exports 
1 
3 
2 
2 
13 
36 
Supplies to the Channel Islands 
1 
2 
2 
2 
4 
2 
Total new supply  
515 
669 
654 
633 
652 
646 
Production as % of total new 
supply 
99% 
99% 
100% 
99% 
102% 
105% 
Total meat supplies
Production 
2,506 
2,721 
2,929 
2,893 
2,785 
2,787 
Imports(A): from the Eight (c)... 
469 
373 
487 
483 
445 
499 
from third countries 
617 
574 
322 
306 
305 
293 
Exports (live and meat) 
78 
149 
134 
185 
179 
195 
Supplies to the Channel Islands 
5 
9 
12 
10 
15 
12 
Total new supply 
3,509 
3,511 
3,591 
3,486 
3,342 
3,376 
Production as % of total new 
supply 
71% 
77% 
82% 
83% 
83% 
83% 

(a) 
 Docs not include meat offals or trade in preserved or manufactured meat products (e.g. canned meat). 

(b) 
 Boneless beef and veal have been converted to bone-in weights, in order to bring imports into line with the home production figures. 

(c) 
 Includes meat from animals imported fat from Irish Republic. 

| Calendar                        |  years          |             | million   |  litres    |
|---------------------------------|-----------------|-------------|-----------|------------|
| 1977                            |                 |             |           |            |
| (forecast)                      |                 |             |           |            |
| Average                         |                 |             |           |            |
| of                              |                 |             |           |            |
| 1967-69                         | 1973            | 1974        |           |            |
| 1975                            |                 |             |           |            |
| 1976                            |                 |             |           |            |
| id)                             |                 |             |           |            |
| 7,482                           |                 |             |           |            |
| 7,862                           |                 |             |           |            |
| 7,698                           |                 |             |           |            |
| 7,761                           |                 |             |           |            |
| 7,517                           |                 |             |           |            |
| 7,524                           |                 |             |           |            |
| 2,772                           |                 |             |           |            |
| 2,150                           |                 |             |           |            |
| 957                             |                 |             |           |            |
| 1,136                           |                 |             |           |            |
| 1,253                           |                 |             |           |            |
| 751                             |                 |             |           |            |
| 2,053                           |                 |             |           |            |
| 2,040                           |                 |             |           |            |
| 964                             |                 |             |           |            |
| 2,224                           |                 |             |           |            |
| 1,819                           |                 |             |           |            |
| 958                             |                 |             |           |            |
| 1,239                           |                 |             |           |            |
| 2,181                           |                 |             |           |            |
| 1,006                           |                 |             |           |            |
| 1,095                           |                 |             |           |            |
| 2,361                           |                 |             |           |            |
| 1,003                           |                 |             |           |            |
| 580                             |                 |             |           |            |
| 260                             |                 |             |           |            |
| 132                             |                 |             |           |            |
| 502                             |                 |             |           |            |
| 195                             |                 |             |           |            |
| 114                             |                 |             |           |            |
| 524                             |                 |             |           |            |
| 175                             |                 |             |           |            |
| 103                             |                 |             |           |            |
| 579                             |                 |             |           |            |
| 175                             |                 |             |           |            |
| 107                             |                 |             |           |            |
| 630                             |                 |             |           |            |
| 214                             |                 |             |           |            |
| 105                             |                 |             |           |            |
| 603                             |                 |             |           |            |
| 219                             |                 |             |           |            |
| 122                             |                 |             |           |            |
| Sales through                   | milk            | marketing   |           |            |
| schemes:                        |                 |             |           |            |
| for                             | liquid          | consumption |           |            |
| for                             | manufacture:    |             |           |            |
| butter                          |                 |             |           |            |
| cheese                          |                 |             |           |            |
| (a)                             |                 |             |           |            |
| cream                           |                 |             |           |            |
| condensed                       |                 |             |           |            |
| milk—full                       | cream           |             |           |            |
| (b)                             |                 |             |           |            |
| milk                            | powder—full     | cream...    |           |            |
| other                           |                 |             |           |            |
| Total                           | for manufacture | 4,089       | 5,945     | 5,399      |
| 5,858                           | 6,739           |             |           |            |
| Total                           | sales           |             |           |            |
| 11,606                          | 13,468          |             |           |            |
| 13,098                          | 13,133          |             |           |            |
| 13,618                          |                 |             |           |            |
| 14,221                          |                 |             |           |            |
| Used                            | on farms (c)    |             |           |            |
| 302                             | 231             | 221         | 210       |            |
| 201                             |                 |             |           |            |
| 194                             |                 |             |           |            |
| Output for human consumption... |                 |             |           |            |
| 11,908                          |                 |             |           |            |
| 13,699                          |                 |             |           |            |
| 13,319                          | 13,343          |             |           |            |
| 13,819                          |                 |             |           |            |
| 14,415                          |                 |             |           |            |

(a) Includes farmhouse cheese made under milk marketing schemes. 

(6) Includes condensed milk used in the production of chocolate crumb. 

(c) Includes farmhouse manufacture of butter and cream, milk consumed in farm households and sales outside milk marketing schemes. 

id) 
366 days. 

Average 
of 
1967-69 
1973 
1974 
1975 
1976 
1977 
(forecast) 
Butter 
Opening Stocks 
Production (a)
Imports *(b)*:from the Eight 
... 
from third countries 
42 
50 
159 
297 
69 98 
186 152 
61 54 
326 
120 
67 
48 
364 
124 
83 90 
275 
123 
107 
120 
215 
120 
14 
2 2 
1 
2 
14 
2 
2 
Exports (inc. re-exports): 
to the Eight to third countries... 
"i 
5 
11 
Total Supply 
546 
489 
558 
601 
555 
545 
Closing Stocks 
Offtake 
40 
506 
61 
428 
67 
491 
83 
517 
107 
449 
139 
406 
Production as % of offtake 
... 
10% 
23% 
11% 
9% 
20% 
29% 
Cheese 
10
100 
Opening Stocks 
Production (a) Imports: 
from the Eight 
... 
from third countries 
55 
122 
55 
110 
85 
182 
83 54 
74 
218 
101 
21 
71 
235 
119 
33 
100 
204 
114 
33 
214 
100 
15 
1 
2 
3 3 
3 9 
4 
3 
6 4 
6 5 
Exports (inc. re-exports): 
to the Eight 
to third countries... 
Total Supply 
339 
398 
401 
452 
441 
418 
74 
324 
71 
329 
100 
351 
100 
341 
78 
340 
Closing Stocks 
Offtake 
61 
278 
Production as % of offtake 
... 
44% 
56% 
66% 
67% 
60% 
63% 
Cream-fresh,frozen 
and sterilized 
- 
67 
12 
- 
82 
11 
- 
85 
8 
- 
84 
6 
- 
81 
5 
- 
81 
5 
Opening Stocks 
Production (a) Imports: 
from the Eight 
... 
from third countries 
Exports (inc. re-exports): 
to the Eight to third countries... 
" i 
... 
Total Supply 
77 
93 
93 
90 
85 
85 
Closing Stocks 
Offtake 
77 
93 
93 
- 
90 
- 
85 
- 
85 
Production as % of offtake 
... 
87% 
88Ji 
91% 
93% 
95% 
95% 
Condensed Milk-full 
cream 
16 
33 
245 
8 
30 
234 
11 
28 
226 
9 
23 
195 
9 
21 
204 
9 
223 
10 
... 
Opening Stocks (c)
Production (c) ... 
Imports: 
from the Eight 
from third countries 
Exports *(d)* (inc. re-exports): 
to the Eight 
to third countries... 
1 
32 
1 
13 
16 
1 
14 
2 
29 
2 
24 
Total Supply 
253 
262 
246 
213 
203 
223 
Closing Stocks (c)
Offtake 
32 
221 
28 
234 
23 
223 
21 
192 
16 
187 
16 
207 
Production as % of offtake 
... 
111% 
100% 
101% 
102% 
109% 
108% 
Average 
of 
1967-69 
1973 
1974 
1975 
1976 
1977 
(forecast) 
Milk Powder-full cream 
3 
27 
4 
27 
5 
32 
3 
24 
2 
22 
2 
22 
Opening Stocks 
Production 
11 
7 
4 
4 
Imports: 
from the Eight 
... 
from third countries 
4 
16 
13 
2 
Exports (inc. re-exports): 
to the Eight 
to third countries... 
1 
8 
1 
7 
3 
8 
3 
8 
2 8 
2 9 
Total Supply 
41 
39 
37 
24 
17 
17 
Closing Stocks 
Offtake 
3 
38 
5 
35 
3 
33 
2 
21 
2 
15 
2 
15 
Production as % of offtake ... 
71% 
77% 
97% 
114% 
147% 
147% 
Skimmed Milk Powder 
Opening Stocks (e) 
Production 
21 84 
59 
158 
60 
103 
49 
173 
52 
106 
26 
214 
22 
20 
Imports: 
from the Eight 
... 
from third countries 
14 
22 
15 
1 
10 
54 
2 
Exports (/) (inc. re-exports): 
to the Eight 
to third countries... 
13 
10 
92 
21 
38 
13 
55 
5 
102 
13 
60 
8 
Tota
Tota
Total Suppl
Suppl
Supply 
118 
119 
123 
154 
129 
192 
Closin
Closin
Closing Stock
Stock
Stocks (e)
(e)
(e) 
24 93 
60 59 
52 71 
Offtak Offtak Offtake 
49 
106 
26 
103 
86 
106 
Productio
Productio
Production a
as %
% o
of offtak
offtak
offtake ..
..
... 
90% 
268% 
145% 
100% 
168% 
202% 

(a) 
 Includes farmhouse manufacture. 

(b) Includes butter other than natural (i.e. butter fat and oil, dehydrated butter and ghee). 

(c) 
 Includes condensed milk used in the production of chocolate crumb. 

(d) 
 From February 1973 to December 1973 and from January 1975 includes an insignificant amount derived from skimmed milk. 

(e) 
 Figures for stocks from closing stocks 1973 include Intervention stocks as well as manufacturers' stocks 
but do not include powder bought by the Irish Republic intervention agency for storage in the UK 
. 
if) 
 
Between February and December 1973 this includes buttermilk and whey powder. 

| Calendar      |  years                   |               | million   |  dozen    |
|---------------|--------------------------|---------------|-----------|-----------|
| Average       |                          |               |           |           |
| of            |                          |               |           |           |
| 1977          |                          |               |           |           |
| 1967          |                          |               |           |           |
| -1969         |                          |               |           |           |
| (fore­         |                          |               |           |           |
| cast)         |                          |               |           |           |
| 1973          |                          |               |           |           |
| 1974          |                          |               |           |           |
| 1975          | 1976                     |               |           |           |
| (a)           |                          |               |           |           |
| Home          | supplies                 |               |           |           |
| (b)           |                          |               |           |           |
| Packing       | station throughput:      |               |           |           |
| sold          | in                       | shell         |           |           |
| 581           |                          |               |           |           |
| 587           | 605                      | 614           |           |           |
| 612           | 597                      |               |           |           |
| 40            |                          |               |           |           |
| 503           |                          |               |           |           |
| 38            |                          |               |           |           |
| 464           |                          |               |           |           |
| 36            |                          |               |           |           |
| 501           |                          |               |           |           |
| processed     |                          |               |           |           |
| Other         | sales (c)                |               |           |           |
| 92            |                          |               |           |           |
| 549           |                          |               |           |           |
| 42            |                          |               |           |           |
| 536           |                          |               |           |           |
| 41            |                          |               |           |           |
| 526           |                          |               |           |           |
| 1,222         |                          |               |           |           |
| 12            |                          |               |           |           |
| 38            |                          |               |           |           |
| 1,149         |                          |               |           |           |
| 17            |                          |               |           |           |
| 2             |                          |               |           |           |
| 1,164         |                          |               |           |           |
| 15            |                          |               |           |           |
| 2             |                          |               |           |           |
| Total         | output for human con­     |               |           |           |
| sumption      |                          |               |           |           |
| Imports (t/): | from                     | the           | Eight     |           |
| from          | third                    | countries     |           |           |
| 1,165         |                          |               |           |           |
| 34            |                          |               |           |           |
| 10            |                          |               |           |           |
| 1,116         |                          |               |           |           |
| 38            |                          |               |           |           |
| 2             |                          |               |           |           |
| 1,148         |                          |               |           |           |
| 35            |                          |               |           |           |
| 8             |                          |               |           |           |
| 12            |                          |               |           |           |
| 29            |                          |               |           |           |
| 14            |                          |               |           |           |
| 4             |                          |               |           |           |
| 4             |                          |               |           |           |
| 2             |                          |               |           |           |
| 12            |                          |               |           |           |
| 3             |                          |               |           |           |
| Exports       |                          |               |           |           |
| (d):          |                          |               |           |           |
| to the        | Eight                    |               |           |           |
| to            | third                    | countries ... |           |           |
| 9             |                          |               |           |           |
| 1             |                          |               |           |           |
| 9             |                          |               |           |           |
| 3             |                          |               |           |           |
| Total         | new supply               | 1,231         | 1,203     | 1,181     |
| 1,163         |                          |               |           |           |
| Output        | as % of total new supply |               |           |           |
| 99%           |                          |               |           |           |
| 97%           | 97%                      | 98%           |           |           |
| 100%          |                          |               |           |           |
| 100%          |                          |               |           |           |

(a) 366 days. 

(b) Hen eggs for human consumption including output from commercially insignificant units, 
(r) Includes farmhouse consumption and domestic egg production. 

(d) Includes shell egg equivalent of whole dried, frozen and liquid egg and yolk, but excludes albumen. 

|             |                   |           | Wool    |  supplies    |
|-------------|-------------------|-----------|---------|--------------|
| Calendar    | years             |           | million | kg           |
| Average     |                   |           |         |              |
| of          | 1977              |           |         |              |
| 1967        |                   |           |         |              |
| 1973        | 1974              | 1975      | 1976    | (fore­        |
| -1969       | cast)             |           |         |              |
| Production: |                   |           |         |              |
| (a)         |                   |           |         |              |
| 53          | 48                |           |         |              |
| 50          | 49                |           |         |              |
| 48          | 47                |           |         |              |
| of          | which             | clip      | (35)    | (35)         |
| Imports:    |                   |           |         |              |
| from        | the               | Eight     |         |              |
| 12          | 16                |           |         |              |
| 11          |                   |           |         |              |
| 15          | 19                | 21        |         |              |
| from        | third             | countries | 227     | 135          |
| Exports:    |                   |           |         |              |
| to the      | Eight             | 14        | 16      | 15           |
| to          | third             | countries | 12      | 11           |
| Total       | new supply        | 266       |         |              |
| 172         |                   |           |         |              |
| 147         | 152               | 178       |         |              |
| 159         |                   |           |         |              |
| Production  | as % of total new |           |         |              |
| supply      | 20                | 28        | 34      | 32           |
| 30          |                   |           |         |              |

(a) Figures relate to clip years (June/May) but in practice the bulk of production is within the calendar year. 

## Net Income, Net Product And Labour Productivity All Commercially Significant Holdings

Calendar years 

| FARMING                                           |  N E T   |  INCC   |
|---------------------------------------------------|----------|---------|
| )ME                                               |          |         |
| £m                                                |          |         |
| at current prices                                 |          |         |
| (a)                                               |          |         |
| including                                         | Stock    |         |
| Appreciation                                      |          |         |
| exclud­                                            |          |         |
| ing                                               | Stock    |         |
| Apprccia­                                          |          |         |
| tion                                              |          |         |
| (b)                                               |          |         |
| Yea                                               | Yea      | Year    |
| Actual                                            | Actual   |         |
| 3-year                                            |          |         |
| moving                                            |          |         |
| average                                           |          |         |
| 1967                                              |          |         |
| 546                                               |          |         |
| 509                                               |          |         |
| 103                                               |          |         |
| 79                                                |          |         |
| 1968                                              | 504      | 539     |
| 1969                                              | 566      | 536     |
| 1970                                              | 539      | 597     |
| 1971                                              | 686      | 644     |
| 1972                                              | 706      |         |
| 863                                               | 590      | 111     |
| 1,081                                             |          |         |
| 1,324                                             |          |         |
| 1,536                                             |          |         |
| 1,68                                              | 1,689    |         |
| 858                                               |          |         |
| 742                                               |          |         |
| 930                                               |          |         |
| 1,158                                             |          |         |
| 1,34                                              | 1,348    |         |
| 1,198                                             |          |         |
| 1,340                                             |          |         |
| 1,435                                             |          |         |
| 1,835                                             |          |         |
| 1,79                                              | 1,796    |         |
| 1973                                              |          |         |
| 1974                                              |          |         |
| 1975                                              |          |         |
| 1976                                              |          |         |
| 1977                                              |          |         |
| (fore­                                             |          |         |
| cast)                                             |          |         |
| Forecasts for 1977 are as at end of October 1977. |          |         |

(a) 
 Net income is defined as the return to farmers and their wives for their manual and managerial labour ami 
for the use of the occupiers' investment after provision has been made for depreciation. The occupiers" 
investment includes all tenant-type physical assets in livestock, crops, machinery, etc, but excludes any
financial assets and all landlord-type assets such as land and buildings. These figures are not directly corn­
parable with incomes in other sectors of the economy, since farm income also includes elements of wages 
and changes in stock valuations as well as profits. 
(b) This is net income at current prices including the change in the volume of stocks and work-in-progress but 
excluding stock appreciation (ic that part of the change in the value of stocks and work-in-progress attribut­
able to the change in the cost of inputs between the beginning and end of year). 
(c) 
 Net product (net output) measures year-to-year changes in the value-added at constant prices by farmers,
landowners and farmworkers to all the goods and services purchased from outside the agricultural sector. 
i,/) Labour productivity is defined here as gross product per person engaged in agriculture. Gross product is 
gross output less all inputs other than depreciation, labour, net rent and interest. It is measured here at constant 
prices. In order to be consistent with national economic conventions, gross product as used in the calculation 
of labour productivity covers agricultural contractors as well as all commercially significant holdings. The 
total number of persons engaged in agriculture comprises the number of employees, employers and self­
employed (excluding farmers' spouses) recorded in the annual June census taken by the Agricultural 
Departments. Before 1971, however, the trends in numbers of employers and employees were estimated 
respectively from the Population Censuses and the Department of Employment count of national insurance 
cards. 
T A B L E 20 

## Average Earnings And Hours Of Agricultural Workers (A)

| Calendar   |  years     |
|------------|------------|
| 1973       |            |
| 1974       | 1975       |
| 1976       |            |
| 1977       |            |
| (forecast) |            |
| Earnings   | £ per week |
| (b)        |            |
| 27-32      | 3407       |
| 42-92      | 50-27      |
| 54-00      |            |
| Hours      | per week   |
| (c)        |            |
| 47-2       |            |
| 45-9       |            |
| 460        | 45-5       |
| 45-8       |            |

(a) 
 For all hired regular whole-time men. 

(6) 
 Earnings include pay for statutory holidays and paymcnts-in-kind which are valued at rates set down by the 
Agricultural Wages Board:, and comprise houses, milk, potatoes, etc (the principal one being houses, most of 
which were, in England and Wales, valued at 50p before 20 January 1976 and £1-50 thereafter). 
(c) 
 All hours worked and statutory holidays. 

| N E         | N E          | T PRODUC   |
|-------------|--------------|------------|
| LABOU       | LABOU        | R          |
| PRODUCTIVIT | PRODUCTIVITY |            |
|             | (d)          | (d)        |
| at constan  | constant     |            |
| price       | prices       |            |
| (c)         | (c)          |            |
| 1975-100    | 1975=100     |            |
| 113         |              |            |
| 114         |              |            |
| 100         |              |            |
| 89          |              |            |
| 112         |              |            |
| 102         |              |            |
| 107         |              |            |
| 100         |              |            |
| 91          |              |            |
| 111         |              |            |

## Output, Input And Net Income (A)

| £                        |  million           |
|--------------------------|--------------------|
| Calendar                 | years              |
| 1973                     |                    |
| 1974                     |                    |
| 1977                     |                    |
| (fore­                    |                    |
| cast)                    |                    |
| 365                      |                    |
| 401                      |                    |
| 20                       |                    |
| 227                      |                    |
| 239                      |                    |
| 14                       |                    |
| 1                        |                    |
| 279                      |                    |
| 338                      |                    |
| 17                       |                    |
| 1                        |                    |
| 300                      |                    |
| 330                      |                    |
| 15                       |                    |
| 1                        |                    |
| 334                      |                    |
| 382                      |                    |
| 18                       |                    |
| 2                        |                    |
| (646)                    |                    |
| (635)                    |                    |
| (736)                    | (788)              |
| (482)                    |                    |
| 317                      |                    |
| 85                       |                    |
| 9                        |                    |
| 43                       |                    |
| 146                      |                    |
| 59                       |                    |
| 9                        |                    |
| 51                       |                    |
| 568                      |                    |
| 98                       |                    |
| 11                       |                    |
| 56                       |                    |
| 374                      |                    |
| 143                      |                    |
| 10                       |                    |
| 58                       |                    |
| 123                      |                    |
| 69                       |                    |
| 9                        |                    |
| 29                       |                    |
| OUTPUT                   | (6) (c)            |
| Farm                     | crops              |
| (d)                      |                    |
| Wheat                    |                    |
| Barley                   |                    |
| Oats                     |                    |
| Other                    | cereals            |
| (Total                   |                    |
| cereals)                 |                    |
| Potatoes                 |                    |
| Sugar                    | beet               |
| Hops                     |                    |
| Other                    | (e)                |
| 1,373                    |                    |
| 1,110                    |                    |
| 1,469                    |                    |
| 712                      |                    |
| 1.                       |                    |
| Total crops              |                    |
| 228                      |                    |
| 87                       |                    |
| 77                       |                    |
| 455                      |                    |
| 133                      |                    |
| 116                      |                    |
| 343                      |                    |
| 91                       |                    |
| 93                       |                    |
| 286                      |                    |
| 100                      |                    |
| 85                       |                    |
| 376                      |                    |
| 112                      |                    |
| 108                      |                    |
| Horticulture             |                    |
| Vegetables               | (including         |
| Fruit                    |                    |
| Other                    | CO                 |
| 392                      |                    |
| 471                      |                    |
| 596                      |                    |
| 2.                       |                    |
|                          | Total horticulture |
| 1,046                    |                    |
| 283                      |                    |
| 642                      |                    |
| 460                      |                    |
| 564                      |                    |
| 156                      |                    |
| 420                      |                    |
| 210                      |                    |
| 18                       |                    |
| 897                      |                    |
| 187                      |                    |
| 493                      |                    |
| 284                      |                    |
| 21                       |                    |
| 994                      |                    |
| 240                      |                    |
| 556                      |                    |
| 344                      |                    |
| 24                       |                    |
| Livestock                |                    |
| Fat                      | cattle and calves  |
| Fat                      | sheep and lambs    |
| Fat                      | pigs               |
| Poultry                  |                    |
| Other                    |                    |
| (g)                      |                    |
| 617                      |                    |
| 164                      |                    |
| 468                      |                    |
| 254                      |                    |
| 19                       |                    |
| 1,522                    | 2,462              |
| 2,158                    |                    |
| 1,883                    |                    |
| 1,366                    |                    |
| 3.                       |                    |
| Total livestock          |                    |
| 1,295                    |                    |
| 1,461                    | 837                |
| 306                      |                    |
| 17                       |                    |
| 6                        |                    |
| 1,065                    |                    |
| 276                      |                    |
| 20                       |                    |
| 8                        |                    |
| 342                      |                    |
| 24                       |                    |
| 10                       |                    |
| 393                      |                    |
| 31                       |                    |
| 10                       |                    |
| 697                      |                    |
| 285                      |                    |
| 16                       |                    |
| 5                        |                    |
| Livestock                | products           |
| Milk                     | and                |
| Eggs                     |                    |
| Clip                     | wool               |
| Other                    |                    |
| (h)                      |                    |
| 1,670                    | 1,896              |
| 1,368                    |                    |
| 1,166                    |                    |
| 1,003                    |                    |
| 4.                       |                    |
| Total livestock products |                    |
| 38                       |                    |
| 33                       |                    |
| 31                       |                    |
| 32                       |                    |
| 5.                       |                    |
| Sundry                   | output             |
| (i)                      | 26                 |
| 5,925                    |                    |
| 4,921                    |                    |
| 4,090                    |                    |
| 6,473                    |                    |
| 3,500                    |                    |
| 6.                       |                    |
|                          | T O T A L          |
| 42                       |                    |
| 46                       |                    |
| 44                       |                    |
| 31                       |                    |
| 7.                       |                    |
| Sundry                   | receipts           |
| 90                       |                    |
| 96                       |                    |
| 114                      |                    |
| 8.                       |                    |
| Production               | grants             |
| 3,627                    | 4,222              |
| 9.                       |                    |
| 5,118                    | 6,084              |
| - 4 0                    |                    |
| +31                      |                    |
| Work-in-Progress         | Change             |
| (k)                      |                    |
| Stock                    | Change (/)         |
| - 8                      |                    |
| - 6 0                    |                    |
| -143                     |                    |
| -203                     |                    |
| - 3 8                    |                    |
| +                        | 320                |
| +2S2                     |                    |
| - 1 9                    |                    |
| - 6 6                    |                    |
| - 8 5                    |                    |
| 10.                      | Total              |
| +S7                      |                    |
| - 2 0                    |                    |
| +67                      |                    |
| 4,214                    |                    |
| 6,896                    |                    |
| 11.                      | GROSS              |
| 5,999                    |                    |
| 3,694                    |                    |
| 352                      |                    |
| 102                      |                    |
| 299                      |                    |
| 64                       |                    |
| 381                      |                    |
| 107                      |                    |
| 250                      |                    |
| 39                       |                    |
| 326                      |                    |
| 48                       |                    |
| Intermediate output      |                    |
| (m)                      |                    |
| Feed                     | (n)                |
| Seed                     |                    |
| 362                      |                    |
| 454                      |                    |
| 12.                      |                    |
| Total                    | intermediate       |
| 375                      |                    |
| 289                      |                    |
| Output,       |  input and net income    |
|---------------|--------------------------|
| (a)           |                          |
| Calendar      | years                    |
| 1977          |                          |
| 1973          | 1974                     |
| 1975          |                          |
| 1976          |                          |
| (fore­         |                          |
| cast)         |                          |
| 13.           |                          |
| 3,405         | 3,839                    |
| 5,545         |                          |
| 6,408         |                          |
| INPUT         |                          |
| Expenditure   |                          |
| Feedingstuffs |                          |
| 960           | 1,152                    |
| 1,770         |                          |
| Seeds         |                          |
| 79            |                          |
| 97            | 118                      |
| 181           |                          |
| 204           |                          |
| Livestock     | (imported and inter-farm |
| expenses)     |                          |
| 94            |                          |
| 103           | 125                      |
| 138           |                          |
| Fertilisers   | and                      |
| (o)           |                          |
| 210           | 292                      |
| 320           | 369                      |
| 436           |                          |
| 233           |                          |
| 289           |                          |
| 345           | 402                      |
| 477           |                          |
| Machinery     | ... "                    |
| of            | which:                   |
| (112)         |                          |
| (129)         |                          |
| U56)          | (179)                    |
| (209)         |                          |
| Fuel          | and oil                  |
| (82)          |                          |
| (U7)          |                          |
| (131)         | (156)                    |
| (192)         |                          |
| Other         | (including               |
| services)     |                          |
| (39)          | (43)                     |
| (58)          | (67)                     |
| (76)          |                          |
| Farm          | maintenance              |
| (p)           |                          |
| 132           | 151                      |
| 211           |                          |
| 245           |                          |
| Miscellaneous | expenditure              |
| (g)           |                          |
| 223           | 284                      |
| 363           |                          |
| 423           |                          |
| 469           |                          |
| 14.           |                          |
| 1,931         | 2,368                    |
| 2,601         | 3,269                    |
| 3,738         |                          |
| Stocks        | (J)                      |
| 15.           |                          |
| - 8           |                          |
| - 1 7         |                          |
| +             | 12                       |
| - 3 0         |                          |
| + S           |                          |
| 16.           |                          |
| 1,923         | 2,351                    |
| 3,743         |                          |
| 17.           |                          |
| 1,634         | 1,976                    |
| 3,255         |                          |
| 18.           |                          |
| 1,770         |                          |
| 1,863         | 2^02                     |
| 3,153         |                          |
| Depreciation  |                          |
| Machinery     |                          |
| 195           |                          |
| 255           | 342                      |
| 503           |                          |
| Other         |                          |
| (p)           |                          |
| 88            |                          |
| 117           | 152                      |
| 19.           |                          |
|               | Total                    |
| 282           |                          |
| 372           |                          |
| 494           | 600                      |
| 747           |                          |
| 20.           |                          |
| 1,488         |                          |
| 1,491         | 1,808                    |
| 2,160         | 2,405                    |
| Labour        |                          |
| 503           | 608                      |
| 748           | 868                      |
| 935           |                          |
| Net           | rent (/)                 |
| 54            |                          |
| 42            |                          |
| 33            |                          |
| 21            | 6                        |
| Interest      |                          |
| (u)           |                          |
| 73            |                          |
| 99            |                          |
| 98            | 113                      |
| 21.           |                          |
| 858           |                          |
| 742           |                          |
| 930           |                          |
| 1,158         |                          |
| 1,348         |                          |
| excluding     | stock appreciation       |
| Stock         | appreciation (v)         |
| Livestock     |                          |
| +             | 23S                      |
| + 3 0 5       | + 2 S 9                  |
| Crops         | and other                |
| +             | 107                      |
| + 2 9 2       | + 2 1 6                  |
| 22.           |                          |
|               | Total                    |
| +             | 340                      |
| +             | S97                      |
| +441          |                          |
| 23.           |                          |
| stock         | appreciation             |
| 1,340         |                          |
| 1,435         | 1,835                    |

Estimates for 1977 are as at end of October 1977. 

(a) 
 The estimates represent value at current prices for commercially significant holdings which, broadly speaking, are holdings with 26 standard man-days or more. 

(6) 
 Because this table relates to output ie sales, rather than total production, the quantities used are not the same as those shown for home production in the supply tables (Tables 6-18). 

(c) 
 Output is netted of Value Added Tax (VAT) collected on the sale of inedible products, which is repaid to 
II.M. Customs and Excise. Figures include subsidies, 
(a") Excludes deficiency payments on retained cereals and compensation payments on unsold **potatoes—see** (J).
let 
Beans for stockfecd, hay and dried grass, oilseed rape, grass and clover seed and other farm crops. 
if) 
Flowers, bulbs and nursery stock, seeds and other minor products. 
(g) Breeding animals exported, poultry for stock and export, rabbits and game, knacker animals and other minor 
livestock. 
(A) 
 Honey, goat milk, export of eggs for hatching and other minor livestock products, 
(i) 
 Own account capital formation, timber, osiers, peat and turf. 
ij) 
 
Deficiency payments on cereal retentions. Potato Marketing Board compensation payments, animal disease 
compensation, co-operative society dividends and interest and other miscellaneous receipts. 
(A) 
 Growing crops and livestock numbers: closing level *minus* opening level. 
(I) Stocks of unsold harvested crops; closing level *minus* opening level. 
(m) Sales included in Output but subsequently repurchased and so reappearing as Input. 
in) Cereals, potatoes, beans, hay and dried grass, 
(o) Before subsidy where applicable. 
(/') Including landlord-type maintenance work. 
(0) 
 
Electricity, veterinary expenses, pesticides, rates and miscellaneous costs. 
(r) 
 Expenditure is netted or VA 
T reclaimed in the normal way, but each heading includes VA 
T paid without 
recovery by, for example, unregistered producers. The total unrecovered tax is estimated at £10 million for 
1975, £12 million for 1976 and for 1977 £13 million. 
(J) 
 
Feed (purchased) and fertilisers. Opening stock *minus* closing stock. 
(r) 
 
Net Rent is the residual after deducting landlords' maintenance and depreciation from Gross Rent. Land­
lords' maintenance and landlords' depreciation are included in Farm Maintenance and Depreciation and hence the whole of Gross Rent is treated as a cost to the industry. The estimates of Gross Rent are £205.1 million in 1973. £226.6 million in 1974, £263.1 million in 1975, £309.3 million in 1976 and £359.0 million in 1977. 
iu) 
 On commercial debt for current farming purposes. 

(v) 
 Stock appreciation measures that part of the change in the value of stocks and work-in-progress attributable to the change in the cost of inputs between the beginning and end of year. 

| Calendar   |  years                     |
|------------|----------------------------|
| Index      | of gross rents per hectare |
| Year       |                            |
| 1975       | - 100                      |
| 1967       | 54-7                       |
| 1968       | 58-8                       |
| 1969       | 63                         |
| 0          |                            |
| 1970       | 67-2                       |
| 1971       | 70-9                       |
| 1972       | 74-9                       |
| 1973       | 79-2                       |
| 1974       |                            |
| 861        |                            |
| 1975       | 1000                       |
| 1976       | 119-1                      |
| 1977       | (provisional)              |

(a) Gross rents per hectare vary considerably between different regions and sizes and types of farm. Detailed information on farm rents is published in "Farm Rents in England and Wales" and in "Scottish Agricultural Economics". In Northern Ireland almost all land is held by owner-occupiers. 

|                  | Calendar   |  years    |
|------------------|------------|-----------|
| Gross            | capital    | formation |
| (a)              |            |           |
| £                | million    |           |
| Average          |            |           |
| of               | 1973       | 1974      |
| 1967-69          |            |           |
| (provisional)    |            |           |
| 130              |            |           |
| 231              | 308        |           |
| 372              |            |           |
| 500              | 614        |           |
| 89               | 209        | 251       |
| 226              | 258        |           |
| Plant,           | machinery  | and       |
| Buildings        | and works  |           |
| Work-in-progress | and stocks |           |
| 0 )              | 62         | 415       |
| Total            |            | '         |
| 281              | 855        |           |
| 1,165            | 903        | 1,348     |
| 1,596            |            |           |

(a) 
 
Capital formation represents investment by tenants, landlords, and owner-occupiers. Investment in plant and machinery is normally tenant-type. Investment in buildings and works is normally landlord-type. In practice, however, there are many variations in the division between the two responsibilities. The figures in the table represent gross expenditure before crediting any grants which reduce the cost to the owner or occupier. Annual charges in the form of depreciation are made for these items in calculating aggregate farming net income. 

## Specimen Net Incomes For Different Types Of Farm (A)

| Averag                       | Average       |
|------------------------------|---------------|
| size                         | of farm       |
| in                           | sample        |
| Typ                          | Type          |
| Hectares                     |               |
| of                           | crops         |
| and                          |               |
| grass                        |               |
| Standard                     |               |
| man-days                     |               |
| (smd)                        |               |
| 50                           |               |
| 80                           |               |
| 71                           |               |
| 83                           |               |
| 142                          |               |
| 92                           |               |
| 102                          |               |
| 47                           |               |
| 970                          |               |
| 1,182                        |               |
| 791                          |               |
| 759                          |               |
| 990                          |               |
| 1,254                        |               |
| 1,272                        |               |
| 1,200                        |               |
| England                      |               |
| (275^199                     |               |
| smd) (6)                     |               |
| Specialist                   | dairy ...     |
| Mainly                       | dairy         |
| Mainly                       | sheep         |
| Cattle                       | and           |
| Cereals                      |               |
| General                      | cropping      |
| Mixed                        |               |
| Pigs                         | and poultry   |
| All                          | types         |
| ding                         | horticulture) |
| 79                           |               |
| 1,033                        |               |
| Wales                        |               |
| (275^199                     |               |
| smd)                         |               |
| (b)                          |               |
| Specialist                   | dairy ...     |
| Ma                           | jnly          |
| Mainly                       | sheep         |
| Cattle                       | and           |
| All                          | types         |
| (c) ...                      |               |
| 37                           |               |
| 51                           |               |
| 48                           |               |
| 66                           |               |
| 52                           |               |
| 734                          |               |
| 799                          |               |
| 720                          |               |
| 672                          |               |
| 730                          |               |
| England                      | and           |
| (275-4199 smd)               |               |
| (b)                          |               |
| All                          | types         |
| ding horticulture)           |               |
| 74                           |               |
| 986                          |               |
| 8,501                        |               |
| 9,044                        |               |
| -r­                           |               |
| 6                            |               |
| smd                          |               |
| Scotland                     |               |
| (275                         |               |
| and over)                    |               |
| (b)                          |               |
| 65-4                         |               |
| 41-7                         |               |
| 730                          |               |
| 1,205                        |               |
| 871                          |               |
| 773                          |               |
| 750                          | 742           |
| 940                          |               |
| 118-2                        |               |
| 810                          |               |
| 1,250                        |               |
| Dairy                        |               |
| Hill                         | sheep         |
| Upland                       | rearing ...   |
| Rearing                      | with          |
| arable                       |               |
| Arable,                      | rearing       |
| and feeding                  |               |
| Cropping                     |               |
| Rearing                      | with          |
| tensive livestock            |               |
| All                          | types         |
| 68-5                         |               |
| 78-9                         |               |
| 1,042                        |               |
| 996                          |               |
| 597                          |               |
| 29-9                         |               |
| Northern Ireland (d)         |               |
| (200 smd and over)           |               |
| (b)                          |               |
| Dairy                        |               |
| Dairy                        |               |
| and poultry                  |               |
| Cattle                       | and           |
| Mixed                        |               |
| All                          | types         |
| (e) ...                      |               |
| 719                          |               |
| 450                          |               |
| 579                          |               |
| 573                          |               |
| 23-2                         |               |
| 36-7                         |               |
| 40-6                         |               |
| 33-5                         |               |
| Weighted                     | average       |
| (excluding                   | breeding      |
| stock appreciation) per farm |               |
| dentical                     | sample in thc |
| two                          | years)        |
| 1975/76                      | 1976/77       |
| Percentage                   |               |
| change                       |               |
| £                            | £             |
| 6,508                        |               |
| 8,517                        |               |
| 5,954                        |               |
| 6,691                        |               |
| 12,474                       |               |
| 17,875                       |               |
| 12,567                       |               |
| 9,625                        |               |
| +                            |               |
| 4                            |               |
| +                            |               |
| 3                            |               |
| +                            |               |
| 29                           |               |
| 12                           |               |
| +                            |               |
| 31                           |               |
| 4­                            |               |
| 7                            |               |
| -                            |               |
| 8                            |               |
| 25                           |               |
| 6,247                        |               |
| 8,296                        |               |
| 4,609                        |               |
| 5,982                        |               |
| 9,489                        |               |
| 16,746                       |               |
| 13,596                       |               |
| 12,788                       |               |
| 4                            |               |
| 9,183                        |               |
| 9,584                        |               |
| 4,808                        |               |
| 6,197                        |               |
| 3,033                        |               |
| 4,667                        |               |
| 4,692                        |               |
| 5,848                        |               |
| 6,959                        |               |
| 4,675                        |               |
| 6,064                        |               |
| 6,028                        |               |
| +                            |               |
| 22                           |               |
| 12                           |               |
| 4.                           |               |
| 54                           |               |
| +                            |               |
| 30                           |               |
| 28                           |               |
| 8                            |               |
| 43                           |               |
| 8,879                        |               |
| 4,525                        |               |
| 5,401                        |               |
| 9,580                        |               |
| 6,493                        |               |
| 6,289                        |               |
| 16                           |               |
| 4-                           |               |
| 4­                            |               |
| -f                           |               |
| 7,335                        |               |
| 8,768                        |               |
| 20                           |               |
| 4-                           | ­              |
| 14,314                       |               |
| 24,911                       |               |
| 10,721                       |               |
| 23,959                       |               |
| 34                           |               |
| 4                            |               |
| 4­                            |               |
| -f                           |               |
| 7,437                        |               |
| 11,728                       |               |
| 10,217                       |               |
| 10,639                       |               |
| 27                           |               |
| 10                           |               |
| -t­                           |               |
| 5,352                        | 6,475         |
| 21                           |               |
| -f­                           |               |
| 6,622                        |               |
| 4,000                        |               |
| 8,175                        |               |
| 5,861                        |               |
| 7,616                        |               |
| 5,415                        |               |
| 10,031                       |               |
| 7,098                        |               |
| 4­                            |               |
| 4­                            |               |
| -f­                           |               |
| -f­                           |               |
| 15                           |               |
| 35                           |               |
| 23                           |               |
| 21                           |               |

(a) 
 These figures are collected by Universities and Agricultural Colleges in Great Britain and the Department 
of Agriculture in Northern Ireland. They are averages weighted by the census distribution of agricultural 
holdings by type of farming and size of business. More detailed figures for England and Wales will be published 
in "Farm Incomes in England and Wales 1976/77", for Scotland in "Scottish Agricultural Economics 1978",
lor Northern Ireland in "Farm Incomes and Investment in Northern Ireland 1976/77", and for Wales in the 
"Supplement to the Annual Digest of Welsh Statistics 1976/77". Net income is defined as in the aggregate 
aeries (Tables 19 and 21) except that stock appreciation is assessed at current market prices and that no 
deduction is made for interest on farming debts. Net income is shown in this table for the first time excluding
that part of the total valuation change which is attributable to changes during the trading year in estimated 
market values (but not in the numbers) of breeding cattle, sheep and pigs. Footnote (v) to Table 21 describes 
the different definition of stock appreciation deducted in the corresponding aggregate scries. All farms are 
treated as rented and an imputed rental value is charged as an expense in the accounts of owner-occupiers. 
The accounts relate in the main to calendar years or to the year ending 5 April. The average year-ending
date is about mid-February. 
(o) 
 Based on standard labour requirements per unit of crop area and per head of livestock at 1968 levels (sec 
Table 3, footnotes (a) & id)). 
ic) Includes "mixed" farm type but excludes "pigs and poultry", "cropping" and "horticultural" farm types. 
id) Almost all farm businesses in Northern Ireland are based on owner-occupied holdings. As rents cannot be 
imputed with reference to tenanted farms, the rental charges entered for owned land and buildings have been assessed in relation to estimated sale value. Where land was taken in conacre, the actual rents paid have been included. For these reasons the average net incomes per farm are not on the same basis as those for Great 
Britain. 
it) 
Includes "cattle, sheep and pigs", "pigs and poultry" and "cropping" farm types. 

| Public      |  expenditure under the   |  common   |  agricultural   |
|-------------|--------------------------|-----------|-----------------|
| national    | grants and subsidies     |           |                 |
| (a)         |                          |           |                 |
| April/March | (financial)              | years     |                 |
| £           | million                  |           |                 |
| 1973/74     |                          |           |                 |
| 1974/75     |                          |           |                 |
| 1975/76     |                          |           |                 |
| 1976/77     | 1977/78                  |           |                 |
| (forecast)  |                          |           |                 |

I 
     Price
     Price
     Price
     Price
     Price
     Price
     Price guarantees
              guarantees
              guarantees
              guarantees
              guarantees
              guarantees
              guarantees and
                                 and
                                 and
                                 and
                                 and
                                 and
                                 and production
                                        production
                                        production
                                        production
                                        production
                                        production
                                        production 

grants
grants
grants
grants
grants
grants
grants

(i
(i
(i
(i
(i
(i
(i) 
    Pric
     Pric
     Pric
     Pric
     Pric
     Pric
     Price guarantee
                guarantee
                guarantee
                guarantee
                guarantee
                guarantee
                guarantees on product
                                          product
                                          product
                                          product
                                          product
                                          product
                                          products 

supporte
supporte
supporte
supporte
supporte
supporte
supported by th
             th
             th
             th
             th
             th
             the CA
                 CA
                 CA
                 CA
                 CA
                 CA
                 CA 
                    P 

Cereal
Cereal
Cereal
Cereal
Cereal
Cereal
Cereals (6
       (6
       (6
       (6
       (6
       (6
       (6) 
                                    8-8 
                                                                               -

Mil
Mil
Mil
Mil
Mil
Mil
Milk (c)
     (c)
     (c)
     (c)
     (c)
     (c)
     (c) 
                                103-2 

Cattl
Cattl
Cattl
Cattl
Cattl
Cattl
Cattle 
Pig
Pig
Pig
Pig
Pig
Pig
Pigs 
Egg
Egg
Egg
Egg
Egg
Egg
Eggs 
                                      5-7 
                                                 o-i 
                                                                                w. 
                                                                                      ­
                                                             -
                                                                        -
                                                                              )

Tota
Tota
Tota
Tota
Tota
Tota
Total (i
(i
(i
(i
(i
(i
(i)  
117-7 
0-3 
... 
- 

(ii
(ii
(ii
(ii
(ii
(ii
(ii) 
     Pric
      Pric
      Pric
      Pric
      Pric
      Pric
      Price 
                  guarantee
                  guarantee
                  guarantee
                  guarantee
                  guarantee
                  guarantee
                  guarantees 
                                        on othe
                                                othe
                                                othe
                                                othe
                                                othe
                                                othe
                                                other 

product
product
product
product
product
product
products 

Shee
Shee
Shee
Shee
Shee
Shee
Sheep 
                                         8-5 
                                                  7-5 
                                                            0-2 
                                                                      0 4 

Woo
Woo
Woo
Woo
Woo
Woo
Wool (b)
    (b)
    (b)
    (b)
    (b)
    (b)
    (b) 
                       (-52) 
                              (-4-3) 
                                       20 
                                            (-2-4) 
                                                    (-2-2)

Potatoe
Potatoe
Potatoe
Potatoe
Potatoe
Potatoe
Potatoes (b)
        (b)
        (b)
        (b)
        (b)
        (b)
        (b) 
                                   10 
                                             1-6 
                                                       0-5 
                                                                 0-8 
                                                                            56 

Tota
Tota
Tota
Tota
Tota
Tota
Total (ii
(ii
(ii
(ii
(ii
(ii
(ii)  
(-4-2) 
5-8 
10 0 
(-14) 
3-8 

(iii
(iii
(iii
(iii
(iii
(iii
(iii) Productio
       Productio
       Productio
       Productio
       Productio
       Productio
       Production grant
                            grant
                            grant
                            grant
                            grant
                            grant
                            grants an
                                         an
                                         an
                                         an
                                         an
                                         an
                                         and sub
                                                   sub
                                                   sub
                                                   sub
                                                   sub
                                                   sub
                                                   sub-
                                                        ­

sidie
sidie
sidie
sidie
sidie
sidie
sidies 

Dair
Dair
Dair
Dair
Dair
Dair
Dairy Her
     Her
     Her
     Her
     Her
     Her
     Herd Conversio
          Conversio
          Conversio
          Conversio
          Conversio
          Conversio
          Conversion Schem
                     Schem
                     Schem
                     Schem
                     Schem
                     Schem
                     Scheme 
                                   2 1 
                                            100 
                                                      11-8 
                                                                 4-4 
                                                                            5-7 

Guidanc
Guidanc
Guidanc
Guidanc
Guidanc
Guidanc
Guidance Premium
Premium
Premium
Premium
Premium
Premium
Premiums 
01 
06 
2-2 
7-8 

Mil
Mil
Mil
Mil
Mil
Mil
Milk Non-Marketin
    Non-Marketin
    Non-Marketin
    Non-Marketin
    Non-Marketin
    Non-Marketin
    Non-Marketing Premium
                   Premium
                   Premium
                   Premium
                   Premium
                   Premium
                   Premiums 
                                                                           12 0 

Fertiliser
Fertiliser
Fertiliser
Fertiliser
Fertiliser
Fertiliser
Fertilisers 
                                         14-6 
                                                      61 

Lim
Lim
Lim
Lim
Lim
Lim
Lime 
                             4-5 
                                     4-5 
                                              4-7 
                                                      4-6 
                                                                01 

Calve
Calve
Calve
Calve
Calve
Calve
Calves 
                                 33-9 
                                          48-9 
                                                    61-6 
                                                              261 
                                                                         240 

* 
 Bee
Bee
Bee
Bee
Bee
Bee
Beef cow
cow
cow
cow
cow
cow
cows 
9-2 
221 
81 
10 5 
3-2 

Pi
Pi
Pi
Pi
Pi
Pi
Pig subsid
    subsid
    subsid
    subsid
    subsid
    subsid
    subsidy 
                                                       29-2 
                                                                                 6-2 
                                                                                              106 

Oi
Oi
Oi
Oi
Oi
Oi
Oil fo
   fo
   fo
   fo
   fo
   fo
   for horticultur
       horticultur
       horticultur
       horticultur
       horticultur
       horticultur
       horticulture 
                                              5-6 
                                                         0-3 

Tota
Tota
Tota
Tota
Tota
Tota
Total (iii
(iii
(iii
(iii
(iii
(iii
(iii)  
64-3 
126-5 
871 
540 
63-4 
Total I  
177-8 
132 6 
97-1 
52-6 
67-2 

## Public Expenditure Under The Common Agricultural Policy (Cap) And On National Grants And Subsidies (A)

| April/March   |  (financial)   |  years        |           |            | £    |  million    |
|---------------|----------------|---------------|-----------|------------|------|-------------|
| 1977/78       |                |               |           |            |      |             |
| 1973/74       | 1974/75        | 1975/76       | 1976/77   | (forecast) |      |             |
| II            |                |               |           |            |      |             |
| Support for   | capital        | and other     |           |            |      |             |
| improvements  |                |               |           |            |      |             |
| Farm          | and            | Horticulture  | Dc­        |            |      |             |
| velopment     | Scheme         |               |           |            |      |             |
| (d)           |                |               |           |            |      |             |
| -             |                |               |           |            |      |             |
| 0 1           | 0-8            | 3-7           | 156       |            |      |             |
| Farm          | Accounts       |               |           |            |      |             |
| -             | -              | -             |           |            |      |             |
| 0-2           |                |               |           |            |      |             |
| Farm          | Structure      | 1-3           | 1-4       | 1-5        | 1-4  | 1-3         |
| Farm          | Capital        | Grant         | Scheme    |            |      |             |
| (d)           |                |               |           |            |      |             |
| 67-4          | 77-4           | 65-9          | 546       | 56-1       |      |             |
| Grants        | absorbed       | by            | Farm      | Capital    |      |             |
| Grant         | Scheme         | 6-9           | 3-3       |            |      |             |
| -             | -              | -             |           |            |      |             |
| Grants        | for            | horticultural | (national |            |      |             |
| schemes)      | 10 1           | 5-8           | 3-4       | 2-6        | 2-8  |             |
| Co-operation  | grants         | 09            | 09        | 11         | 0-8  | 10          |
| Others        |                |               |           |            |      |             |
| (e)           |                |               |           |            |      |             |
| 1-3           | 10             | 10            | 0-2       | 06         |      |             |
| Total         | II             |               | 87-9      |            |      |             |
| 89-9          | 73-7           | 63-3          | 77-6      |            |      |             |
| Ill           |                |               |           |            |      |             |
| Support       | for            | agriculture   | in        | special    |      |             |
| areas         |                |               |           |            |      |             |
| Hill          | livestock:     | compensatory  | al­        |            |      |             |
| lowanccs      |                |               |           |            |      |             |
| (f)           |                |               |           |            |      |             |
| —cattle       |                |               |           |            |      |             |
| -             | -              |               |           |            |      |             |
| 6-3           | 43-9           | 260           |           |            |      |             |
| —sheep        |                |               |           |            |      |             |
| -             | -              |               |           |            |      |             |
| 10-8          | 38-8           | 24-4          |           |            |      |             |
| Hill          | cattle         | 16-9          | 35-4      | 1-2        |      |             |
| 1             |                |               |           |            |      |             |
| Hill          | sheep          | 10-4          | 19-8      | 2-9        |      |             |
| y             |                |               |           |            |      |             |
|               | 0-2            |               |           |            |      |             |
| ...           |                |               |           |            |      |             |
| Winter        | keep           | 70            | 12-3      | 1-2        |      |             |
| J             |                |               |           |            |      |             |
| Additional    | benefit        | under         | FHD       | S          |      |             |
| and           | FCGS           | 4-8           | 3-4       | 5-9        | 70   | 7-7         |
| Others        |                |               |           |            |      |             |
| (g)           |                |               |           |            |      |             |
| 1-6           | 1-7            | 1-8           | 1-2       | 0-8        |      |             |
| Total         | III            |               |           |            |      |             |
| 40-7          | 72-6           | 301           |           |            |      |             |
| 911           | 58-9           |               |           |            |      |             |
| Total         | I, II, III     |               |           |            |      |             |
| 306-4         | 295-1          | 200-9         | 2070      | 203-7      |      |             |
| against       | which          | receipts      | from      |            |      |             |
| FEOGA         | guidance       | section       |           | ...        |      |             |
| -             |                |               |           |            |      |             |
| 4-4           | 116            | 20-1          |           |            |      |             |
| guarantee     | section        | ...           |           |            |      |             |
| -             | -              |               |           |            |      |             |
| -             | -              |               |           |            |      |             |
| 7-2           |                |               |           |            |      |             |
| IV            |                |               |           |            |      |             |
| Market        | regulation     | under         | the CAP   |            |      |             |
| (h)           |                |               |           |            |      |             |
| Cereals       | 21-3           | 13            | 4         | 46-2       | 29-8 | 4-8         |
| Beef          | and            | Veal          |           |            |      |             |
| 1-2           | 63-7           | 1130          | 16-3      | 9-4        |      |             |
| Pigmcat       |                |               |           |            |      |             |
| 190           | 24-1           | 38-6          | 12-3      | 0-4        |      |             |
| Sugar         | 2-6            | 45-7          | 41-2      | 71-2       | 89-2 |             |
| Processed     | products       |               |           |            |      |             |
| 9-7           | 141            | 3-4           | 8-8       | 17-0       |      |             |
| Milk          | products       | 29-5          | 35-8      | 61-8       | 241  | 74-6        |
| Others        | (/)            | 2-3           | 2-6       | 6-5        | 8-9  | 8-5         |
| Total         | IV             |               | 85-6      | 1994       |      |             |
| 310-7         | 171-4          |               |           |            |      |             |
| 203-9         |                |               |           |            |      |             |
| against       | which          | receipts      | from      |            |      |             |
| FEOG          | A              | guarantee     | section   | ...        |      |             |
| 76-7          | 169-6          | 259-6         | 168-7     | 146-5      |      |             |

(a) 
 This table excludes expenditure which may benefit farmers but where the value to them is not shown by the expenditure (eg expenditure on animal disease and pest control or on research, advice and education). It does, however, include some expenditure which benefits consumers and overseas exporting interests rather than producers(see note *(h)).* The figures for years up to and including 1975/76 represent actual expenditure recorded in the Appropriation Accounts. The figures for 1976/77 are subject to confirmation and those for 1977/78 are the latest estimates of expenditure. 

(6) Payments in respect of cereals, wool and potatoes relate partly to the crops or clip of the year indicated and 
partly to the crops or dips in the preceding year or years. The figures shown in brackets reflect the arrange­
ments with the British Wool Marketing Board, whereby deficiency payments made by the Exchequer are 
repayable from surpluses (excess of market price over guaranteed price) up to the amount of debt owing by 
the Board to Ministers. 
(c) 
 Payments on milk reflect the Government policy of holding down the retail price of milk. For public cxpendi­
ture purposes, they have been attributed to expenditure under the price guarantees in 1973/74 and shown in 
the body of the table above, but for subsequent years the expenditure has been attributed to the food subsidies programme. 
(d) 
 Farmers in special areas are also eligible for additional assistance under the Farm and Horticulture Develop­
ment Scheme and the Farm Capital Grant Scheme. The estimated benefit is shown separately in section III 
of the table. 
(t) 
Includes grants in respect of investment on self-propelled machines (agricultural and horticultural), credit
4,
forage groups', small horticultural production businesses', small farmers, farm business records, water 
supply', agricultural drainage', special assistance to livestock producers' and hops restructuring. (Provision 
for the schemes marked * was included in the 1977/78 Supply Estimates.) 
(/) Some unavoidable delay in payments in 197S/76 resulted in a carryover of £16.4 million into 1976/77. 
(r) 
 Includes grants for improvement of hill land and livestock rearing land', rural roads', producers in the 
Scottish Islands', crofting improvements', hill cattle agistmcnt subsidy and hill livestock and young stock 
scheme'. (Provision for the schemes marked * was included in the 1977/78 Supply Estimates.) 
(A) 
 The figures shown are total expenditure before allowing for receipts from FEOG 
A which are shown 
separately at the foot of the table. The figures are made up of several elements and include import refunds 
(net of export levies) on intra-Community trade, import and export refunds on third country trade, the beef 
premium scheme, aid for private storage and animal feed, certain production subsidies and the net cost of 
commodities bought into intervention and subsequently sold. The figures for 1974/75, 1975/76 and 1976/77 
include the special import subsidy on sugar. Much of the expenditure benefits consumers and overseas export­ ing interests rather than producers. The consumer subsidy on butter is not included. 
i /') Includes eggs, poultrymeat, fruit and vegetables, oilseeds, hops, herbage seeds, dehydrated fodder and 
fisheries. Also includes expenditure on products covered by the C A  
P but not produced to any significant 
extent in the United Kingdom (rice, wine, flax and hemp). 

|               | £           |  million      |
|---------------|-------------|---------------|
| Net           | cost change | relating      |
| to            | all         | products      |
| Fecdingstuffs |             |               |
| -             |             | 62-2          |
| Seeds         |             | ...           |
| -             |             | 24-6          |
| Imported      | livestock   |               |
| +             |             | 7-6           |
| Fertilisers   | and         | lime          |
| +             | 48-6        |               |
| Machinery     | (including  | depreciation) |
| +             | 175-5       |               |
| Maintenance   | (including  | depreciation  |
| +             |             | 15-4          |
| Miscellaneous |             |               |
| +             |             | 58-1          |
| Labour        |             |               |
| +             | 111-9       |               |
| G n           | u           | r**nt         |
| +             |             | 33-9          |
| vii           | "           |               |
|               | mma ***     | ...           |
| -             |             | 58-0          |
| Interest      |             |               |
| Transport     | and         | marketing     |
| +             |             | 16-3          |
| Total         |             |               |
| +322-5        |             |               |

(a) 
 These estimates are made on the assumption that any change in the cost of an item of expenditure will continue for a full year and that there will be no change from the current usage of that Item. They include the effect of all cost changes known up to 6 December 1977. 

## Commodity Price Trends

This table gives indications of the movement in commodity prices at the first point of sale. 

The series do not always show total receipts by farmers; for some commodities additional premiums or deficiency payments were made to achieve support price levels. 

|                             |                              | Calendar   |  years    |
|-----------------------------|------------------------------|------------|-----------|
| 1973                        | 1974                         | 1975       | 1976      |
| 1977                        |                              |            |           |
|                             | Average ex-farm price        |            |           |
| (a)                         |                              |            |           |
| 45-77                       | 59-88                        | 55-96      |           |
| 72-39                       | 83-24                        |            |           |
| Wheat                       |                              |            |           |
| (£                          | per                          | tonne)     |           |
|                             | Average ex-farm price        |            |           |
| (a)                         |                              |            |           |
| 41-64                       | 56-99                        |            |           |
| 57-77                       |                              |            |           |
| 73-63                       |                              |            |           |
| 7701                        |                              |            |           |
| Barley                      |                              |            |           |
| (£                          | per                          | tonne)     |           |
|                             | Average ex-farm price        |            |           |
| (a)                         |                              |            |           |
| 37-34                       |                              |            |           |
| 53-97                       | 5508                         |            |           |
| 67-74                       |                              |            |           |
| 73-49                       |                              |            |           |
| Oats                        |                              |            |           |
| (£                          | per                          | tonne)     |           |
|                             | Average ex-farm price        |            |           |
| (a)                         |                              |            |           |
| 41-4                        | 560                          |            |           |
| 611                         |                              |            |           |
| 760                         |                              |            |           |
| 750                         |                              |            |           |
| Rye                         |                              |            |           |
| (£                          | per                          | tonne)     |           |
|                             | Average                      | farm-gate  | price     |
| (b)                         |                              |            |           |
| 828                         |                              |            |           |
| 876                         |                              |            |           |
| 1,074                       |                              |            |           |
| 1,360                       |                              |            |           |
| 1,360                       |                              |            |           |
| Hops                        |                              |            |           |
| (£                          | per                          | tonne)     |           |
|                             | Average                      | farm-gate  | price (c) |
| 20-7                        |                              |            |           |
| 23-6                        |                              |            |           |
| 56-8                        |                              |            |           |
| 143-4                       |                              |            |           |
| 700                         |                              |            |           |
| Potatoes                    |                              |            |           |
| (£                          | per                          | tonne)     |           |
| Sugar                       | beet                         |            |           |
|                             | Producer price               |            |           |
| (d)                         |                              |            |           |
| 9-41                        | 13-96                        |            |           |
| 18-41                       |                              |            |           |
| 19-58                       |                              |            |           |
| 20-27                       |                              |            |           |
| (£                          | per                          | tonne)     |           |
| Apples                      |                              |            |           |
| (£                          | per                          | tonne)     |           |
|                             | Average market price         |            |           |
| (e)                         |                              |            |           |
|                             | Dessert                      |            |           |
| Culinary                    |                              |            |           |
| 121                         |                              |            |           |
| 151                         |                              |            |           |
|                             | Average market price (e) ... |            |           |
| 144                         |                              |            |           |
| 152                         |                              |            |           |
| 185                         |                              |            |           |
| 189                         |                              |            |           |
| 255                         |                              |            |           |
| Pears                       |                              |            |           |
| (£                          | per                          | tonne)     |           |
|                             | Average market               | price      |           |
| (e)                         | ...                          |            |           |
| 212                         | 237                          |            |           |
| 291                         |                              |            |           |
| 346                         |                              |            |           |
| 420                         |                              |            |           |
| Tomatoes                    |                              |            |           |
| (£                          | per                          | tonne)     |           |
|                             | Average market price         |            |           |
| (e) ...                     |                              |            |           |
| 73-3                        |                              |            |           |
| 91-7                        |                              |            |           |
| 121-5                       |                              |            |           |
| 119-2                       |                              |            |           |
| 137-2                       |                              |            |           |
| Cauliflowers                |                              |            |           |
| (£                          | per                          | tonne)     |           |
| 64                          |                              |            |           |
| 123                         |                              |            |           |
| 37-35                       |                              |            |           |
| Cattle                      |                              |            |           |
| (store)                     |                              |            |           |
|                             | 1st quality Hereford/        |            |           |
| (£                          | per                          | head)      |           |
| (f)                         | ...                          |            |           |
| 1st quality yearling        | steers                       |            |           |
| beef/dairy cross            |                              |            |           |
| (f)                         |                              |            |           |
| Cattle (fat)                |                              |            |           |
|                             | clean                        | cattle     |           |
| (g)                         |                              |            |           |
| (p per kg liveweight)       |                              |            |           |
|                             | 1 st quality lambs,          |            |           |
|                             | hoggets                      | and        | tegs      |
| 13-6                        |                              |            |           |
| 70-5                        |                              |            |           |
| Sheep                       | (store)                      |            |           |
| (£per                       | head)                        |            |           |
| Sheep(fat)(h)               |                              |            |           |
| (p per kg estimated dressed | carcase                      | weight)    |           |
| ...                         |                              |            |           |
| 43-79                       |                              |            |           |
| 45-98                       | 61-90                        |            |           |
| 67-32                       | 71-47                        |            |           |
| Pigs                        |                              |            |           |
|                             | Average market price         |            |           |
| (0                          |                              |            |           |
| (£                          | per kg deadweight)           |            |           |
|                             | Average wholesale price ...  |            |           |
| 42-9                        |                              |            |           |
| 45-8                        | 550                          |            |           |
| 63-6                        |                              |            |           |
| 75-9                        |                              |            |           |
| Broilers                    |                              |            |           |
| (p per kg)                  |                              |            |           |
| Milk                        |                              |            |           |
| (p per litre)               |                              |            |           |
|                             | Average net return to        |            |           |
|                             | producers                    |            |           |
| 0)                          |                              |            |           |
| 509                         | 6-28                         |            |           |
| 7-98                        |                              |            |           |
| 9-37                        | 1014                         |            |           |
| (forecast)                  |                              |            |           |
| 150                         |                              |            |           |
| 112                         |                              |            |           |
| 175                         |                              |            |           |
| 172                         |                              |            |           |
| 345                         |                              |            |           |
| 221                         |                              |            |           |
| 191                         |                              |            |           |
| 176                         |                              |            |           |
| 41                          | 40                           |            |           |
| 56                          | 63                           |            |           |
| 97                          |                              |            |           |
| 33-12                       |                              |            |           |
| 110                         |                              |            |           |
| 38-51                       |                              |            |           |
| 174                         |                              |            |           |
| 5809                        |                              |            |           |
| 157                         |                              |            |           |
| 52-43                       |                              |            |           |
| 12-0                        |                              |            |           |
| 64-6                        |                              |            |           |
| 14-0                        |                              |            |           |
| 75-4                        |                              |            |           |
| 190                         |                              |            |           |
| 103-9                       |                              |            |           |
| 24-0                        |                              |            |           |
| 125-9                       |                              |            |           |

## Commodity Price Trends

| Calendar   |  years    |
|------------|-----------|
| 1973       |           |
| 1974       | 1975      |
| 1976       |           |
| 1977       |           |
| (forecast) |           |
| Average    | producer  |
| (k)        |           |
| 23-7       | 24-6      |
| 22-        | 22-8      |
| 27-8       | 31-3      |
| Eggs       | Eggs      |
| (p         | pe        |
| Wool       |           |
| (p         | per       |
| Average    | producer  |
| for        | clip      |
| 48-2       |           |
| 571        |           |
| 69-5       | 95-5      |

(a) 
 Weighted average ex-farm prices of U K cereals. 

(6) 
 Average farm-gate prices paid by Hops Marketing Board to growers in England. Hops are not grown clse­
where in the U K . 
(c) 
 Weighted average price paid to growers by registered merchants for early and main crop potatoes in the  U K 
(d) Average price paid to growers in the  U K by the British Sugar Corporation for sugar beet with a standard 
sugar content of 16%. 
(r) Weighted average wholesale prices for England and Wales. 
(/) 
Average prices at representative markets in England and Wales. 
(g) Based on auction market prices up to April 1973, and thereafter on Meat and Livestock Commission all 
clean cattle prices. 
(h )  U K weighted average market price for animals certified under the Fatstock Guarantee Scheme, 
(i)  U K average market price for clean pigs. 
(/) 
 
Derived by dividing total value of output (Table 21) by the total quantity of output available for human 
consumption (Table IS). 
(A ) Average price of all Class A eggs weighted according to quantity in each grade. 

(/) 
Average price paid to producers by the British Wool Marketing Board. 

Printed **in England for Her Majesty's Stationery Office by Williams Lea London**  
Dd 148306 **K64 1/78**  
CP(78) 2 
C O P Y N O 
8 0 
16 J a n u a r y 1978 
C A B I N E T 
M E M O R A N D U M F O R L I A I S O N C O M M I T T E E **O N**  
E X C H A N G E 
C O N T R O L 
 
Note by the C h a n c e l l o r of the E x c h e q u e r  
A t a meeting of the M i n i s t e r i a l C o m m i t t e e on E c o n o m i c Strategy in D e c e m b e r I was i n v i t e d to put to the C a b i n e t a n i n f o r m a t i o n p a p e r on exchange c o n t r o l which could be c i r c u l a t e d to the P a r l i a m e n t a r y L a b o u r P a r t y / 
T r a d e s Union C o n g r e s s L i a i s o n C o m m i t t e e . 

I attach a m e m o r a n d u m for this purpose which i s intended to d e s c r i b e b r i e f l y why o u r exchange c o n t r o l r e g i m e developed i n its p r e s e n t f o r m ; 
to explain the r e a s o n s for the l i m i t e d changes made recently; 
a n d to outline the a r g u m e n t s w h i c h a r e being advanced for and against f u r t h e r changes i n t e r m s which w i l l not unsettle the m a r k e t s o r p r e ­
empt C a b i n e t d i s c u s s i o n by a p p e a r i n g to i m p l y the d i r e c t i o n of future G o v e r n m e n t p o l i c y . 

I should he glad to know i f m y colleagues agree that this i s a suitable p a p e r f o r d i s c u s s i o n by the L i a i s o n C o m m i t t e e at their meeting on M o n d a y 23 J a n u a r y . 

I would p r o p o s e a l s o to c i r c u l a t e as b a c k g r o u n d to the L i a i s o n C o m m i t t e e the T r e a s u r y E c o n o m i c P r o g r e s s R e p o r t of September 1976, containing an a r t i c l e on the e c o n o m i c i m p a c t of f o r e i g n investment, 
"International Investment a n d the B a l a n c e of P a y m e n t s " , a copy of which I a l s o attach. 

D W H 
t r e a s u r y C h a m b e r s 
*6 J a n u a r y 1973 

## General

The broad o b j e c t i v e of exchange c o n t r o l i s to conserve 
 

the.UK's h o l d i n g s o f 
                     g o l d and 
                               f o r e i g n currency, and 
                                                      t o a s s i s t  

the balance o f 
                  payments. 
                                I t s purpose has been t o p r o t e c t 
                                                                        

our e x t e r n a l p o s i t i o n r a t h e r than d i r e c t l y to 
                                                                              i n f l u e n c e 
                                                                                              the 
                                                                                                      

domestic economy.  

2. 
      Exchange c o n t r o l was f i r s t i n t r o d u c e d i n 1939 under 

Defence Finance R e g u l a t i o n s . 

I t has remained a f e a t u r e of the B r i t i s h economic scene ever s i n c e , under the 19^7 Exchange 

Control A c t , which was 
                              amended i n minor r e s p e c t s i n 1968 
                                                                          and 
1977. 
        The 
              Act p r o h i b i t s a wide range of 
                                                      t r a n s a c t i o n s i n g o l d , 

f o r e i g n currency, and 
                                            s e c u r i t i e s , except w i t h Treasury 
                                                                                                                p e r m i s s i o n , 

and empowers the Treasury to make orders and 
                                                           g i v e d i r e c t i o n s . 

3. 
      The 
            powers under the Act have been used w i t h v a r y i n g 

A g r e e s of 
                  s e v e r i t y , r e f l e c t i n g changing economic needs, d u r i n g 

the 30 years s i n c e 19^7- 
                                Because they have been extended 
                                                                       t o 

the s t e r l i n g a r e a , and 
                            because exchange c o n t r o l has been a p p l i e d 

to the use 
            of s t e r l i n g i n t h i r d country trade s i n c e 1976, the 

c o n t r o l s as 
                       a whole are 
                                                s t i l l more s t r i n g e n t than a t 
                                                                                                           any time 

i n the 1960's, even a f t e r the changes announced i n October 

and December 
                  1977. 

7. 
      The 
            a d m i n i s t r a t i o n of the c o n t r o l has 
                                                              been l a r g e l y delegated  

t 0  
         the Bank o f 
                                                 England, t o 
                                                                                          be c a r r i e d out i n accordance w i t h 
                                                                                                                                                                                                                the  

^ l i c y o f 
                 the Treasury a t 
                                             the time, and 
                                                                      the Bank i n t u r n devolve  

functions to 
             a u t h o r i s e d banks, and 
                                      to 
                                         a u t h o r i s e d d e p o s i t a r i e s  

i n  respect of s e c u r i t i e s . The aim has to 
                                                                                                                                               be 
                                                                                                                                                          t o 
                                                                                                                                                                    enable m i l l i o n s o f  
         i n d i v i d u a l t r a n s a c t i o n s , whether f o r t r a d e , o r investment, 
                                                                                                                                                                                                                

0 r  
         Personal a f f a i r s , t o 
                                                                              take place w i t h the minimum o f f r i c t i o n  

consistent with p r o t e c t i n g 
                            the balance of 
                                            payments. The control must r e l y on the co-operation of those i t 
                                                      a f f e c t s , and  

roust be i n t e l l i g i b l e and c r e d i b l e , as well as seen to 
                                                                  be 
                                                                       

administered 
             f a i r l y .  

What the controls are 
 

5. 
       Current payments - i e 
                                           f o r 
                                                 imports of goods and s e r v i c e s 
                                                                                                  ­

are generally u n r e s t r i c t e d , as they have to 
                                            be f o r 
                                                    the free flow of trade. But they may be monitored to check that they 

are not 
        being used as channels f o r 
                                        unauthorised c a p i t a l 

movements. And there are c o n t r o l s which t r y 
                                              to secure that money which i s 
               due from abroad i s 
                                   made a v a i l a b l e to the reserves 

in good time, and that payment f o r 
                                               goods and services from 

abroad consists only of what i s 
                                    due, 
                                          and i s 
                                                  not 
                                                      made too soon. 

6­ 
                The c o n t r o l therefore applies mainly to c a p i t a l transactions  

(a) 
 UK residents cannot use o f f i c i a l exchange to 
 
add to the g l o b a l stock of p o r t f o l i o **investment**  
i n f o r e i g n currency **s e c u r i t i e s ;**  
(b) 
 
d i r e c t investment overseas, with some **exceptions,**  
i s not allowed to 
be financed with **o f f i c i a l**  
exchange;  
(c) 
 
a v a r i e t y of personal transactions i s **c o n t r o l l e d**  
l a r g e l y to prevent t h e i r use f o r 
c a p i t a l **exports**  
which would otherwise not 
have been **permitted.**  
7.  
In a d d i t i o n , the f o r e i g n currency required by **i n s t i t u t i o n s**  

n  the private sector l i k e banks and insurance **companies,**  
S u P p l i e d only i n 
accordance with r u l e s l a i d down **from time**  
t
o  **time.**  
8. 

The purpose of the c o n t r o l s on outward d i r e c t investment  
i s to ensure t h a t i t i s f i n a n c e d i n a way which minimises or  

e l i m i n a t e s the 
                         i n i t i a  
                                    l cost to the r e s e r v e s . 
                                                                               The f i n a n c e 
                                                                                                     can 
                                                                                                              

be found from borrowing i n f o r e i g n currency 
                                                            or from p r o f i t s  

which companies are allowed to r e t a i n abroad. 
                                                  O f f i c i a l exchange  

i s provided only under the s o - c a l l e d " s u p e r - c r i t e r i o n " scheme,  

which ensures t h a t an e q u i v a l e n t amount of f o r e i g n exchange i s  
remitted back t o the UK w i t h i n a p r e s c r i b e d s h o r t p e r i o d , and  
that there i s a c o n t i n u i n g r e t u r n i n f o r e i g n currency.  
9- 
UK r e s i d e n t s cannot buy f o r e i g n s e c u r i t i e s a t the expense of the r e s e r v e s . 

G e n e r a l l y speaking they can o b t a i n them only i f another UK r e s i d e n t i s prepared to dispose of such s e c u r i t i e s Since the e f f e c t of t h a t i s a f i x e d s t o c k , a buyer must be ready to pay a premium - the investment currency premium - to Persuade another r e s i d e n t to make a d i s p o s a l . 

## Recent Changes

10. 
     The improvement i n our e x t e r n a l accounts i n 1977 
                                                                     made i  
                                                                             t p o s s i b l e 

to
      some changes, p a r t i c u l a r l y i n areas o f exchange c o n t r o l which 
   raake 

were i n t r o d u c e d t o meet a c r i s i s and brought s h o r t term b e n e f i t  
to the reserves a t a cost to the economy as a whole; and i n some controls on p e r s o n a l t r a n s a c t i o n s which were no l o n g e r necessary  
to p r o t e c t our r e s e r v e s and which a f f e c t e d i n d i v i d u a l s u n f a i r l y .  

U . 
       For example, on 26th October, 
                                                     1977, 
                                                              we made a change t o encourage 

foreign investment i n B r i t a i n . 
                                   Instead of i n s i s t i n g t h a t such 

investment should be f i n a n c e d i n p a r t by b r i n g i n g i n f o r e i g n 

exchange, we p e r m i t t e d a l  
                          l 
                            non-resident c o n t r o l l e d 
                                                      manufacturing companies i n the UK ( i n s t e a d o f only some, e.g. from the EEC) t o ^ 

borrow s t e r l i n g i n the UK f o r t h e i r UK business without 
                                                             r e s t r i c t i o n 

a* to the amount, o r t o the r e g i o n i n which they were i n v e s t i n g . 

12- 
      To help our insurance companies and banks to compete f o r f o r e i g n  

business on equal terms and thus i n c r e a s e our i n v i s i b l e e a r n i n g s ,  

"e made some r e l a x a t i o n i n the r u l e s governing the working 
                                                                              balances  

v'hich insurance companies, banks, and merchants, c o u l d h o l d i n  

f ^ e i  
                  E n currency i n s t e a d o f s t e r l i n g , i n r e l a t i o n t o t h e i r f o r e i g n  

currency b u s i n e s s .  

!3- 
     In a d d i t i o n , c e r t a i n l i m i t s on p e r s o n a l t r a n s a c t i o n s were r a i s e d  

t 0  make some allowance f o r i n f l a t i o n and d e p r e c i a t i o n .  

l". 
                 Other changes were announced i n December t o take e f f e c t from 

1st  
    j n 
             1 9 78 
                   i n order to secure the necessary EEC a u t h o r i s a t i o n s 
     a 
        u
         a
          r
           y 

f
    
   Q
       
      r c o n t i n u i n g the main s t r u c t u r e o f our exchange c o n t r o l s ; they  

W
  e
      
     r e designed t o help our economy by meeting the o b j e c t i v e s 

A s c r i b e d i n paragraph 
                                         10. 
                                                  Besides r a i s i n g the l i m i t s f o r some 

Personal t r a n s f e r s w i t h i n the EEC, we 
                                                    decided: 

(a) 
To lengthen from 18 months t o 3 years the p e r i o d d u r i n g which 
e q u i v a l e n t 
f o r e i g n exchange must accrue under the 
" s u p e r - c r i t e r i o n " and to i n c r e a s e the l i m i t permitted )er 
P r o j e c t from 
£250,000 
t o **£500,000.** 
T h i s relaxat:' 
should help B r i t i s h f i r m s - p a r t i c u l a r l y s m a l l e r ones - t o to penetrate **EEC** markets and thus c r e a t e more j o b s at home;  
(b) 
To end the r u l e under which 25 per cent o f the f o r e i g n  
currency r e c e i p t s from s a l e s o f f o r e i g n currency s e c u r i t i e s  
must be s o l d on the f i n a n c i a l market. 

T h i s arrangement was  
h e l p f u l i n times when the reserves were under great pressure.  
But t h e r e i s no longer any need t o enforce a t r a n s f e r  
of about £200 m i l l i o n a year from p r i v a t e h o l d i n g s to the  
r e s e r v e s , e s p e c i a l l y as the r a t e o f r e t u r n we can earn on  
the reserves i s not as high as we can earn abroad. 

UK 
 
holders are now f r e e t o s w i t c h from l e s s p r o f i t a b l e t o more  

p r o f i t a b l e overseas s e c u r i t i e s without i n c u r r i n g a  
. 
 s u b s t a n t i a l p e n a l t y i n doing so. 
T h i s w i l l add t o the  
t o t a l o f UK a s s e t s abroad and i n c r e a s e our f u t u r e income from them.  

## £Hg^ F U T U R E

15. 

Any f u r t h e r changes i n exchange c o n t r o l w i l l have t o be  
r e l a t e d not only t o the development of the c u r r e n t balance  
and the reserves but a l s o t o the needs o f the economy as a  
"hole, as determined i n p a r t i c u l a r by the course of the exchange  
rate and the l e v e l o f economic growth at which we aim. 

I t i s 
 
important t h a t the balance o f advantage from any changes should  
i i e w i t h the UK. 

 
16. 

One i s s u e under c u r r e n t d i s c u s s i o n i s the e f f e c t which the  
existence o f exchange c o n t r o l s may have on the l e v e l of the  

exchange r a t e . 
                Other c o u n t r i e s w i t h s t r o n g e x t e r n a l 
                                                       p o s i t i o n s 
                                                                  

do not have major c o n t r o l s a g a i n s t o u t f l o w s . 
                                                   I t i s argued t h a t  

these c o n t r o l s by l i m i t i n g the supply o f s t e r l i n g i n r e l a t i o n  

to the. 
          demand f o r i t may produce a h i g h e r exchange r a t e - as .in ee i s t h e i r purpose when s t e r l i n g i s under pressure - and t h a t i f a t e r l i n g r i s e s beyond a c e r t a i n p o i n t i t w i l l reduce our  

competitiveness and i n c r e a s e unemployment. 
                                                       A number o f  

arguments are adduced on the o t h e r s i d e - t h a t the impact on the  

exchange r a t e i s only m a r g i n a l , t h a t the a p p r e c i a t i o n o f s t e r l i n g  

b y reducing i n f l a t i o n w i l l improve our economic performance, t h a t  

w  e cannot y e t be c o n f i d e n t t h a t we s h a l l maintain our c i  
account s u r p l u s through the e i g h t i e s , and t h a t because the UK economy and f i n a n c i a l system are e x c e p t i o n a l l y open such c o n t r o l s are more necessary here than i n some other c o u n t r i e s .  
17. . 

Another-issue i s the e f f e c t on outward d i r e c t investment on investment and jobs i n the UK. 

I t i s argued on the one hand that a high p r o p o r t i o n o f d i r e c t investment overseas i s l i k e l y to have a p o s i t i v e net e f f e c t on UK e x p o r t s , and thus t o improve not only the balance o f payments but a l s o employment at home. 

In a d d i t i o n , UK investment overseas w i l l i n c r e a s e the flow o f i n v i s i b l e earnings and support our economy i n the f u t u r e . 

On the other hand i t i s argued t h a t investment at home must i n c r e a s e jobs more d i r e c t l y and produce a h i g h e r s o c i a l r e t u r n than investment overseas. 

18. 

This r a i s e s the q u e s t i o n whether w i t h h o l d i n g o f f i c i a l exchange for outward d i r e c t investment does i n f a c t produce h i g h e r investment at home. The **1967/8** Reddaway Report came t o the c o n c l u s i o n t h a t investment abroad from **1955** 
to **196*** 
l e d t o an i n c r e a s e i n e x p o r t s . 

In c o n d i t i o n s o f l e s s than f u l l employment t h i s i m p l i e s some increase i n jobs and probably i n investment i n s i d e the UK. 

Evidence so f a r a v a i l a b l e on the s i t u a t i o n today does not throw l i g h t on the extent t o which d e c i s i o n s to i n v e s t at home or  
overseas a r e , i n p r a c t i c e , a l t e r n a t i v e s , or are c o n f l i c t i n g  
o r  complementary. 

We hope t h a t the work b e i n g done i n s e c t o r  
^ k i n g p a r t i e s under NEDC as p a r t of the I n d u s t r i a l S t r a t e g y w i l l ­
throv; some f u r t h e r l i g h t on t h i s .  
Prepared by the Information Division of the Treasury 

## International Investment And The Balance Of Payments

For many years now (here has persisted an undercurrent of public concern about the effect of UK investment overseas on the balance of payments. Despite the exchange controls at present in force, some critics continue to argue that the UK 
is "exporting capital
41 on a massive scale, to the detriment of the official reserves, the balance of payments generally or the exchange rate, with the result that the Government is forced to run the economy at a lower pressure of demand, and higher level of unemployment, than would otherwise be necessary. In fact, criticisms cn these lines are usually based on misunderstanding. 

The net additions to our overseas investments in recent years have been financed in such a way that the reserves have been fully protected, and the net effect on the balance of **payments of** *all* the identified items connected with international investment - past and present - has been both favourable and massive, averaging some £21 billion a year over the Ja*i three years. Such an outcome is virtually guaranteed by our exchange control rules. 

This article begins by explaining briefly the effects of the present exchange control rules. It then shows how a quick reading of the normal balance of payments accounts can 
-
lead to misunderstandings. Final!), it presents the figures in a n e w way which brings together all the identified items in the balance of payments accounts relating to inter­
national investment. 

## Effect Of Present Exchange Controls

The authorities do not restrict overseas investment as such, but they do restrict the ways in which companies can finance it. The main features of the current rules on direct investment are as follows. 

The broad effect of rules (i) - (iii) above is that "new" overseas investment (net) by UK companies cannot cost the reserves a significant amount. Rule (iv), on the other hand, ensures a substantial and continuing inflow of funds to the UK from our existing overseas investments. 

i. 
 
Companies are allowed to finance only a very small 
proportion of investment with foreign currency out of 
the official reserves: the only projects which can 
b
e sofinanced 
to a limited extent arc those which 
m
e
e
t the "super-ciitcrion", that is to say projects 
which directly promote exports of goods and services and will bring benefits to the balance of payments equal to the cost of the original investment within a 
period of eighteen months, and continuing thereafter. 
As far as *portfolio* investment overseas is concerned, this too is regulated by exchange control and may be under­
taken, with permission, in only two ways - cither by foreign currency borrowing as above or through the use of "in­ vestment currency". The investment currency market is primarily a mechanism to enable portfolio investments in foreign currency securities to be transferred among UK residents. In addition, the requirement to surrender 25 per cent of the sale proceeds at the official rather than at the investment currency rale ensures a continuing benefit to the balance of payments. 

ii. 
 Other direct investments must be financed in ways 
which minimise or eliminate the cost to the reserves. 
In practice, almost all such investment isfinanced 
by 
borrowing foreign currency (either direct from over­
scas banks or through UK banks) or out of profits 
retained overseas, and in neither case is there any net 
outllow across the exchanges. 

## S O U R C E S Of Misunderstanding

iii. 
 When companies finance their direct investment by 
foreign currency borrowing this has to be repaid in due 
Despite the rules just described, the impression remains quite widespread that wc arc exporting capital on a M O N T H L Y E C O N O M I C 
A S S E S S M E N T 
The Treasury's latest monthly report on the e c o n o m i c situation is published o n page 5. 

course. To protect the reserves, the regulations require that the amounts repaid out of official exchange do not exceed the inflows of funds resulting from the invest­
ment. 

iv. 

 The UK controlled subsidiaries and branches overseas are required to remit to the UK a large proportion of their profits. The general rule is that at least two-thirds of net taxed earnings must be remitted, although detailed arrangements vary with the type of company and host country regulations. The statistics in balance of payments publications do not appear to bear this out (eg "unrcmitted profits" amount to more than one-thii d of total direct investment earnings). Hut this is largely because exchange control applies only to companies where voting comrol lies within the UK, whereas the balance of payments statistics in­
cludc alsofigures for earnings of overseas companies where the UK interest is a minority; and because remittances of rojallies, management fees and certain other earnings count towards the two-thirds requite­
ment, while stock appreciation is generally disregarded in calculating earnings. 

In practice, many UK­
controlled companies remit much more than two-thirds of their net earnings. 

Copies of **Economic** Progress Report *are* available from Circulation Section (H), **Central** Office of Information, **Hercutas** Rood, London, SE1 7 D U . 

Readers who **recoive their** copies **direct** from the Central Office of Information **oro** Sftkod to notify any changes of **address** in order to avoid **delay** in receipt cf copies. 

massive scale **for** investment overseas. How docs the misunderstanding arise ? 

  If the reader of the accounts is unaware of the related 
entries under the current account and foreign currency 
borrowing by U  
                  K banks, it is quite understandable that he 
may interpret the £J,250 under private investment over­
seas as a "capital outflow" or "export of capital". 

 The example just described, and the effect on the 
reserves, can be shown more fully as follows. 

   It seems to arise in part from the item in the capital 
account of the balance of payments called "private invest­
mcnt overseas", which typically carries every' year a very 
large negative entry, or an "outflow" in balance of pay­
ments terms. It is often assumed that these "investments" 
can be compared with investment in machinery, plant and 
buildings in the U  
                       K and that they are diaining away the 
reserves. 

  In fact, both assumptions are false. "Overseas invest­
ment" includes not only fixed investment of the kind just 
mentioned but also stcckbuilding, stock appreciation and 
other transactions of a financial nature such as additions 
to or repayments of working capital, other loans and trade 
credit and transactions in securities. On the other hand, 
thefigures 
          are expressed net of disinvestment. It is thus 
quite wrong to compare "investment" figures in the 
balance of payments accounts with "gross domestic fixed 
capital formation" figures in the national income accounts, 
which correspond to one of the popular usages of the term 
"investment". 

## A N E W Presentation

The second assumption - that the entries under "private investment overseas" show the effect on the reserves of overseas investment - is likewise mistaken. To assess the overall effect on the balance of payments, it is necessary to take account of a number of entries in the balance of payments accounts, relating to the financing of overseas operations - notably borrowing in foreign currency for use overseas and profits etc retained overseas (or "unremittcd" 
profits). When this has been done, it can be seen that the statistics confirm that the exchange control rules are indeed fulfilling their intended function of protecting the reserves and promoting a substantial annual inflow of income from past investments. 

## A Hypothetical Example

It might be asked-why not score in the current account only remitted profits, and not total profits? There would then be no need for the.negative contra-enlry in the capital account, which apparently causes misunderstanding. Such an approach, however, would not be consistent with the form of accounting recommended by the IMF and would be open to serious objections. It would misallocate items between the current and capital accounts and would lead to an understatement of both the invisibles surplus and gross national product. 

A simple example may help to illustrate the inter­
relationship between **the various balance of payments**  
entries **just mentioned.**  
Let us suppose that an overseas subsidiary remits £1,000 
of profits to the UK, thus increasing the official reserves by this amount. The figure of £1,000 will not appear as such in the summary balance of payments accounts. Instead, the totul profits earned overseas (say £1,500) will be entered as a credit under "interest, profits and dividends" in the current account and the *unremiited* element (£500) will appear as a contra-cntry in the capital account under 
"private investment overseas". There are in fact good reasons for presenting the accounts in this way, which follows accepted international practice. 

An alternative way of showing more clearly the effect on the balance of payments of international investment is to leave the main accounts as they are but have an additional table on the lines of that used in connection with the example discussed above - a table which brings together all the identified items in the balance of payments accounts which relate to international investment, and shows the combined effect of these items". Such a table would not, of course, show the total effect of overseas investment on the reserves: for this purpose it would be necessary in addition to estimate the effects of overseas **investment on** U K trade 
(a problem tackled in the Reddaway Report), tand pos­
sibly to allow for effects on the exchange rate. With these qualifications, however, a table which brings together all Matters become more complicated if in addition the U 
K 
parent has borrowed (say) £750 of foreign currency from a UK bank to finance its overseas operations. In that event the "outflow" under "private investment overseas" will appear even larger (£500 *phis* £750 equals £1,250), although there will be an offsetting "inflow" of £750 
elsewhere in the capital account under "foicign currency 

borrowing by U  
               K banks". The only direct effect on the 
reserves is the £1,000 of remitted profits, but the accounts 
will show: 

|             | Current    |  account    |
|-------------|------------|-------------|
| Private     | investment | overseas    |
| Foreign     | currency   | borrowing   |
| C           |            |             |
| 4           |            |             |
| -1          |            |             |
| .500        |            |             |
| -1          |            |             |
| .250        |            |             |
| *           |            | 750         |
| TOTAL       |            |             |
| -f          |            |             |
| 1           |            |             |
| .000        |            |             |
| Current     | account    | items       |
| Earnings    | of         | interest,   |
| 1.500       |            |             |
| of          |            |             |
| which.      |            |             |
| -unremittcd | profits    |             |
| 5 0 0       |            |             |
| therefore:  |            |             |
| effect      | on         | reserves    |
| 1.000       |            |             |
| Capital     | account    | items       |
| Private     | investment | overseas    |
| - 1 . 2 5 0 |            |             |
| of          |            |             |
|             | which.     |             |
| -financed   | by         | unremitted  |
| and         | trade      | creoit**    |
| - 5 0 0     |            |             |
| therefore:  |            |             |
| ether       | investment | to          |
| - 7 5 0     |            |             |
| Foreign     | currency   | borrowing   |
| 7 5 0       |            |             |
| therefore:  |            |             |
| effect      | on         |             |
| reserves    |            |             |
| Overall     | effect     | on          |
| 1.000       |            |             |
| *           | *assumod   | to          |

## Effect **On Reserves Of Identified Balance Of Payments Items** Associated With International Investment

( i implies a transaction f ovoui able to the rouorvos) 

| 1973          |
|---------------|
| (provisional) |

## I Uk Private Investment O V E R S E A S '

Currant (invisibles) account itoms 
1 
Interest, profits and dividends' 
4-2.432 
i 2.646 
4-2.225 
2 
o/*vA/c/)unremrned profits
1 
' 
4-935 
4-960 
4-1.018 
3 
therefore *eliect* on the reserves 
4-1.557 
4-1.686 
41.207 
l 
4 
Net receipts frorn services and royalties
4 
4 1 0 6 
4-135 
4-147 
5 
Interest payments on foreign currency borrowing for invest­
ment overseas
4 
- 2 2 5 
- 2 7 5 
- 3 5 0 
C 
 therefore *niiect* on resetves of 
1-5 
4 1 . 4 3 8 
4-1.546 
4-1.004 
Capital account itoms 
7 
 
UK private investment overseas (net) * 
- 1 . 8 5 5 
- 
- 1 . 1 6 9 
- 1 . 4 0 5 
of which 
8 
financed by unrcmitted profits' 
 
- 9 3 5 
- 9 6 0 
- 1 . 0 1 8 
9 
trade cred.t etc' 
 
- 1 7 9 
- 3 1 9 
- 2 4 5 
therefore ­
10 
other net investment to be financed 
- 7 4 1 
4 110 
- 1 4 2 
11 
Foreign currency borrowing for investment overseas (net) 
. . 
4-762 
4-410 
-f-466 
12 *therefore* effect on reserves 
of 7-11 
 
4-11 
4-520 
13 
Combined effect of current and capital account items (6 plus 

## Overseas Investment In U K Private Sector

Current (invisibles) account items 
14 
Interest, profits and dividends' 
 
- 7 9  
2 
- 7 0  
8 
- 7 1 1 
- 2 3 1 
- 2 7 7  
16 *therefore* effect on reserves 
- 3 7  
8 
 
- 477  
- 4 3 4 
18 
therefore effect on reserves 
of 14-17 
 
- 5 1 4 
- 6 3 8  
- 6 2 5 
Capital account items 
4-2.235 
-f 1.760 
of which 
-! 231 
4-277  
21 
tiade credit etc' 
-f-45 
 
4 1 1 5 
-f-80  
22 
Direct borrowing abroad (net) to finance overseas invest­
24 
Combined effect of current and capital account items (18 plus  
23) on reserves' 
4 3 4  
8 
 
4-1.022  
4 5 6 9 
25 
TOTAL EFFECT O N R E S E R V E S (13 plus 24) 
 
-t-1.797 
43.088 
-! 1.897 

## Footnotes

1. 

 Net of disinvestment. The figures cover di'*cL potfofio. O'! end mitcellaneout *investment.* Further *dotails* of the identified capital transactions associated with UK 
investment overseas are given in table 20 of "United Kingdom Balance of Payments 19G5-75" (the "Pink Book"). UK private investment overseas includes the transactions of certain public corporations. 

* 
2 Comprises privsic sector credits ("Pink Book" table 13) *lest* interest on unrelated export credit, net Eurocurrency earnings, sterling cliims. and discount earnings; 
plus the earnings ol certain public corporations. 

3 
 Comprising unremittcd profits of cffiiiotes (net) other than that part of un remitted losses caused by dividends exceeding profits. 

4. 

 Excluding those of oil companies. These are included within interest profits and dividends. 

5. 

 Rough estimates. 

6. 

 Including funds surrendered to tho UK ofhcial reserves under the 25 per cent surrender scheme: 1973: f 158 mi!!,on. 1974: C265 million. 1975: CtBO million. 

7. Gros* amounts of trade credit extended to and received Irom overseas affiliates or parents Such trade cu d t extended by oil companies cannot be identified, fl. Excluding the effect of certain unidentified transactions, notably the effect of investment by oil companies in the form of trade credit. 

9. 

 Comprises private sector debits ("Pink Book" table 13) *less* interest on issues abroad jnd on direct borrowing abroad for use abroad, and interest on sterling labilities and on import credit. 

10. 

 Direct borrowing abroad, net of repayments (including net issues abroad) used for financing UK private investment overseas This is conventionally included in 
"overseas investment in UK private sector" (lino 19). as well as in line 11. and has therefore to be deducted. 

11. 

 Excluding sterling borrowing from UK banks by overseas companies for investment rn fha UK. *which* it generally prohibited by Exchange Ccntrot. The amount of this borrowing is thought to be small. 

the relevant identified flows in the accounts ought at least first section of the table, headed "Current (invisibles) 
to prevent the **misunderstandings which result** *from* un­
account items", gives the total earnings on our overseas familiarity with the accounts. 

investments and then shows the amounts remitted to the The table above has been constructed on these lines UK (line 6). The second section, headed "Capital account and gives figures for the last three years. The upper part of items", shows the net additions to our investments during the table corresponds closely to the second of the tables the periods in question and the extent to which these illustrating the hypothetical example discussed earlier. The additions were financed without call on the official 

£ 
 million 
4- 2,065 
-r 1.328 
- 161  
- 1 9 1 
4-229  
4 209 
+1.660  
\ 1.194 

reserves - from earnings retained overseas, trade credit from pa r c n  
l companies, foreign currency borrowings etc. 

The residua! item in line 12 then shows the extent of any CQst, or benefit, to the reserves. Because investment is calculated net of disinvestment, the overall effect as shown 
, n this line may actually be favourable. The lower part ol foetobleshows comparable figures lor overseas investment 
"HhcUK private sector. 

As can be seen, the table immediately highlights the fact lhat if one looks at *all* the identified balance of payments transactions associated with UK private investment ovcr­
seas, the net effect on the balance of payments has been both favourable and massive- averaging over £1billio n a year in the last three years. Moreover, this benefit to the reserves becomes still larger averaging some £2] billion a year over the same period—when account is taken of overseas investment in the UK private sector. The table also brings out clearly how unremitted profits, or profits retained overseas, contribute to the financing of overseas investment, and in particular how in the last three years the net additions to our overseas investments have been financed in such a way that the overall effect on the reserves has actually been favourable. 

C P ( 7 8 ) 3 
16 J a n u a r y 1978 
C A B I N E T 
T H E G R E E N 
P O U N D 
M e m o r a n d u m by the M i n i s t e r of A g r i c u l t u r e , F i s h e r i e s a n d F o o d 
1. 

We need to c o n s i d e r whether to m a k e a n i m m e d i a t e green pound devaluation i n the l i g h t of p a r l i a m e n t a r y p r e s s u r e s a n d the negotiating position o n C o m m o n A g r i c u l t u r a l P o l i c y ( C A P ) p r i c e s i n B r u s s e l s . 

2. 

T h e r e i s now a strong case f o r action to i m p r o v e the U n i t e d K i n g d o m f a r m support p r i c e l e v e l s and to ease the p r o b l e m s w h i c h e x c e s s i v e M C  
A 
(monetary c o m p e n s a t o r y amount) e x p o r t *ubsidi*s on supplies f r o m other E u r o p e a n E c o n o m i c C o m m u n i t y ( E E C ) c o u n t r i e s a r e c a u s i n g f o r the meat p r o c e s s i n g i n d u s t r y and w h i c h could l e a d to m o r e than three thousand further r e d u n d a n c i e s . 

T h e A n n e x s u m m a r i s e s the key facts i n c l u d i n g the effects on food p r i c e s . 

A l t h o u g h a g r i c u l t u r e has h a d a m u c h better year i n 
1977 the u n d e r l y i n g trends a r e u n s a t i s f a c t o r y with the beef a n d p i g b r e e d i n g herds i n p a r t i c u l a r showing sharp d e c l i n e s . 

T h e difficulties of these two s e c t o r s a r e due i n l a r g e m e a s u r e to t h e i r h a v i n g to compete i n the U n i t e d K i n g d o m m a r k e t with h i g h l y s u b s i d i s e d i m p o r t s of D a n i s h b a c o n and I r i s h heef. 

T h e d a i r y h e r d i s now also starting to f a l l and investment i n a g r i c u l t u r a l b u i l d i n g s and w o r k s i s continuing to f a l l . C A P P R I C E 
N E G O T I A T I O N S 
3. 

In a c c o r d a n c e w i t h o u r strategy towards the C A  
P o u r m a i n objective in the p r i c e negotiations w i l l be to h o l d down i n c r e a s e s i n c o m m o n p r i c e s as close as p o s s i b l e to the average of 2 p e r cent p r o p o s e d b y the C o m m i s s i o n . 

A n i n c r e a s e of this o r d e r w i l l not be sufficient to m a i n t a i n the p r o d u c t i v e base of o u r own a g r i c u l t u r e a n d we w i l l n e e d to a d d to it by devaluing the green pound b y 5 p e r cent o r m o r e l e a v i n g u s w i t h a n M C  
A gap of about 
2 * p e r cent. 

T h e i m p r o v e m e n t i n the c o m p e t i t i v e n e s s of o u r m e A t i n d u s t r y afforded by a r e d u c t i o n i n the M C A s w h i c h would r e s u l t f r o m an i m m e d i a t e 
5 p e r cent devaluation i s , i n m y view, the m i n i m u m that is needed i f we a r e to have a r e a l p r o s p e c t of a r r e s t i n g the continuing decline i n o u r p i g a n d b e e i breeding h e r d s . 

T h i s devaluation w o u l d r e d u c e the M C  
A subsidy on D a n i s h b a c o n i m p o r t s b y £ 4 3 p e r tonne (a cut of about 18 p e r cent) and the net M C A 
subsidy on I r i s h beef i m p o r t s by £ 6  
0 p e r tonne (a cut of about 20 p e r cent). 

T h e r e a r e , m o r e o v e r , great negotiating advantages i n m a k i n g this devaluation 
^ 2 £ ^ t h  
e C o u n c i l starts its d i s c u s s i o n s o n C A P p r i c e s . 

T h i s y e a r , with no further t r a n s i t i o n a l steps to i n c r e a s e our support p r i c e s a n d with w e l l known P r o b l e m s i n c e r t a i n s e c t o r s the other m e m b e r states w i l l know that we r e q u i r . 

m o r e than the 2 p e r cent c o m m o n p r i c e i n c r e a s e . 

W e need therefore to t r y to get the g r e e n pound i s s u e taken out of the p r i c e - f i x i n g to avoid it b e c o m i n g a l e v e r w h i c h other m e m b e r states c a n use to achieve their objective of higher c o m m o n p r i c e s . 

T h e F r e n c h and the Italians, to strengthen their own t a c t i c a l positions, a r e m a k i n g g r e e n c u r r e n c y devaluations before the negotiations and ii we do the s a m e it w i l l strengthen the g e n e r a l case against i n c r e a s e d c o m m o n p r i c e s . 

T H E P A R L I A M E N T A R Y 
S I T U A T I O N 
4. 

W e have to decide how to deal with the O p p o s i t i o n motion^to be debated on 23 J a n u a r y c a l l i n g f o r an i m m e d i a t e d e v a l u a t i o n of 7^ p e r cent. 

The m i n o r p a r t i e s s e e m c e r t a i n to support this a n d we r u n a v e r y r e a l r i s k of defeat i f we cannot announce some change i n the g r e e n pound. 

W e c o u l d , of c o u r s e , m a k e no i m m e d i a t e change a n d continue to a r g u e that i t i s f o r the G o v e r n m e n t to judge when and by how m u c h to m a k e a devaluation; if we were defeated we c o u l d b l a m e the other p a r t i e s i o r the food p r i c e i n c r e a s e s which would follow. 

B u t I would strongly oppose o u r s u r r e n d e r i n g the initiative i n this way. 

T h e c r e d i b i l i t y of o u r l i n e o n the g r e e n pound depends on our being p r e p a r e d to m a k e some m o v e when c i r c u m s t a n c e s justify i t . H wo c o u l d announce a 5 p e r cent change it w o u l d be v e r y difficult f o r the Opposition to argue that it should have been g r e a t e r and we would have effectively defu3cd a n i s s u e w h i c h w i l l otherwise cause u s continuing c r i t i c i s m and e m b a r r a s s m e n t o v e r the c o m i n g m o n t h s . 

## T I M I N G

5. 

W e w i l l need to m o v e q u i c i d y to p e r s u a d e the C o m m i s s i o n to table a p r o p o s a l i n time f o r the C o u n c i l m e e t i n g o n 23-24 J a n u a r y . 

C O N C L U S I O N 
6* 
I invite the C a b i n e t to a g r e e that I should i m m e d i a t e l y a s k C o m m i s s i o n e r G u n d e l a c h to table a p r o p o s a l at the C o u n c i l on 23-24 J a n u a r y f o r a 5 p e r cent g r e e n p o u n d devaluation to be effective on 1 F e b r u a r y . 

M i n i s t r y of A g r i c u l t u r e , F i s h e r i e s and F o o d 
*6 J a n u a r y 1978 

## Economic Data A G R I C U L T U R E - G E N E R A L P O S I T I O N

A g r i c u l t u r a l p r o d u c t i o n h a s i n c r e a s e d by a b o u t 
2
5
% 
i n 1977 
a s a r e s u l t o f b e t t e r w e a t h e r . 

The i n d e x o f n e t p r o d u c t 
(1975 
= 
100) 
i s as f o l l o w s 

| 1973   |      |
|--------|------|
| 113    |      |
|        |  114 |
|        |  100 |
|        |   89 |
|        | 112  |

I arm i n c o m e s 
( e x c l u d i n g s t o c k a p p r e c i a t i o n ) 
a r e e x p e c t e d t o i n c r e a s e by 16% i n money t e r m s i n 1978 
f r o m £1158 
m i l l i o n t o 
£ 1 3 4 8 
m i l l i o n . 

I n r e a l t e r m s t h e y w i l l h a v e r e m a i n e d a b o u t t h e s a m e . 

Cost i n c r e a s e s i n 1977 
were much l e s s t h a n i n t h e p r e v i o u s y e a r . 

The e s t i m a t e d f i g u r e i s £322.5 m i l l i o n c o m p a r e d w i t h t o t a l i n p u t s o f £5,500 
m i l l i o n . 

The volume o f new i n v e s t m e n t i n a g r i c u l t u r e i s as f o l l o w s 

1973 
1974 
1975 
1976 
1977 
B u i l d i n g s & Work 
104 
100 
79 
64 
61 
P l a n t & **M a c h i n e r y** 
91 
100 
93 
101 
100 
T o t a l 
97 
100 
87 
85 
83 

## Main Commodity P R O A U C T I O N T R E N D S

M i l k **p r o d u c t i o n i n** 1977 
was some 4J% 
h i g h e r t h a n i n 1976 
w i t h t h e i n c r e a s e c o m i n g l a r g e l y f r o m much b e t t e r y i e l d s . 

The d a i r y h e r d D
U
t i
£
 
n o w expanded b y 1
% b e t w e e n **J u n e** 1976 
and J u n e 1977
c o n t r a c t i n g a g a i n . 

Beef production i n 1977 i s forecast to be about 5
% l e s s than i n 1976. 

The s p e c i a l i s t beef breeding herd f e l l by 4
% between June 1976 and June 1977 and i s s t i l l d e c l i n i n g . 

Pig production i s s t i l l f a l l i n g . 

The breeding herd f e l l by 7
% 
between June 1976 and June 1977* 
Cereals production reached a record l e v e l at nearly 17 m i l l i o n tonnes. The acreage was higher than i n 1976 but below e a r l i e r l e v e l s . 

There was no improvement i n sugar beet acreage but production i s expected to have increased by over 3
0
% as a r e s u l t of much b e t t e r weather. 

## Net Margins I N A G R I C U L T U R E

O f f i c i a l s have made a preliminary examination of the possible l e v e l of returns to a g r i c u l t u r e i n 1978 and i t i s considered that for net margins to be maintained at recent l e v e l s the following ranges of percentage increases i n support p r i c e s are indicated f o r the main commodities 

Wheat 
7 - 9 
Barley 
5 -
Sugar Beet 
6 - 7 
Beef 
7 - 1  
0 
Mii 
K 
4 - 5 
on t o t a l returns which can 
be achieved 

e i t h e r by 10*% 
increase on manufactured p r i c e s (which are a f f e c t e d by the green pound) or by a combination of a smaller manufacturing price increase and some l a t e r change i n the l i q u i d p r i c e 

## Employment

T o t a l employment i n t h e meat p r o c e s s i n g i n d u s t r y i s e s t i m a t e d at 4 5 , 0 0 0 o f whom a b o u t 
2 2 , 0 0 0 a r e i n t h e p i g m e a t s e c t o r . 

There have a l r e a d y b e e n 
3 , 0 0 0 r e d u n d a n c i e s i n t h i s s e c t o r s i n c e mid-1976 a n d t h e r e a r e a t p r e s e n t a p p l i c a t i o n s f o r T e m p o r a r y Employment S u b s i d y c o v e r i n g a f u r t h e r 3*300 
j o b s . 

E s t i m a t e d e f f e c t s o f 
5% d e v a l u a t i o n o n r e t a i l p r i c e s o f m a i n f o o d s t u f f s A 5% d e v a l u a t i o n w o u l d i n c r e a s e t h e c o s t o f f o o d t o t h e c o n s u m e r by about
 
1
% a f t e r a l l t h e e f f e c t s h a d w o r k e d t h r o u g h . 

The e f f e c t on t h e a l l i t e m s R e t a i l P r i c e I n d e x w o u l d be an i n c r e a s e o f a b o u t i%. 

B e t a i l p r i c e c h a n g e f o r t h e m a i n c o m m o d i t i e s B u t t e r 
-f 3
p l b 
) *Effect* 
not l i k e l y t o be s e e n u n t i l 
) autumn o w i n g t o e x i s t e n c e o f l a r g e Cheese 
* 3
p l b 
) s t o c k s o f b u t t e r and c h e e s e B e e f 
* 2p l b Bacon & ham 
* 1p l b Bread 
* -Jp s t a n d a r d l o a f Sugar 
4- 1p k g 

## P U B L I C E X P E N D I T U R E

MAFF f o r e c a s t o n a f u l l y e a r b a s i s s m a l l s a v i n g s i n p u b l i c e x p e n d i t u r e , t a k i n g a c c o u n t o f o u r net c o n t r i b u t i o n s t o t h e E E C 
and e x p e n d i t u r e programmes i n t h e U K , a l t h o u g h t h e outcome d e p e n d s on i n c r e a s e d i n t e r v e n t i o n . 

( R e c e i p t s on a g r i c u l t u r a l l e v i e s , a c c r u i n g t o t h e E x c h e q u e r , would a l s o i n c r e a s e ) . 

## 1978 0? The Green Pound (£ Million) Approximate Increases Arising Prom A Devaluation R-Arly In Effects In A Full Year

| FEOG        | FEOGA       |
|-------------|-------------|
| UK          | producer    |
| 1           |             |
| s returns   | UK          |
| UK          | consumers   |
| expendi     | expendi-    |
| exchang     | exchange    |
| expenditur  | expenditure |
| cost        | costs       |
| Before feed |             |
| After       | feed        |
| 32          |             |
| -           |             |
| 62          |             |
| 22          |             |
| 5%          |             |
|             | devaluation |
| 185         |             |
| 152         |             |
| 115         |             |

## Notes

1. 
The estimates are based on quantities of production, trade and consumption forecast marketing years of 1978/79. 
'or 
the 
2. 
Increases  
i n i n s t i t u t i o n a l prices are assumed to be f u l l y reflected  i n market prices, except 
f o r 
beef, where only a minor part 
of the 
increase  
i s l i k e l y to bs reflected because of an expected 
hardening of the market during 1978, 
and f o r sugar, where jtlie BSC 
has already set a price f o r 1973 
contracts. 
Increased returns 
to beef producers are net a f t e r higher costs 
of imported I r i s h stores, 
The devaluation  
i s assumed to a f f e c t d i r e c t l y only the price of milk f o r manufacture, accounting
f o r about h a l f of milk delivered from farms. 

On these bases a 5% 
                    devaluation might ultimately add about VA 
                                                              to the average r e t a i l price of food. 
The e f f e c t s on 
               the average r e t a i l price of a l  
                                              l items would be about one-quarter of 1%. The f u l l 
effects on food prices from a devaluation on 
                                             1 ittnary 
                                                    would only appear  
                                                                       i n the course of 1978, as 
d i s t r i b u t o r s worked o f f stocks, and as prices of intensive livestock products adjusted to higher 
feed costs. 

5. 
Although the immediate effect on foreign exchange expenditure of the UK would be adverse, there 
would ultimately be some saving  
i n foreign exchange expenditure, as higher prices here stimulated 
production, reduced consumption, and so l e d to a f a l l  i n quantities of imported food. 
CP(78) 4 
C O P Y N O 
8 0 
!6 J a n u a r y 1978 
C A B I N E T 
W H I T E P A P E R O N A I R P O R T S 
P O L I C Y 
M e m o r a n d u m by the S e c r e t a r y of State for T r a d e 
1. 

F o l l o w i n g the d e c i s i o n , i n J u l y 1974. 

to abandon the M a p l i n a i r p o r t Project, we initiated a w i d e - r a n g i n g r e v i e w of a i r p o r t s p o l i c y . 

T h e a i m was to devise a p o l i c y for G r e a t B r i t a i n as a whole r a t h e r than to r e l y on p i e c e m e a l solutions and also to ensure that a l l those affected by a i r p o r t developments should be i n v o l v e d i n the f o r m u l a t i o n of p o l i c y . 

A consultation document, i n two p a r t s , was p r o d u c e d to a s s i s t this p r o c e s s . 

P a r t 1, published i n N o v e m b e r 1975, dealt with a i r p o r t s i n the L o n d o n a r e a and G
r e a P a r t 2, p u b l i s h e d i n June 1976, c o n s i d e r e d a i r p o r t s i n the **r e s t** .t
* 
B r i t a i n . 

O v e r 600 organisations and m a n y i n d i v i d u a l s made representations on these documents a n d M i n i s t e r s h e l d meetings with the m o r e i m p o r t a n t organisations. 2. 

A White P a p e r setting out the G o v e r n m e n t ' s future a i r p o r t s p o l i c y i s attached. 

A draft of the White P a p e r was c o n s i d e r e d b y the M i n i s t e r i a l C o m m i t t e e . n E c o n o m i c a n d I n d u s t r i a l P o l i c y on 14 D e c e m b e r 
1977 
F o l l o w i n g c l e a r a n c e b y C a b i n e t , the C o m m i t t e e a g r e e d that the White P a p e r should be p u b l i s h e d subject to a m e n d m e n t of the r e f e r e n c e to the significance of a i r p o r t s strategy for r e g i o n a l development; 
to the i n c l u s i o n of a m o r e forthright statement about the abandonment of M a p l i n ; 
and to further consultation between the S e c r e t a r y of State f o r S c o t l a n d and me about tne Highlands and Islands a e r o d r o m e s . 

T h e draft has been amended to take account of the f i r s t two p o i n t s . 

W i t h r e g a r d to the H i g h l a n d s and Isian s P r o d r o m e s , subject to one exception, I a g r e e with the S e c r e t a r y of State 
*or Scotland that the future a r r a n g e m e n t s f o r these a e r o d r o m e s should be l e i t for the Scottish A s s e m b l y to c o n s i d e r . 

S u m b u r g h , i n the Shetland i s vital to the oil i n d u s t r y a n d the exceptional growth of traffic there p r e s e n t s management p r o b l e m s beyond the e x p e r i e n c e and abilities of the C i v i l A v i a t i o n A u t h o r i t y ( C A A ) w h i c h now o p e r a t e s the a e r o d r o m e . 

T h e s e p r o b l e m s a r e likely to b e c o m e m o r e acute a n d to r e q u i r e a e r o d r o m e management skxlls 
* h i c h can only be p r o v i d e d by the B r i t i s h A i r p o r t s A u t h o r i t y . 

In my view, r e s p o n s i b i l i t y for S u m b u r g h should be t r a n s f e r r e d as q u i c k l y as p o s s i b l e to 
* e B r i t i s h A i r p o r t s A u t h o r i t y . 

I invite colleagues to c o n s i d e r this i s s u e . 

^ the c o n c l u s i o n i s that S u m b u r g h should be t r a n s f e r r e d to the B n U s h A i r p o r t s A u t h o r i t y the square b r a c k e t s i n p a r a g r a p h s 142, 
143 and 163 would be deleted. 

O n the other h a n d if it i s d e c i d e d to l e a v e the a e r o d r o m e with the C A A the sections i n square b r a c k e t s would be deleted. 

3. 
T h e White P a p e r i s long, though no m o r e so than p r e v i o u s White 
P a p e r s dealing with a i r p o r t s . 
In the light of the extensive 
consultations, 
I bslieve it i s i m p o r t a n t that the G o v e r n m e n t
1 s statement should recognise the m a i n a r g u m e n t s that have been deployed a n d within that context explain the content of the p r o p o s e d strategy. 

Sections 1 -3 p r o v i d e a b a s i c f r a m e w o r k against w h i c h d e c i s i o n s r s l a t i n g to p a r t i c u l a r a i r p o r t developments should be c o n s i d e r e d . 

I hope that this w i l l p r o v i d e a guide to p o l i c y for many y e a r s to c o m e . 

Section 4 contains d e c i s i o n s which a r e n e c e s s a r y now on p a r t i c u l a r d e v e l o p m e n t s . 

Section 6 i s a s u m m a r y of the p r i n c i p a l issues and c o n c l u s i o n s . 

4* 
C o l l e a g u e s m a y w i s h tc take p a r t i c u l a r note of the following points: 
i . 
T h e developments p r o p o s e d f o r the L o n d o n a r e a p r o v i d e 
capacity for about 72 m i l l i o n p a s s e n g e r s by 1990 c o m p a r e d with 
the f o r e c a s t range of 66-90 m i l l i o n p a s s e n g e r s . 
T h e r e i s , 
t h e r e f o r e , 
a r i s k that d e m a n d w i l l e x c e e d planned capacity at the 
end of the 1980s if traffic grows at the highest f o r e c a s t 
rate. 
H o w e v e r , 
given the c o n s i d e r a b l e u n c e r t a i n t i e s , 
set out i n the 
White P a p e r , s u r r o u n d i n g the high forecast; 
the i m p o r t a n c e 
attached tc flexibility 
i n a i r p o r t s p o l i c y ; 
the need to avoid 
p o s s i b l y p r e m a t u r e expenditure on f u r t h e r a i r p o r t capacity; 
and 
the p r o b a b i l i t y that the devolopments p r o p o s e d could a l m o s t 
c e r t a i n l y cater for a g r e a t e r n u m b e r of p a s s e n g e r s i f the need 
a r o s e , 
I think this i s a r i s k which we should accept. 
i i . 
 
Outside the L o n d o n a r e a the p o l i c y is one of r a t i o n a l i s a t i o n . 
T h e W h i t e P a p e r states- c l e a r l y that, with the exception of the 
H i g h l a n d s and Islands, 
f u r t h e r subsidies for a i r p o r t s w i l l not be 
p r o v i d e d and that wasteful competition w i l l not be encouraged. 
C e r t a i n a i r p o r t s a r e identified as c e n t r e s for growth. 
T h e White P a p e r m a k e s it c l e a r that the G o v e r n m e n t w i l l seek to encourage the m o r e r a p i d d e v e l o p m e n t of a i r s e r v i c e s i n the regions b y their concentration at selected a i r p o r t s , but because the o v e i w h e l m i n g p r o p o r t i o n of p a s s e n g e r s live i n the South E a s t the White P a p e r r e j e c t s suggestions that m e a s u r e s should be i n t r o d u c e d to f o r c e these p a s s e n g e r s to use a i r p o r t s i n the r e g i o n s . 

l
v
 
 
* 
Although there could be advantages i n e n c o u r a g i n g the 
takeover by the B r i t i s h A i r p o r t s A u t h o r i t y of the 
strategic 
r e g i o n a l a i r p o r t s identified i n the White P a p e r , I believe 
that i n the i n t e r e s t of p r e s e r v i n g l o c a l and r e g i o n a l autonomy, 
any t r a n s f e r of a i r p o r t s should be b a s e d on a g r e e m e n t between 
the B r i t i s h A i r p o r t s A u t h o r i t y a n d the l o c a l authorities 
c o n c e r n e d r a t h e r than on the d i r e c t i o n of c e n t r a l G o v e r n m e n t . 
v. 
F u r t h e r d e c i s i o n s on a i r p o r t development a r e l i k e l y to be 
n e c e s s a r y , e s p e c i a l l y i n the South E a s t , where additional a i r p o r t 
capacity w i l l be needed for the 1990s i f a i r traffic continues to 
grow. 
The White P a p e r i n d i c a t e s that the G o v e r n m e n t intends to 
continue to consult widely on these i s s u e s and, i n p a r t i c u l a r , 
to 
involve the l o c a l planning authorities m o r e c l o s e l y i n the 
p r e p a r a t i o n 
of p o l i c y . 
5. 

T h e p r o p o s a l s i n the White P a p e r m i n i m i s e expenditure as far as p r a c t i c a l and for the c u r r e n t P u b l i c E x p e n d i t u r e S u r v e y p e r i o d a r e expected to be contained within existing p r o v i s i o n . 

6* 
P u b l i c a t i o n of the White P a p e r has been widely anticipated for some time and before the R e c e s s the H o u s e was i n f o r m e d that publication W
a s expected e a r l y i n 1978. 

A c l e a r statement of p o l i c y i s needed to remove p r e s e n t u n c e r t a i n t i e s affecting m a n y o r g a n i s a t i o n s and people, but m o r e i m p o r t a n t l y to p r o v i d e the n e c e s s a r y impetus to the transfer of traffic f r o m H e a t h r o w to G a t w i c k and to the P u b l i c Inquiry on the p r o p o s e d fourth t e r m i n a l at H e a t h r o w , both of w h i c h a r e e s s e n t i a l to the handling of L o n d o n a r e a a i r traffic i n the s h o r t e r t e r m . 

Cabinet i s invited to approve the White P a p e r for p u b l i c a t i o n . 

E D 
D e p a r t m e n t of T r a d e 
1 
7 J a n u a r y 1978 
P O L I C Y 

## Contents

|    |                           | 1                  | B a c k g r o u n d    |
|----|---------------------------|--------------------|------------------------|
| 2  | C o n s u l t a t i o n s | on a i r p o r t s | p o l i c y            |
| 3  | B a s i c                 |                    | a s s u m p t i o n s  |

## £Gctlqn 1; R P H 1 ? To/^£Work F Q R An Airport Strategy

|                 |                                   | 1               | I n t r o d u c t i o n    |
|-----------------|-----------------------------------|-----------------|----------------------------|
| 2               | T y p e s                         | o f             | a i r p o r t              |
| G a t e w a y   | i n t e r n a t i o n a l         | a i r p o r t s |                            |
| R e g i o n a l | a i r p o r t s                   |                 |                            |
| L o c a l       |                                   | a i r p o r t s |                            |
| G e n e r a l   |                                   | a v i a t i o n | a e r o d r o m e s        |
| 3               | T h e i m p l e m e n t a t i o n | o f             | a n a i r p o r t s        |
| 4-              | T h e r o l e                     | o f             | r e g i o n a l            |
| 5               |                                   | A i r p o r t   |                            |
| 6               | F i n a n c e                     | a n d           | o w n e r s h i p          |

7 
A i r p o r t 
c h a r g e s 
8 
F u t u r e d e v e l o p m e n t 
o f 
p o l i c y 
9 
T h e 
f r a m e w o r k 

| g L J L L   |                         |
|-------------|-------------------------|
| 1           |                         |
|             | I n t r o d u c t i o n |

2 
A r e v i e w 
o f 
t h e 
f o r e c a s t s 
3 
R e a l i s m o f 
f o r e c a s t s 
^ 
C a r g o 
f o r e c a s t s 

## Section The Airport Environment

1 
I n t r o d u c t i o n 
2 
A i r c r a f t noise 
3 
Access 
4 
Planning 

## Section A Narpmnat. Airports System

I n t r o d u c t i o n 

2 
The London area a i r p o r t s 
Heathrow 
Gatwick Stansted 

Luton 

Adequacy of proposed developments 

The longer term 

Costs 

3 
A i r p o r t s outside the South East 
Central England 
Northern England South Wales and South West England 
Scotland C e n t r a l Scotland Northern Scotland 

4­ 
General a v i a t i o n 
Development of a n a t i o n a l a i r p o r t s system The demand f o r a i r transport The London area The r e s t of Great B r i t a i n 

5 
Scotland 
6 
General 
a v i a t i o n 
7 
Implementation of the strategy 
8 
Access 
9 
A i r c r a f t noise 
10 
Planning 
11 
Consultation 

## Airports **Policy** Introduction Background

1

 
    The need t o 
               meet the 
                        demand f o r a i r t r a v e l i n 
                                                the 
                                                   London 

area by b u i l d i n g a large new a i r p o r t on 
                                            the 
                                                 N a p l i n sands, 

in the 
        Thames estuary, 50 miles from London was c a l l e d i n t o 

question by four developments i n 
                                   the e a r l y 1970s, 

rapid i n t r o d u c t i o n 
                     of large a i r c r a f t meant that the 
                                                           major 

constraints at a i r p o r t s i n 
                            the 
                                London area had 
                                                  become the 
                                                             capacity 

o
  f  passenger terminals r a t h e r than runways. 
                                                                                                                                                               Secondly, the 
                                                                                                                                                                                                                new 
                                                                                                                                                                                                                             

larger a i r c r a f t were markedly l e s s noisy t h a n t h e i r predecessors,  

and i n t e r n a t i o n a l agreement on 
                                      the 
                                           permitted noise l e v e l s of a l l  

Jet a i r c r a f t suggested that disturbance from a i r c r a f t noise 

" * * d be reduced over the 
                                           comingyears. 
                                                                    T h i r d l y , the 
                                                                                          exceptional 

rise
      
     i  
        the 
             cost of f u e l , i n v o l v i n g f o r the 
                                                   a i r l i n e s a 250 
                                                                    per 
       n cent increase between 1972 and 197^, 
                                      r e s u l t e d i n 
                                                   t r a f f i c f o r e c a s t s 

s  i g n i f i
                                 c 
                                        n t
                                                l
                                                   y below those experienced i n 
                                                                                                                                                                                     the 
                                                                                                                                                                                                      past or considered  
                                     a  

t
  o  he reasonable by the 
                                                                                  R o s k i l l Commission. 
                                                                                                                                                               F i n a l l y , the 
                                                                                                                                                                                                             

economic recession of 197^ n e c e s s i t a t e d a d r a s t i c pruning of 

P u b l i c  expenditure.  

Against t h i s background, the 
                               Government re-assessed 
                                                      the 
                                                            

^ a p l i  
         n 

a i r p o r t p r o j e c t , which was abandoned. I t also decided  

     ^ d e r t a k e a comprehensive review of a i r p o r t s p o l i c y 
                                                                                                   i n 
                                                                                                          
Gt*eat R ­

r i t a i n i n 
                                          c o n s u l t a t i o n with a l l 
                                                                                                                                        those concerned. 
                                                                                                                                                                                                                      T h i s 
                                                                                                                                                                                                                                                  

review was not concerned with Northern Ireland since the  

development of B e l f a s t A i r p o r t does not impinge upon the  

p r o v i s i o n of a i r p o r t capacity i n Great B r i t a i n . 
                                                                                                 Neither was i t  

concerned with the Channel Islands or the I s l e of Man.  

## Consultations On Airports **Policy**

3 
The R o s k i l l Commission produced one of the most **thorough**  
examinations ever undertaken of the options f o r a major **project**  
of p u b l i c investment. 

Yet the conclusions of the **Commission,**  
i n a changing economic climate, were shown within **a few years**  
to be based on assumptions of rates of growth of a i r **t r a f f i c**  
which were u n l i k e l y to be achieved, while the **pace** **of**  
t e c h n o l o g i c a l development and i t s e f f e c t s had been more **rapid**  
than expected. 

Moreover, the recommendation of the **Commission,**  
f o r a new a i r p o r t on an inland s i t e at Cublington, was i t s e l f  
r e j e c t e d by the Government. 

T h i s experience suggested a  
c e r t a i n caution, and the need to recognise the wider i m p l i c a t i o n i n the case of p r o j e c t s i n v o l v i n g the commitment of vast **p u b l i c**  
resources and a f f e c t i n g many m i l l i o n s **of people.**  
4
- 
The Government decided t h a t , f o r the f u t u r e , i t was e s s e n t i a l to ensure that d e c i s i o n s concerning the development of p a r t i c u l a r a i r p o r t s were reached a f t e r taking f u l l account of the views of a l l those who use, work at, or are a f f e c t e d by, them. 

To f a c i l i t a t e t h i s process, and to ensure a wider understanding of the issues the Government produced a two part c o n s u l t a t i o n document " A i r p o r t Strategy f o r Great B r i t a i n " . 

Part 1, published i n November 1975, covered the London area 
8^ 
a i r p o r t s and Part 2 published i n June 1976 dealt **with the** 
region a i r p o r t s . 5 
N e a r l y 1000 o r g a n i s a t i o n s t h r o u g h o u t G r e a t B r i t a i n were i n v i t e d t o comment o n t h e s e d o c u m e n t s , i n c l u d i n g a l l t h e l o c a l a u t h o r i t i e s c o n c e r n e d , R e g i o n a l E c o n o m i c P l a n n i n g C o u n c i l s , amenity g r o u p s , a i r l i n e s , a i r p o r t a u t h o r i t i e s a n d e m p l o y e e s a n d o t h e r o r g a n i s a t i o n s w i t h a n i n t e r e s t i n a i r p o r t d e v e l o p m e n t s . 

In a d d i t i o n , a c o n s i d e r a b l e number o f o t h e r o r g a n i s a t i o n s a n d i n d i v i d u a l s s u b m i t t e d comments and a d v i c e . 

T h e G o v e r n m e n t b e l i e v e s t h a t t h i s a p p r o a c h t o t h e d e v e l o p m e n t o f a i r p o r t s p o l i c y has b e e n b o t h n e c e s s a r y and u s e f u l . 

T h e a d v i c e which, has been r e c e i v e d h a s b e e n v i r t u a l l y u n a n i m o u s i n w e l c o m i n g t h e c o n s u l t a t i o n p r o c e s s and e n d o r s i n g t h e n e e d t o c o n s i d e r a i r p o r t s p o l i c y i n a n a t i o n a l c o n t e x t . 

6 
U n d e r s t a n d a b l y , a g r e a t d e a l o f t h e a d v i c e s u b m i t t e d r e p r e s e n t e d t h e v i e w s o f s p e c i a l i n t e r e s t s s u c h a s t h e u s e r s of an a i r p o r t o r t h o s e a d v e r s e l y a f f e c t e d b y i t s o p e r a t i o n s . 

T h e Government's c o n c l u s i o n s w i l l n o t t h e r e f o r e r e c e i v e u n i v e r s a l a c c e p t a n c e . 

N e v e r t h e l e s s , i t i s h o p e d t h a t a s a r e s u l t o f t h e c o n s u l t a t i o n s t h e r e w i l l b e a t l e a s t a b e t t e r u n d e r s t a n d i n g of t h e d e c i s i o n s w h i c h t h e G o v e r n m e n t b e l i e v e s t o be n e c e s s a r y . 

C e r t a i n l y w i t h i n G o v e r n m e n t t h e r e i s a c l e a r e r a n d d e e p e r u n d e r s t a n d i n g o f t h e p o s i t i o n o f a l  
l t h o s e w i t h a n i n t e r e s t i n a i r p o r t d e v e l o p m e n t s . 

## Basic Assumptions Of Airports P O L I C Y

7 
I n d e v e l o p i n g i t s p o l i c y t h e G o v e r n m e n t h a s b e e n i n f l u e n c e d b y s i x m a i n c o n s i d e r a t i o n s : 
c o n f i r m a t i o n o f t h e abandonment of the Maplin a i r p o r t p r o j e c t ; 
the **r o l e** **of**  
the a i r transport industry i n the n a t i o n a l economy; 
the  
environmental and land use i m p l i c a t i o n s of **a i r p o r t**  
developments; 
consumer demand; the more e f f e c t i v e **use of**  
e x i s t i n g a i r p o r t , road and other i n f r a s t r u c t u r e **resources;** and f l e x i b i l i t y i n planning **and development which can be**  
r e l a t e d more c l o s e l y t o the growth i n demand. 

The **Government**  
has also considered the employment and the i n d u s t r i a l **development**  
promoted by **a i r p o r t s .**  
8 
U n t i l the 1960s, the rapid growth of the a i r **transport**  
industry throughout the world had been l i t t l e **constrained** **by**  
environemental considerations. 

Many a i r p o r t s **had been**  
b u i l t and developed on s i t e s which, had the post **war**  
development of c i v i l a v i a t i o n been foreseen, **would not have**  
been acceptable. 

Whil/e the massive investment which has been  
undertaken cannot be ignored, an i n c r e a s i n g l y **important element**  
of any a i r p o r t s p o l i c y must be a r e c o g n i t i o n **of the need to**  
take account of the planning and environmental **e f f e c t s** **of**  
a i r p o r t development and s p e c i f i c a l l y the need to l i m i t as f a r 
 
as possible the impact of a i r c r a f t noise on areas **surrounding**  
a i r p o r t s .  
9 
However, there needs also to be a proper **r e c o g n i t i o n** **of**  
the c o n t r i b u t i o n which the a i r transport industry makes **t o the**  
United Kingdom economy. 

C i v i l a v i a t i o n  
i s the dominant **form**  
of i n t e r n a t i o n a l passenger transport and plays a r o l e **both  i n**  
domestic transport and  i n i n t e r n a t i o n a l trade. 

During the  
Period which has seen the d e c l i n e of t r a d i t i o n a l **i n d u s t r i e s ,**  
a i r transport has been a high growth **industry, and  i s an area  i n**  
which the United Kingdom has retained a strong p o s i t i o n  **i n the**  
international market. 

A i r transport not only provides a  

                                -
                                 K
                                 ,
                                  ,
                                  ,
                                   - - i ^
                                          e s s e n t i a l part 
substantial b e n e f i t to the economy, but  i s
                                       a
                                       an
                                        n  

of the i n d u s t r i a l s t r u c t u r e of a country that needs  t o l i v e 
                                                                         y 
                                                                              

i t s trade with the outside world.  
                                                                         I t  i s a l s o o f f e r i n g  

increasingly wide o p p o r t u n i t i e s f o r a l l sections of the  

community both  t o enjoy h o l i d a y s abroad and  t o v i s i t  

^ e n d s and r e l a t i v e s l i v i n g outside the United Kingdom. A small  

number
       f those consulted expressed the view that the d i s ­
      0  

v
benefits of a v i a t i o n ,  i n p a r t i c u l a r a i r c r a f t
  
                                                       nois
                                                       noise
                                                            e and associated 
                                                               an  

congestion on the ground, were too high a p r i c e to pay. 
                                                           However, 
                                                                       

the majority accepted t h a t , while there must be a proper  

consideration of the e f f e c t s of a i r p o r t s on the surrounding  

areas, ways should be sought f o r meeting e f f i c i e n t l y the  

growing consumer demand f o r a i r t r a n s p o r t . 
                                              

1
  0  
                   F i n a l l y ,  i n the present economic climate an important  

^ W i t y of any p o l i c y s h o u l d be  t o e s t a b l i s h the most e f f e c t i v e  

U s * of e x i s t i n g a i r p o r t s i n f r a s t r u c t u r e and r e l a t e d 
                                                                                                                                                                          investment, 
                                                                                                                                                                                                                  

^rthermore, under c o n d i t i o n s of u n c e r t a i n t y , r i g i d plans would  

b e  inappropriate and there  i s a need **therefore f o r a strategy**  
w h i o h w i l l seek  t o balance c o n f l i c t i n g i n t e r e s t s , **and at the**  
s a * * time allow f o r change **and adaptation as circumstances unfold.**  

## Section 1; T H E Framework For An Airport Strategy Introduction

11 
A i r t r a f f i c demand h a s r e m a i n e d o v e r w h e l m i n g l y c o n c e n t r a t e d at t h e f o u r L o n d o n a r e a a i r p o r t s o f H e a t h r o w , G a t w i c k , L u t o n and S t a n s t e d w h i c h a c c o u n t f o r a b o u t two t h i r d s o f a l l t e r m i n a l passengers^
 
J 
u s i n g a i r p o r t s i n G r e a t B r i t a i n . 

H e a t h r o w a l o n e h a n d l e s about h a l f t h e t o t a l t e r m i n a l p a s s e n g e r s a n d o v e r 
60 p e r c e n t o f t h e i n t e r n a t i o n a l p a s s e n g e r s a t a i r p o r t s i n Great B r i t a i n . 

W h i l e p a r a g r a p h 4 6 s u g g e s t s t h a t t h e r e m i g h t b e grounds f o r e x p e c t i n g a g r o w t h i n demand f o r a i r t r a v e l i n areas o u t s i d e t h e S o u t h E a s t i n t h e p e r i o d up t o 
1990 
a n d b e y o n d , a s i g n i f i c a n t i n c r e a s e i n c a p a c i t y w i l l be r e q u i r e d a t t h e L o n d o n area a i r p o r t s . 

12 
O u t s i d e t h e S o u t h E a s t , t h e p r o b l e m h a s b e e n an o v e r p r o v i s i o n o f a i r p o r t c a p a c i t y a n d a n i n a b i l i t y t o g e n e r a t e t r a f f i c . 

I f t h e r e i s t o b e a n e f f i c i e n t u s e o f t h e c o u n t r y ' s r e s o u r c e s a n d e n c o u r a g e m e n t g i v e n t o t h e d e v e l o p m e n t o f v i a b l e a i r s e r v i c e s i n t h e r e g i o n s , a r e a s s e s s m e n t a n d r a t i o n a l i s a t i o n of t h e f u t u r e r o l e s o f t h e r e g i o n a l a i r p o r t s i s r e q u i r e d . 

T h e s e g e n e r a l r e q u i r e m e n t s o f t h e L o n d o n a n d r e g i o n a l a i r p o r t s h a v e been w i d e l y r e c o g n i s e d b y t h o s e c o n s u l t e d . 

## Types Of Airport

13 
I n e s t a b l i s h i n g a f r a m e w o r k f o r a n a i r p o r t s t r a t e g y t h e f i r s t s t e p i s t o d e t e r m i n e t h e t y p e s o f a i r p o r t r e q u i r e d i n t h e v a r i o u s p a r t s o f t h e c o u n t r y i n r e l a t i o n t o t h e e x p e c t e d d e m a n d s . 

(1) 
T e r m i n a l p a s s e n g e r s a r e t h o s e p a s s e n g e r s who j o i n o r l e a v e a f l i g h t a t a n a i r p o r t ; 
t h e y i n c l u d e a l  
l p a s s e n g e r s e x c e p t t r a n s i t p a s s e n g e r s . 

The 1961 
           White Paper: 
                           C i v i l Aerodromes and 
                                                     A i r Navigational 

Services (Cmnd 14-57) suggested that the 
                                         p r i n c i p a l "gateway" 

a i r p o r t s should be regarded as part of 
                                                                            a n a t i o n a l a i r p o r t system-

Part 2 of 
           the 
               c o n s u l t a t i o n document "Airport Strategy f o r 

Great B r i t a i n " proposed that t h i s concept might merit f u r t h e r development and considered the 
                                grouping of a i r p o r t s w i t h i n a 
                                                              num^

e
I" 

of categories. Comments received during the consultations 

i n d i c a t e d some disagreement about the 
                                                                           r o l e of p a r t i c u l a r 
                                                                                                                airports* 

but there was considerable support f o r a grouping of a i r p o r t s 
                                                                by 

category as 
             the 
                 b a s i s f o r a n a t i o n a l a i r p o r t s strategy, embracing 

both the 
         London area and 
                          the regions. 

14 
        The grouping of a i r p o r t s w i l l not 
                                                    of i t s e l f provide  

the r a t i o n a l i s a t i o n of a i r p o r t f a c i l i t i e s which the 
                                                            Government 
                                                                        

b e l i e v e s to 
                       be necessary, p a r t i c u l a r l y outside the 
                                                                                                  South East of England. 
          T h i s w i l l require the 
                                implementation of p o l i c i e s on 
                                                              a 
                                                                 

range of a i r transport and r e l a t e d matters and 
                                                 on 
                                                    the decisions 
                                                                   

and involvement of l o c a l a u t h o r i t i e s , l o c a l communities 
                                                                    and 
                                                                          

other organisations. 
                      However, with a c l e a r lead from 
                                                      the 
                                                           

Government on 
              the 
                  r o l e of 
                          p a r t i c u l a r a i r p o r t s , the organisations  

concerned should be able to r e l a t e t h e i r i n d i v i d u a l decisions  

to an o v e r a l l strategy.  

15 
        I t 
           i s 
              not 
                   the Government

1s i n t e n t i o n t o e s t a b l i s h 
                                                                              a 

r i g i d plan f o r a i r p o r t development, since t h i s would f a i l t o recognise the r e a l i t y of a changing s i t u a t i o n . Furthermore, 

the d e f i n i t i o n s 
                          of 
                               the 
                                     various categories w i l l need to 
                                                                                         be 

i n t e r p r e t e d f l e x i b l y since they w i l l not 
                                                                                 n e c e s s a r i l y be p r e c i s e ^ 

relevant to a l l a i r p o r t s over a period during  

Nhich the r o l e of i n d i v i d u a l a i r p o r t s might change. 

I t i s  
e s s e n t i a l therefore that the basic framework should be **capable**  
0 1  adaptation to meet changing circumstances and that any 
 
E d i f i c a t i o n shouldbe the subject of consideration with **those**  
concerned.  
In the l i g h t of comments received during the consultations 
 
n e  Government has adopted the f o l l o w i n g categories of a i r p o r t  
s  Part of the framework **f o r a i r p o r t s p o l i c y .**  

## ^ Gateway I N T E R N A T I O N A L A I R P O R T S

These a i r p o r t s would provide or be expected to **support**  
over time, a wide range and frequency **of i n t e r n a t i o n a l**  

services, i n c l u d i n g i n t e r - C o n t i n e n t a l 
                                                                s e r v i c e s 
                                                                               and 
                                                                                        

a f u l l range of domestic s e r v i c e s .  

## B Regional **A I R P O R T S**

These a i r p o r t s would c a t e r f o r the p r i n c i p a l a i r **t r a f f i c**  
demands of i n d i v i d u a l regions, parts of regions or **groups**  
of regions outside the South E a s t . 

They **would** **be**  
concerned e s s e n t i a l l y with the p r o v i s i o n of a **network** **of**  
shorthaul scheduled i n t e r n a t i o n a l s e r v i c e s ; 
a s i g n i f i c a n t  
range of charter s e r v i c e s ; 
and domestic services i n c l u d i n g  
l i n k s withgateway a i r p o r t s . 

The scheduled **i n t e r n a t i o n a l**  
services would be p r i m a r i l y on the more popular routes **t o**  
Europe or r e l a t e d to the s p e c i a l a s s o c i a t i o n s which **e x i s t**  
between some countries and parts of Great **B r i t a i n ,**  
f o r example, between Scandinavia and North East **England**  
and **Scotland.**  

C 
Local 
A i r p o r t s  
These a i r p o r t s would provide t h i r d l e v e l **services^** '  
c a t e r i n g p r i m a r i l y f o r l o c a l needs, **concentrating** **on**  
(2) 
 
. 

general a v i a t i o n ^ 'with some domestic feeder **services**  
and some charter f l i g h t s .  

D 
General A v i a t i o n **Aerodromes**  
These would be concerned p r i m a r i l y with the **p r o v i s i o n**  
of general a v i a t i o n f a c i l i t i e s .  

## The Impljjmentation Of An Airports **Policy**

17 
         I t 
             i s 
                 not 
                       the 
                            Government's i n t e n t i o n to d i c t a t e to  

a i r l i n e s and a i r p o r t a u t h o r i t i e s the p r e c i s e conditions under  

which they should operate, but 
                                to give the 
                                            maximum scope 
                                                          f o r 
                                                               

commercial d e c i s i o n . 
                       However, i t 
                                    i s i t s objective to ensure,  

as f a r as p o s s i b l e , t h a t the decisions and p o l i c i e s of 
                                                                         the e 
a v i a t i o n a u t h o r i t i e s and l o c a l a u t h o r i t i e s are consistent with  
                                                                                                                                                                                 ^  

n a t i o n a l a i r p o r t s strategy. 
                                              The framework i n 
                                                                         t h i s White Paper and the 
          developments envisaged over the period t o 
                                                                1990, should  

provide a guide to those p o l i c i e s and d e c i s i o n s .  

18 
         The implementation of a i r p o r t s p o l i c y w i l l require the  

co-operation of 
                many a u t h o r i t i e s and a p o s i t i v e r o l e f o r 
                                                         the 
                                                              

Government. 

F i r s t , the Government w i l l take account of a i r p o r ^

(1) T h i r d 
 l e v e l s e r v i c e s are 
u s u a l l y defined as those scheduled 
passenger s e r v i c e s operated by a i r c r a f t with fewer than 25 
seats. 
(2) 
 General a v i a t i o n encompasses a l l forms of c i v i l 
a v i a t i o n 
other than the operations of major a i r l i n e s and includes 
business and r e c r e a t i o n a l f l y i n g and f l y i n g t r a i n i n g . 
Policy  i n i s s u i n g permits f o r scheduled and charter services 
 
b

Dy
 y ov 
         overseas operators. 
                                                                                             Secondly, the C i v i l A v i a t i o n A u t h o r i t y  

(CAA)  i n considering 
a p p l i c a t i o n s by B r i t i s h operators f o r 
new 
 

a
  i
     r 
       
            S e r v i c e s and f o r renewals of e x i s t i n g l i c e n c e s w i l l be  

e xPected to take account of a i r p o r t s p o l i c y  i n accordance  

V ; i t h  Paragraph 14 of the guidance contained  i n the White Paper:  

*
uture C i v i l A v i a t i o n P o l i c y of February 1976 (Cmnd **6400).**  
^hi  
r c * l y , the Government's p o l i c y of encouraging the **growth** **of**  

l
  r 
    
        S
           e
             r
                v i c e s at r e g i o n a l a i r p o r t s o u t l i n e d  i n paragraph 22,  

l H 
             be r e l a t e d to the o v e r a l l objectives of a i r p o r t s p o l i c y . 0 u r t h l y , at p u b l i c l y owned a i r p o r t s the a u t h o r i t i e s concerned  

^1 be expected to r e l a t e the development of t h e i r a i r p o r t s to  

the Qrj  

o vernment's a i r p o r t s p o l i c y as well as  t o the c r i t e r i a which  

Day f r  
      rom time to time apply to p u b l i c sector p r o j e c t s . 
                                                                                   F i f t h l y , 
                                                                                                   

S
  o  f a r as planning procedures may 
                                                                                                                                 be relevant, 
                                                                                                                                                                                   the 
                                                                                                                                                                                                    l o c a l 

^Ut Yi 

0
  r i t i e s concerned w i l l be expected to have regard to 

       P
          O
             r
                t
                   s  P o l i c y  i n t h e i r consideration 
                                                                                                                        of proposals f o r  
deveio  

Pment at and around a i r p o r t s . 
                                 F i n a l l y , the Government's  

## P O **U C I E**

s  r e l a t i n g to employment and to the p r o v i s i o n of **roads,**  
6
 and other forms of i n f r a s t r u c t u r e w i l l have **regard** **to**  
*

i
  r
     p
       o r t s 
                       p o l i c y .  

R
  0
     L
        E
            0
               f  REGIONAL DIVERSION  

## 19

The t r a n s f e r of some part of the growth  i n a i r **t r a f f i c ,**  
^-Kht otherwise take place  i n the South East, to **other**  
w o u l d have two main b e n e f i t s . 

F i r s t ,  i t would help to 

## U * V E D

Pressure on resources  i n the South East and secondly,  i t co 
-
Q n t r i b u t e to the Government
1s r e g i o n a l development p o l i c i e s . 

50 
Comments during the consultations on the d i v e r s i o n of t r a f f i c to r e g i o n a l a i r p o r t s i n d i c a t e d a **widespread,**  
but not u n i v e r s a l , r e j e c t i o n of any p o l i c y to require **passengers** with o r i g i n s and d e s t i n a t i o n s i n the South **East to use a i r p o r t s**  
outside the region. 

Many of the amenity groups and l o c a l  
a u t h o r i t i e s i n the South East f e l t that the same **consideration**  
should be given to the environmental **costs as to the costs to**  
the a i r transport industry and to passengers of d i v e r t i n g **t r a f f i c**  
to r e g i o n a l a i r p o r t s . 

In a d d i t i o n , many **p r o v i n c i a l organisation^'**  
while accepting that a large scale d i v e r s i o n of London **area**  
passengers was u n r e a l i s t i c , **considered that greater a t t e n t i o n**  
5  
should be given to a t t r a c t i n g back to r e g i o n a l a i r p o r t s passenger c u r r e n t l y using London's a i r p o r t s because **of the l a c k of suitable**  
s e r v i c e s from r e g i o n a l a i r p o r t s . I t was also suggested **that the**  
(A) 
propensity to f l y i n the regions other than the South **East,**  
6  
which i s about t w o - f i f t h s of that i n the South East, would incre^s r e l a t i v e l y i n the future; 
that there was scope **f o r a t t r a c t i n g**  
i n c r e a s i n g numbers of f o r e i g n t o u r i s t s d i r e c t to these **regions;**  
and that provided the a i r l i n e s were given s u f f i c i e n t **encouragement'**  
1 0 
 
these a d d i t i o n a l demands could lead to a greater c o n t r i b u t i o n fro the r e g i o n a l a i r p o r t s to the handling of t o t a l a i r t r a f f i c **demand**  
i n Great **, B r i t a i n .**  
21
 
The Government, which has c o n s i s t e n t l y emphasised **the**  
importance **i t attaches to the greater use of r e g i o n a l a i r p o r t s ,**  
has given p a r t i c u l a r consideration to the representations **which**  
have been made. 

In an area where f a c t s and forecasts are **more**  

(1) Propensity 
 to f l y i s the number of i n t e r n a t i o n a l **f l i g h t s** **by**  
residents i n a p a r t i c u l a r year with **o r i g i n s and destinations**  
i n a p a r t i c u l a r region per head **of population i n that r e g i o n**  
than usually uncertain, the Government considers that **p a r t i c u l a r**  
caution i s necessary i n p r e d i c t i n g over a f i f t e e n **year p e r i o d**  
the reactions of i n d i v i d u a l s t o various economic **s t i m u l i**  
and economic and s o c i a l trends. 

Bearing i n mind **that at the**  
Present time 80 per cent of terminating passengers at **London**  
airports have o r i g i n s and d e s t i n a t i o n s i n the South **East, any**  
forced d i v e r s i o n of t r a f f i c , to have a s i g n i f i c a n t **e f f e c t** **on**  
* i r t r a f f i c demand i n the South **East, could involve the imposition**  
** substantial charges on passengers using London a i r p o r t s . 

The 
 
Government **r e j e c t s the suggestion that the a i r transport industry**  
s*ould be subject to the damaging r e s t r i c t i o n s **on i t s operations,**  
w h i c h would be the outcome of the forced d i v e r s i o n of **t r a f f i c**  
t o  regional **a i r p o r t s .**  
22 
Nevertheless, the Government **b e l i e v e s that there are a**  
ber oi ways i n which a greater r o l e **f o r a i r p o r t s outside**  

t
  h
     e  Lond 
                          on area can be achieved. 
                                                                                                                       F i r s t , the Government considers  

that ­
       e pursuit of a coherent a i r p o r t s p o l i c y should make a  

P
  o s i t i v  c o n t r i b u t i o n to an o v e r a l l increase i n t r a f f i c from  
                             e 

t i l e  regions outside the South East. 
                                                                                                                  A proportion of those  

P a s s e n g e r s p r e s e n t l y using the London a i r p o r t s , but with o r i g i n s  

destinations outside the South East would be prepared to use  

a i r p o r t s elsewhere i f the r i g h t s e r v i c e s , at the r i g h t time, and  

the r i g h t frequency were a v a i l a b l e . Such s e r v i c e s are  

-Likely to be commercially 
                                v i a b l e i f they are operated from a  

l m i t e d range of a i r p o r t s . 
                                                                                                   The avoidance of wasteful  

co^Per -
                  i ­

u l t i o n between r e g i o n a l a i r p o r t s , i f t h i s can be assured,  

Provide some i n c e n t i v e to a i r l i n e s to mount s e r v i c e s from  

the 
    m 
P o S s ^ 

r
  e  important r e g i o n a l a i r p o r t s . 
                                                                                                                         Secondly, i t should be  

l
D l e **to achieve a greater use of r e g i o n a l a i r p o r t s by**  
chart*/and l e i s u r e t r a f f i c . 

Leisure t r i p s , and **p a r t i c u l a r l y**  
i n c l u s i v e tours by United Kingdom r e s i d e n t s , already show a **more**  
even d i s t r i b u t i o n of o r i g i n s **and d e s t i n a t i o n s than other services**  
and there could be scope f o r greater market development **outside**  
the South East. 

Tour operators should become **i n c r e a s i n g l y**  
aware of the advantages **of p r o v i d i n g s e r v i c e s from the r e g i o n a l** a i r p o r t s , and perhaps also f o r the most **popular d e s t i n a t i o n s**  
from l o c a l a i r p o r t s . 

T h i r d l y , incoming l e i s u r e t r a f f i c , **although**  
a high proportion continues to t r a v e l by sea, i s **l i k e l y** **to**  
be the f a s t e s t growing sector of a i r t r a v e l . 

The great majority  
of f o r e i g n v i s i t o r s come to London, but nearly h a l f t h e i r **time**  
i s spent i n other parts of the country and the B r i t i s h **T o u r i s t**  
Authority and other t o u r i s t boards are already f o l l o w i n g **p o l i c i e s**  
designed to spread tourism more widely. 

Furthermore, the choice  
of London as the main base f o r f o r e i g n l e i s u r e v i s i t o r s may 
 
d e c l i n e as the number of v i s i t o r s r i s e s , **congestion i n the**  
London area increases, and the r e l a t i v e p r i c e advantage **of other**  
parts of the country becomes more **a t t r a c t i v e .**  
23
 
The London area a i r p o r t s handle an even **higher percentage**  
of the country's i n t e r n a t i o n a l a i r cargo than of **i n t e r n a t i o n a l**  
passengers, although the proportion of cargo with **o r i g i n s** **or**  
 
d e s t i n a t i o n s i n the South East i s lower than f o r passenger t r a f ^
However, the f a c t that overhalf the cargo at Heathrow i s **carried**  
on passenger f l i g h t s , together with the a t t r a c t i v e n e s s of the  
greater frequencies and range of d e s t i n a t i o n s at the **London**  
a i r p o r t s , the s i g n i f i c a n t economies of scale **a v a i l a b l e** **by** concentrating t r a f f i c at a small number of a i r p o r t s , **and the**  
p r a c t i c e of moving cargo by road from r e g i o n a l **a i r p o r t s** **to**  
London a i r p o r t s , l i m i t s s e r i o u s l y the scope f o r d i v e r t i n g **cargo**  
to regional a i r p o r t s .  
24 
I t has been suggested that an a l l cargo a i r p o r t should be established outside the South East, but t h i s s u f f e r s from the same fundamental d i f f i c u l t y of the close l i n k s between cargo and passenger t r a f f i c . 

The Government does not consider that an a l l cargo a i r p o r t i s a p r a c t i c a b l e p r o p o s i t i o n at t h i s time. 

The a t t r a c t i o n back to regional a i r p o r t s of cargo t r a f f i c at present t r a v e l l i n g through the London area a i r p o r t s , must depend primarily on the growth of i n t e r n a t i o n a l passenger services from 

regional a i r p o r t s . 
                             In view of 
                                              the 
                                                    economies of scale i n cargo 

handling f a c i l i t i e s and the need f o r frequent services and 
                                                                 a wide range of d e s t i n a t i o n s , there i s 
                                         a c l e a r need f o r 
                                                             a i r cargo a c t i v i t i e s outside London to 
                                                            be concentrated at a small number 
                                                                                                                                     of airports. I t w i l l be the 
                            Government's p o l i c y therefore t o encourage the p r o v i s i o n of adequate f r e i g h t f a c i l i t i e s at those airports i d e n t i f i e d as having a s i g n i f i c a n t r o l e i n the 

national a i r p o r t s 
                           strategy. 

25 
        Paragraph 18 emphasised the 
                                             need f o r 
                                                         co-operation among 

a l l those concerned i f 
                                                  a national a i r p o r t s p o l i c y i s 
                                                                                                                      to 
                                                                                                                            be e f f e c ­

tive. 
        This w i l l be p a r t i c u l a r l y important i n enhancing 
                                                                   the role of regional a i r p o r t s and the 
                                        Government w i l l seek t o 

co-ordinate t h i s co-operation. In 
                                     the 
                                          case of 
                                                   the r e g i o n a l 

airports i t 
            w i l l be the 
                          Government"s objective to promote 
                                                                 the 

changes outlined i n 
                     paragraphs 22 and 24, but r e s u l t s w i l l take 

some time. 
             A switch i n t r a f f i c from the 
                                              South East to other 

areas of Great B r i t a i n i s l i k e l y t o develop over the period to 

1990, but 
             i t 
                 w i l l not avoid the 
                                             need f o r 
                                                          a d d i t i o n a l 
                                                                          a i r p o r t 

capacity i n 
             the 
                  London area.  

26 
Within the c o n s u l t a t i o n process many l o c a l **a u t h o r i t i e s**  
drew a t t e n t i o n to the need **to avoid i n the future the "creeping**  
expansion" of a i r p o r t s which they have contended has **been** a c h a r a c t e r i s t i c of the past and to e s t a b l i s h " c e i l i n g s " **on the**  
growth of p a r t i c u l a r a i r p o r t s . 

T h i s would provide the **l o c a l**  
a u t h o r i t i e s with a f i r m b a s i s f o r t h e i r urban **development,**  
i n f r a s t r u c t u r e planning and r e l a t e d p o l i c i e s , and at the **same**  
time contain the environmental impact of a i r p o r t development **and**  
a i r transport operations. 

There were suggestions that **these**  
" c e i l i n g s " should be defined by reference to passenger and **cargo**  
throughputs, a i r transport movements v 
, numbers employed **at the**  
a i r p o r t , or l e v e l s of a i r c r a f t **noise.**  
27 
The Government recognises these arguments. 

However, **witk**  
the growth of a i r t r a f f i c , the future l e v e l of noise disturbance  
and many **other f a c t o r s i n e v i t a b l y uncertain and with the current**  
economic s i t u a t i o n imposing t i g h t **c o n s t r a i n t s on p u b l i c**  
expenditure, a i r p o r t capacity must **be provided only i n so f a r**  
as demand can be foreseen with reasonable confidence. 

The 
 
imposition of r i g i d **q u a n t i t a t i v e l i m i t a t i o n s on the capacity of**  
a i r p o r t s would not be compatible with that approach, **neither**  
would i t be p r a c t i c a l nor n e c e s s a r i l y u s e f u l to those **a f f e c t e d**  
by a i r p o r t development. 

I f l i m i t a t i o n s below **the capacity of**  
a i r p o r t s were e s t a b l i s h e d i n terms of the number of **passengers** or a i r c r a f t handled i n a year, i t i s not easy to **v i s u a l i s e**  
how operations could be sustained and the c r e d i b i l i t y **of the**  
c e i l i n g s maintained, when the prescribed l i m i t s had been **reached'**  

(1) An 
 a i r transport movement i s a landing or a take **o f f by an**  
a i r c r a f t operating a scheduled or non-scheduled **s e r v i c e .**  
The r a t e s o f t e c h n o l o g i c a l d e v e l o p m e n t a n d d e s i g n c h a n g e s i n a i r p o r t s i n r e c e n t y e a r s h a v e d e m o n s t r a t e d t h e d i f f i c u l t i e s i n a t t e m p t i n g t o p r e d i c t t h e a n t i c i p a t e d c a p a c i t y o f s e p a r a t e elements o f an a i r p o r t ' s i n f r a s t r u c t u r e . 

28 
W h i l e t h i s s u g g e s t s t h e n e e d f o r a s t e p b y s t e p a p p r o a c h t o a i r p o r t d e v e l o p m e n t , t h e G o v e r n m e n t i s a n x i o u s t o r e s p o n d t o the arguments w h i c h h a v e b e e n a d v a n c e d a n d t o p r o v i d e some r e a s s u r a n c e o f t h e k i n d l o c a l a u t h o r i t i e s a r e s e e k i n g o n t h e u l t i m a t e c a p a c i t y o f a i r p o r t s . 

T h e G o v e r n m e n t t h e r e f o r e a c c e p t s that l i m i t s o n t h e d e v e l o p m e n t o f a i r p o r t s must b e a n i m p o r t a n t p a r t o f i t s s t r a t e g y t h r o u g h o u t G r e a t B r i t a i n . 

T h e G o v e r n m e n t b e l i e v e s t h a t t h i s c a n b e s t b e a c h i e v e d b y a c o m b i n a t i o n o f r e s t r i c t i o n s on t h e number o f t e r m i n a l s t h a t c a n b e p r o v i d e d a t an a i r p o r t ; 
t h r o u g h a r r a n g e m e n t s f o r t h e m o n i t o r i n g a n d development o f f u t u r e a i r p o r t s p o l i c y , w h i c h w i l l i n v o l v e t h e l o c a l a u t h o r i t i e s ; 
a n d t h r o u g h t h e m o d i f i c a t i o n o f t h e B r i t i s h A i r p o r t s A u t h o r i t y ( B A A ) G e n e r a l D e v e l o p m e n t O r d e r (GDO) 
p l a n n i n g p r o v i s i o n s , p a r t i c u l a r l y a s t h e y r e l a t e t o t e r m i n a l d e v e l o p m e n t s . 

T h e s t r a t e g y p r e s e n t e d i n t h i s W h i t e P a p e r i n c o r p o r a t e s e a c h o f t h e s e e l e m e n t s . 

## Finance And Ownership

29 
P o l i c y o n t h e p r o v i s i o n o f G o v e r n m e n t f i n a n c i a l s u p p o r t f o r a i r p o r t d e v e l o p m e n t , a s w e l l a s o w n e r s h i p , was l a i d down i n the 1961 
W h i t e P a p e r . 

T h i s e n v i s a g e d t h a t t h e a i r t r a n s p o r t i n d u s t r y s h o u l d become s e l f - s u f f i c i e n t i n t h e l o n g e r t e r m . 

The White P a p e r r e c o g n i s e d t h a t a number o f s m a l l a e r o d r o m e s , n o t a b l y i n t h e H i g h l a n d s a n d I s l a n d s o f S c o t l a n d , were e s s e n t i a l to the economy and s o c i a l welfare of the areas they **served,**  
that they were never l i k e l y to pay t h e i r way and that **they**  
might need to be supported by means of a d i r e c t subsidy. 

The 
 
White Paper a l s o recognised that some f i n a n c i a l assistance **from**  
the Exchequer might be j u s t i f i e d f o r a p e r i o d , where **an a i r p o r t**  
served a n a t i o n a l as well as a l o c a l need, and where **the cost**  
of running the a i r p o r t would place an unduly heavy **burden**  
on l o c a l resources. 

The Government does **not consider that there**  
i s any j u s t i f i c a t i o n f o r a i r transport f a c i l i t i e s **i n general**  
to be subsidised by the taxpayer and the ratepayer. 

Consequently' 
while i t accepts the need, on s o c i a l grounds, to secure **the**  
continued operation of a l i m i t e d number of small **aerodromes,**  
p a r t i c u l a r l y i n the Highlands and Islands, which provide an 
 
e s s e n t i a l s e r v i c e to the l o c a l communitybut which are not l i k e l y  
to become v i a b l e i n the foreseeable future, the **Government**  
considers that the a i r transport industry has now **advanced** **to**  
the stage at which new commitments to f i n a n c i a l assistance **from**  
the Exchequer f o r a i r p o r t development, **or f o r the a c q u i s i t i o n**  
of a i r p o r t s , w i l l only be j u s t i f i e d i n wholly **exceptional**  
circumstances.  
30 
The 1961 White Paper concluded that the Gateway a i r p o r t s should beowned and managed by a separate a i r p o r t s authority, and the B r i t i s h A i r p o r t s A u t h o r i t y was subsequently set up to own and operate the p r i n c i p a l i n t e r n a t i o n a l a i r p o r t s at Heathrow, Gatwick, Stansted and Prestwick. 

Part 
2 of the c o n s u l t a t i o n document suggested that i n the l i g h t of both the 
1961 White Paper and the p o s s i b l e future development of the a i r p o r t s system, the r o l e of the BAA might be expanded by the Authority's a c q u i s i t i o n of the p r i n c i p a l a i r p o r t s which at present i t does not own and operate. 

A number of **advantages**  
of such a p o l i c y were put forward. 

F i r s t , **that the longer**  
term development of gateway i n t e r n a t i o n a l a i r o o r t s would **require**  
the sort of a i r p o r t management, t e c h n i c a l and operational  
expertise which, i n the case of l o c a l authority owned **a i r p o r t s ,**  

may  i
      m
       p
        0 s e demands on f i n a n c i a l and other resources beyond the  

compass of the present owners. 
                                  Secondly, that consistent  

f i n a n c i a l , management and investment p o l i c i e s f o r major i n t e r n a t i o n a l a i r p o r t s would he an important part of a n a t i o n a l  

airport strategy and common ownership might f a c i l i t a t e t h i s .  

Thirdly, the concentration of a c t i v i t y at a number **of a i r p o r t s**  
might be given encouragement by ownership by the **B r i t i s h** Airports **A u t h o r i t y .**  
31 
In the course of the c o n s u l t a t i o n s , those **a u t h o r i t i e s**  
concerned with a i r p o r t s which seemed l i k e l y to be **candidates**  
f o r a c q u i s i t i o n by the B r i t i s h A i r p o r t s A u t h o r i t y were **f o r the**  
most part opposed to or had r e s e r v a t i o n s about **l o s i n g c o n t r o l**  
Q f t h e i r a i r o o r t s . 

While recognising the need **f o r a n a t i o n a l**  
^ l i c y towards a i r p o r t s they emphasised the widespread **opposition**  
*o o v e r - c e n t r a l i s a t i o n and drew a t t e n t i o n to the acceptance **i n**  
the consultation documents that the l o c a l authority **owned**  
airports have been e f f i c i e n t l y operated. 

I t wasalso **pointed**  
o u  t that there was advantage i n l o c a l **r e s p o n s i b i l i t y and**  
control and responsiveness to l o c a l needs. 

F i n a l l y , **i t was**  
a rSued that consistency of a i r p o r t a u t h o r i t y p o l i c i e s **would**  

d e r i v e
                     
                    f 
                                           
                                                  formulation of a n a t i o n a l p o l i c y and d i d not  
                        r
                           o
                              m
                                  
                                    t
                                       h
                                         e 

d ePend on ownership by the B r i t i s h A i r p o r t s A u t h o r i t y .  

3
  2  
                       In the l i g h t of the views expressed during the consulta­

t
  i
     o
        n s , the Government has concluded that a coherent a i r p o r t s  

p o l i c y derived from the 
                                              framework provided by t h i s White Paper,  

i s not 
             dependent on major changes i n 
                                                                       ownership. 
                                                                                               Local authori­

t i e s w i l l , of course, need t o take into account the implications  

of the 
        Government p o l i c y set 
                                   out i n 
                                           paragraph 29. 
                                                              In  

circumstances where there i s 
                             agreement on 
                                          the d e s i r a b i l i t y of  

BAA ownership between the l o c a l authority owners concerned  

and the 
         BAA and where t h i s would be consistent with 
                                                                the 
                                                                      

Government's strategy, the 
                           Government w i l l consider proposals  

made f o r changes i n 
                    ownership. 
                                 Insuch cases the 
                                                  Government w i l l attach p a r t i c u l a r importance to ensuring an e f f e c t i v e l o c a l voice i n 
         the operation of 
                            any a i r p o r t s which the 
                                                     BAA might  

acquire.  

33 
         Losses at l o c a l a u t h o r i t y a i r p o r t s i n 
                                                            England and Wales 
                                                                                     

are c u r r e n t l y running at 
                                         £5-6 
                                                 m i l l i o n a year. 
                                                                               While 
                                                                                        the 
                                                                                               

subsidies f o r 
              some Highlands and Islands services are 
                                                         a p a r t i c u l a r 
                                                                       

exception the 
               Government sees no general 
                                             j u s t i f i c a t i o n f o r  

s u b s i d i s i n g a i r p o r t s and a i r s e r v i c e s . 
                                                                                 At the a i r p o r t s which  

w i l l remain under l o c a l authority c o n t r o l the 
                                                                                         Government w i l l  

continue to 
            urge economies and 
                                the a p p l i c a t i o n of p o l i c i e s aimed  

at reducing 
            f i n a n c i a l losses as e f f e c t i v e l y 
                                               as p o s s i b l e . 
                                                              In 
                                                                     

p a r t i c u l a r , as a general r u l e the Government w i l l expect p r o p o s a l f o r improving these a i r p o r t s to be postponed u n t i l the economic 
 
s i t u a t i o n allows some growth i n l o c a l a u t h o r i t y **expenditure.**  

## Airport **Charges**

3
4
 - 
        Part 2 of 
                      the c o n s u l t a t i o n document suggested that one  

f a c t o r c o n t r i b u t i n g to losses at r e g i o n a l a i r p o r t s had been  

the adoption of 
                  uneconomic charging p o l i c i e s . 
                                                        I t 
                                                            had been argued that the 
                major a i r p o r t s i n 
                                   Great B r i t a i n were part of  

a common system to which common a i r p o r t charges **should** **be**  
applied. 

During the consultations a number **of a i r p o r t**  
a u t h o r i t i e s expressed t h e i r opposition to increased **charges**  
for a i r navigation s e r v i c e s by the C i v i l **A v i a t i o n Authority,**  
which, they pointed out, were very much **higher at r e g i o n a l**  
airports than at a i r p o r t s i n the London area and thus **were**  
r e i n f o r c i n g the e x i s t i n g pattern whereby landing and other  
charges at the BAA's London a i r p o r t s are g e n e r a l l y lower **than**  
those elsewhere. 

The r e g i o n a l a i r p o r t a u t h o r i t i e s **contended**  
that d i f f e r e n t i a l increases of t h i s kind were **not consistent**  
with the Government's wish to encourage the growth of **t r a f f i c**  
at **regional a i r p o r t s .**  
35
 
The Government's c o n s i d e r a t i o n of these matters **has**  
been influenced by three p r i n c i p l e s . 

F i r s t , the **Government**  
does **not consider that a i r t r a v e l g e n e r a l l y should be**  
subsidised by the taxpayer **and ratepayer and b e l i e v e s that**  
charges should r e f l e c t **the cost of p r o v i d i n g a i r p o r t s e r v i c e s .**  
Secondly, a i r p o r t revenues should be adequate **t o provide f o r**  
^ e continued existence, i n c l u d i n g replacement **and a return**  
0 1 1  c a p i t a l , of the f a c i l i t i e s . 

T h i r d l y , and within **these**  
P r i n c i p l e s and the c o n s t r a i n t s of a n t i - i n f l a t i o n and competition 
 
Policy, the s e t t i n g of a i r p o r t charges should **remain** a  
^ t t e r f o r a i r p o r t managements. 

In consequence, the **Government**  
considers that the s u b s t a n t i a l d e f i c i t s which have been **incurred**  
a t  some a i r p o r t s are C o n s i s t e n t with **the p r i n c i p l e that a i r**  
t r a v e l **should not be subsidised by the n o n - t r a v e l l i n g p u b l i c .**  
X
t  r e j e c t s any suggestion that exchequer **subsidies should be**  
b a i l a b l e g e n e r a l l y to support **the operation of a i r p o r t s .**  
5
6  
I t i s recognised that since a i r p o r t s have a h i g h **l e v e l**  
of f i x e d c a p i t a l , average u n i t costs are very **dependent** **on**  
t r a f f i c l e v e l s and t h i s **can give large e s t a b l i s h e d a i r p o r t s a**  
considerable advantage. 

Moreover, i t may oftenbe **d i f f i c u l t**  
to define the marginal **costs of providing a i r p o r t services,**  
p a r t i c u l a r l y where these are supplied c e n t r a l l y or where **there**  
are large overhead costs. 

However, the Government **i s not**  
convinced that a i r p o r t landing and r e l a t e d charges **are a**  
material i n f l u e n c e on the l e v e l of t r a f f i c at an a i r p o r t . 

They 
 
represent a very small proportion of t o t a l **a v i a t i o n costs and the**  
extent to which a i r l i n e s have **a choice of a i r p o r t i s frequently**  
over-estimated. 

Thus, while d i f f e r e n t i a l a i r p o r t **charges**  
may be of some s i g n i f i c a n c e i n the competition between **a i r p o r t s**  
serving a s i m i l a r catchment area and i n i n f l u e n c i n g the **spread** **of**  
t r a f f i c between peak **and off-peak periods, the e f f e c t on the**  
a t t r a c t i v e n e s s of the r e g i o n a l a i r p o r t s i n general i s n e g l i g i b l e . 

 
37
 
The Government i s conscious of the d i f f i c u l t i e s **caused**  
by the recent large increases i n charges. 

I t recognises also  
the c r i t i c i s m s of the d i v e r s i t y of charges with **a i r p o r t landing**  
fees, which are often themselves complex, being **supplemented**  
by charges f o r a i r navigation s e r v i c e s , s e c u r i t y and **aerodrome**  
l i c e n s i n g . 

I t has been suggested that t h i s **m u l t i p l i c i t y** **of**  
charges should be replaced by a s i m p l i f i e d charging **system.**  
The Government understands the force of t h i s argument **but i t**  
b e l i e v e s also i t i s important that the j u s t i f i c a t i o n **f o r**  
p a r t i c u l a r charges should be understood and that **theyshould** **be**  
kept generally i n l i n e with c o s t s . 

Charging systems **should**  
be a matter p r i m a r i l y f o r a i r p o r t managements, **and the other**  
providers of s e r v i c e s . 

However, the Government w i l l **keep**  
a v i a t i o n charges under review to ensure, amongst **other things,**  
that the p o l i c i e s adopted are generally consistent with **the**  

## Future Development Of Policy

38 
The c o n s u l t a t i o n s revealed considerable anxiety **about**  

Possible longer term a i r p o r t developments i f 
                                                the 
                                                     growth 
                                                            of demand, p a r t i c u l a r l y i n 
                         the 
                             London area, does not sooner o r l a t e r  

begin t o l e v e l o f f . 
                        Concern on t h i s question i s understandable,  

but the 
        problem flows from u n c e r t a i n t i e s 
                                                which are inherent 
                                                                        

in f o r e c a s t i n g a i r t r a f f i c demands and t r a n s l a t i n g these i n t o acceptable a i r p o r t developments. 
                                     In these circumstances the  

Government acknowledges that a necessary part of 
                                                   any a i r p o r t s  

^ e g  
      y 
          w i l l be t o maintain close l i a i s o n with l o c a l a u t h o r i t i e s  

and others concerning the future of p a r t i c u l a r a i r p o r t s . 
                                                            Moreover, the r o l e s envisaged f o r 
                           d i f f e r e n t a i r p o r t s may change over time  

and i n 
        the 
             London area, i n 
                                 p a r t i c u l a r , i t 
                                                    w i l l be necessary t o  

i n s i d e r the 
                      p r o v i s i o n of a d d i t i o n a l c a p a c i t y e i t h e r at e x i s t i n g airports or 
            at a new a i r p o r t i n 
                                  the 
                                       not 
                                           too 
                                                d i s t a n t f u t u r e .  

59 
     I t w i l l be the 
                         Government's i n t e n t i o n t o continue to consult 
                                                                                     

those concerned with the 
                         development of a i r p o r t s p o l i c y 
                                                         i n 
                                                             

tbe longer term. 
                   In t h i s connection a number of l o c a l planning authorities, mainly through the 
                                 Standing Conference on London and 
                                                                       

S ^ t h East Regional Planning, have represented that they should  

b
e  aore c l o s e l y associated with the i d e n t i f i c a t i o n of future 
 
a i r p o r t development options that may f i g u r e i n future consulta­

t i o **n s .** 
t recognises the 
p a r t i c u l a r i n t e r e s t **of the**  
T
h
e
 G
o
v
e
r
n
m
e
n  
l
o
c  a  
l planning a u t h o r i t i e s and intends, t h e r e f o r e , t o d i s c u s s 
 
^ b h the 
l o c a l a u t h o r i t y a s s o c i a t i o n s an **appropriate formal**  
s t r u c t u r e that w i l l allow these i n t e r e s t s t o be taken **i n t o**  

a
c
c ^ n t i n 
the 
formulation of advice on the longer term **options**  
0
r  airport **p o l i c y .**  

## The **Framework**

40 
The recent Transport P o l i c y White Paper (Cmnd **6836)**  

announced the 
              s e t t i n g i n 
                         hand of 
                                  a study of 
                                             the 
                                                 longer term demand  

f o r domestic inter-urban p u b l i c passenger transport by r a i l ,  

bus and 
         a i r , witha view t o improving co-ordination of operators' p r i c i n g p o l i c i e s and investment plans. 
                                                                                Investment i n a i r p o r t 
                                                                                                                          

capacity i s p r i m a r i l y needed i n response t o 
                                               growth i n 
                                                         international 
                                                                       

a i r t r a f f i c , and 
                              t o t h i s extent the 
                                                                 study w i l l have only l i m i t e d  

relevance t o 
             the 
                 issues dealt with i n 
                                        t h i s White Paper. 
                                                            However? 

the study w i l l provide a u s e f u l c o n t r i b u t i o n 
                                               t o 
                                                  the 
                                                      development 
                                                                   

of f o r e c a s t s of 
                      domestic a i r t r a f f i c over the next 10 
                                                                            - 20 years*  

The planning of a i r p o r t f a c i l i t i e s t o 
                                      meet a i r transport demands  

must proceed i n 
                concert with developments i n 
                                               domestic surface  

transport and 
              the 
                  Government w i l l ensure that the 
                                                    Departments 
                                                                 

involved continue t o 
                      work c l o s e l y together i n t h i s area 
                                                          of 
                                                               

planning.  

## The **Framework**

41 
       Within the 
                     need t o 
                               determine how the 
                                                     demand f o r a i r transport i n 
             South East England can 
                                     be accommodated and 
                                                          how 
                                                              

a i r p o r t f a c i l i t i e s i n 
                                            other areas of 
                                                                         Great B r i t a i n can 
                                                                                                             be used  

more extensively, the 
                      a i r p o r t s strategy framework, i n v o l v i n g  

the d i v i s i o n of a i r p o r t s i n t o four broad categories, w i l l be  

based on s i x g u i d e l i n e s . 

 

( i ) 
 The r a t i o n a l i s a t i o n and 
concentration **of the**  
p r i n c i p a l a i r s e r v i c e s at 
a l i m i t e d number 
of 
 
a i r p o r t s outside the 
South **East.**  
( i i ) 
 
Acknowledgment of 
the need f o r f l e x i b i l i t y 
i n 
 
p o l i c y ratherthan the 
adoption of 
a r i g i d **plan f o r**  
a l l **a i r p o r t s .**  
( i i i ) 
 The development **of p o l i c i e s on a i r service**  
l i c e n c e s and permits, onthe expansion **of a i r p o r t s ,**  

and on planning and r e l a t e d matters consistent **with**  
a i r p o r t s p o l i c y .  
( i v ) 
 Recognition that the d i v e r s i o n of **t r a f f i c** **to**  
r e g i o n a l a i r p o r t s i s u n l i k e l y to have **any s i g n i f i c a n t**  
e f f e c t on the demand **f o r a i r p o r t capacity i n the**  
South **East.**  
(v) 
 Acceptance of the need **to i d e n t i f y the l i m i t s of**  
an a i r p o r t ' s **development.**  
( v i ) 
 Acknowledgment of the need to develop f u r t h e r 
the  
process of c o n s u l t a t i o n 
on a i r p o r t s 
strategy. 
 

a
    
   s
       
      i c to the a p p l i c a t i o n of these guidelines 
                                                                                                                                                                                                     w i l l be the p r i n c i p l e  

that  
a  i r transport f a c i l i t i e s should not i n **general** **be**  
-^-o-ised by the taxpayer or **ratepayer.**  

## Section 2: Air Traffic **Forecasts** Introduction

^2 
        i n assessing the 
                             demand f o r 
                                          a i r p o r t capacity, and 
                                                                     i n 

determining the a i r p o r t developments which might he r e q u i r e d , 

might be provided and might he acceptable, i t 
                                                 i s 
                                                     necessary t o 

quantify the l e v e l of demand. 
                                  Because of 
                                              the l e a d times 

involved i n 
            the p r o v i s i o n of major a d d i t i o n s t o a i r p o r t capacity, i t i s 
            e s s e n t i a l t o provide f o r e c a s t s of passenger and cargo demand 

covering the p e r i o d 10 t o 15 years ahead. 
                                                F o r e c a s t i n g over 

so long a time s c a l e , whether of a i r transport or of 
                                                           any 

other area of economic a c t i v i t y , involves 
                                              considerable 

uncertainties and the b a s i c f o r e c a s t s are 
                                           no b e t t e r than the 

assumptions on whichthey are 
                              based and the 
                                             methodology adopted. 

The methodology used f o r the f o r e c a s t s i n the c o n s u l t a t i o n documents produced r e s u l t s whictiwere not s i g n i f i c a n t l y challenged during the c o n s u l t a t i o n process. 

Nevertheless, 

i t i s 
            important, and i t 
                                                    w i l l be the 
                                                                              Government

1 
  s i n t e n t i o n 

to monitor the present f o r e c a s t s i n l i n e with the development 

o
  f  
         t r a f f i c , t o keep the assumptions and methodology under 

r eview, and t o prepare f o r e c a s t s f o r 
                                                                                                                                     the l a t e 1990s and beyond. 

U3 
The passenger t r a f f i c forecasts prepared f o r the Maplin Review and the c o n s u l t a t i o n documents were based on the t r a f f i c l e v e l s of .1972 and covered the period to 1990. 

Actual t r a f f i c l e v e l s since 1972 reached a peak i n 1973 followed by a recession i n 1974* which interrupted a continuous p a t t e r n of growth since 1945* 
T r a f f i c began to recover i n 1975 and by 
1976 had exceeded 1973 l e v e l s . 

The t r a f f i c l e v e l s during these years are shown i n Table 1. 

| M i l l i o n s   |  of Passengers.    |
|-------------------|--------------------|
| 1972              |                    |
| 1973              | 1974               |
| 1975              |                    |
| 1976              |                    |
| Heathrow          |                    |
| 13                |                    |
| .3                |                    |
| 20.3              |                    |
| 20.1              |                    |
| 21.3              |                    |
| 23.2              |                    |
| Gatwick           |                    |
| 5.3               |                    |
| 5.7               | 5.1                |
| 5.4               |                    |
| 5.7               |                    |
| Stansted          |                    |
| 0.3               |                    |
| 0.2               | 0.2                |
| 0.2               |                    |
| 0.3               |                    |
| Luton             |                    |
| 3.1               |                    |
| 3.2               |                    |
| 2.0               |                    |
| 1.9               |                    |
| 1.8               |                    |
| Total             | London             |
| 27.0              |                    |
| 29.               |                    |
| 4                 |                    |
| 27.               |                    |
| 4                 |                    |
| 28.8              |                    |
| 31.0              |                    |
| Other             | a i r p o r t s    |
|                   |                    |
| 7.3               |                    |
| 8.3               |                    |
| 7.4               |                    |
| 7.7               |                    |
| 7.8               |                    |
| England and       | Wales              |
|                   |                    |
| S c o t t i s h   | a i r p o r t s    |
| 3.6               |                    |
| 4.1               |                    |
| 4.0               | 4.2                |
| 4.8               |                    |
| T o t a l         | Great              |
| 37.9              |                    |
| Ul.               |                    |
| 8                 |                    |
| 38.8              |                    |
| 40.7              |                    |
| 43.6              |                    |

## The **Forecasts**

Wi S i n c e t h e p r e p a r a t i o n o f t h e f o r e c a s t s f o r t h e c o n s u l t a t i o n d o c u m e n t s , a r e v i e w o f the a s s u m p t i o n s a n d t h e m e t h o d o l o g y h a s b e e n c a r r i e d o u t . 

T h i s h a s i n v o l v e d a 
^ c o n s i d e r a t i o n a n d r e - e s t i m a t i o n o f a l l t h e m a i n a s s u m p t i o n s u s e d i n b u i l d i n g up t h e n a t i o n a l f o r e c a s t s a n d a n a t t e m p t t o e s t a b l i s h a m o r e c o m p r e h e n s i v e e x p l a n a t i o n o f p a s t g r o w t h . 

T a k i n g t h i s w o r k i n t o a c c o u n t , r e v i s e d f o r e c a s t s f o r G r e a t B r i t a i n h a v e b e e n p r e p a r e d a n d t h e s e a r e shown i n T a b l e 
2. 

T h e 
*ase y e a r h a s b e e n u p d a t e d f r o m 1972 
t o 
1975 
a n d f o r e c a s t s h a v e 
*een p r o d u c e d f o r f i v e y e a r i n t e r v a l s up t o 1990. 

T h e p o s i t i o n beyond 1990 
h a s a l s o b e e n c o n s i d e r e d . 

G r o w t h i n t r a f f i c i s e x p e c t e d t o c o n t i n u e , b u t the p r o s p e c t s f o r t h e 1990s a n d b e y o n d are a m a t t e r o f p a r t i c u l a r u n c e r t a i n t y e s p e c i a l l y i n v i e w o f t h e d e v e l o p m e n t s d i s c u s s e d i n p a r a g r a p h s U7-U9. 

| M i l l i o n s     |      | o f             | P a s s e n g e r s    |
|---------------------|------|-----------------|------------------------|
| 1990                |      |                 |                        |
| 1975 1976           |      |                 |                        |
| 1980                |      |                 |                        |
| 1985                |      |                 |                        |
| Low                 |      |                 |                        |
| H i g h             | Low  |                 | H i g h !              |
| Low                 |      |                 |                        |
| H i g h             |      |                 |                        |
| 2k.9                |      |                 |                        |
| 26.8                |      |                 |                        |
| 60.                 |      |                 |                        |
| O                   | l    |                 |                        |
| 32.                 |      |                 |                        |
| k                   |      |                 |                        |
| 37.1                |      |                 |                        |
| U6.3                |      |                 |                        |
| 57.1                |      |                 |                        |
| 80.9                |      |                 |                        |
| U.2                 |      |                 |                        |
| 6.U                 |      |                 |                        |
| U.3                 |      |                 |                        |
| 3.9                 | 5.9  |                 |                        |
| 5.1                 |      |                 |                        |
| 8                   |      |                 |                        |
| .5                  |      |                 |                        |
| e i o n a l         |      | A i r p o r t s |                        |
| 6.2                 |      |                 |                        |
| 11.6                | 10.8 |                 |                        |
| 5.6                 |      |                 |                        |
| 15.8                |      |                 |                        |
| 8.8                 |      |                 |                        |
| Int                 |      |                 |                        |
| e r n a t i o n a l |      |                 |                        |
| 5.3                 | 7.3  |                 |                        |
| 6.6                 | 7.0  | 7.0             |                        |
| 12.2                |      |                 |                        |
| 7.9                 |      |                 |                        |
| 9 .                 | k    |                 |                        |
| 7.9                 |      |                 |                        |
| 9.7                 |      |                 |                        |

U5 
The main changes r e s u l t S Q ^ o m ^ W S ^ e v i e v : of the e a r l i e r forecasts are a somewhat lower o v e r a l l expectation of growth i n the period up to 1990 
and a narrowing cf the range between the low and high f o r e c a s t s . 

The most s i g n i f i c a n t reduction occurs i n the high end of the f o r e c a s t range. 

These changes r e s u l t p a r t l y from r e v i s i o n s i n the assumptions f o r economic growth and f u e l p r i c e s and p a r t l y from the reassessment of the p r i c e and income e l a s t i c i t i e s . 

A more c r i t i c a l review of the c o m p a t i b i l i t y of the various assumptions has also been c a r r i e d out, the r e s u l t s of which have l e d to a narrowing i n the range of f o r e c a s t s . 

Within the a i r t r a f f i c f o r e c a s t s , the p r o p o r t i o n of passengers expected to use the London area a i r p o r t s i s of p a r t i c u l a r s i g n i f i c a n c e , since i t i s there that the main capacity problems are expected to a r i s e . 

Table 3 analyses both the t r a f f i c i n 1975 
and the forecasts f o r the London area i n terms of the n a t i o n a l i t y of the passengers and the purpose of t h e i r journeys. 

The f o r e c a s t s f o r i n t e r n a t i o n a l t r a f f i c have been a r r i v e d at by assuming f o r the London a i r p o r t s as a whole a constant share of the t o t a l Great B r i t a i n t r a f f i c i n each passenger category. 

The f o r e c a s t s and p a r t i c u l a r l y the domestic f o r e c a s t s , take account of competition from surface t r a v e l . 

The assumption of a constant share i n each category of i n t e r n a t i o n a l t r a f f i c , although i t leads to small f l u c t u a t i o n s i n the t o t a l London share of i n t e r n a t i o n a l t r a f f i c because of the d i f f e r e n t rates of growth i n the various categories, implies a f a i r l y stable 80 per cent share f o r the London a i r p o r t s up to 1990. 

O v e r a l l , with the a d d i t i o n of domestic t r a f f i c the London area a i r p o r t s shar. of t o t a l t r a f f i c could r i s e s l i g h t l y over time on these assumptions. 

The realism of a constant share assumption f o r i n t e r n a t i o n a l **t r a f f i c**  
is open to question. 

The London area p r o p o r t i o n **might**  
Pall over time, as the a t t r a c t i o n **of the other regions to**  
foreign t o u r i s t s and businessmen, the propensity to f l y i n 
 
the other regions, and the a v a i l a b i l i t y of s e r v i c e s at  
regional a i r p o r t s , increase. 

However, **there i s as yet no**  
evidence of any c l e a r trend i n t h i s **respect and, while the**  
Government accepts that t h i s p r o p o r t i o n could change, i t i s 
 
Prudent f o r f o r e c a s t i n g purposes to r e t a i n the assumption **that**  
the proportion of i n t e r n a t i o n a l passengers using the **London**  
airports w i l l remain **stable.**  
U7 
The i n h e r e n t u n c e r t a i n t y o f a n y a t t e m p t a t f o r e c a s t i n g h a s a l r e a d y b e e n a c k n o w l e d g e d , b u t t h e r e a r e two p a r t i c u l a i
4 
a r e a s where some d e g r e e o f j u d g e m e n t has b e e n e x e r c i s e d a n d a t h i r d t o w h i c h p a r t i c u l a r r e f e r e n c e s h o u l d b e made. 

F i r s t , t h e f o r e ­
c a s t s w i l l b e a f f e c t e d i f c e r t a i n a i r t r a v e l m a r k e t s b e g i n t o show s i g n s o f S a t u r a t i o n ' . 

W h i l e t h e r e i s l i t t l e i n d i c a t i o n t h a t t h i s p o i n t h a s b e e n r e a c h e d , t h e r e h a s b e e n c o n s i d e r a b l e d e b a t e w i t h i n t h e a i r t r a n s p o r t i n d u s t r y on the e x t e n t t o w h i c h t h e u p p e r l i m i t o f m a r k e t g r o w t h c a n b e i d e n t i f i e d . 

T h e r a p i d r a t e s o f g r o w t h , s u c h as were s e e n f o r I n c l u s i v e T o u r s i n t h e 
1 9 6 0 s , r e p r e s e n t e d t h e s u c c e s s f u l d e v e l o p m e n t o f a new m a r k e t , b u t t h e s i z e o f t h i s m a r k e t f o r l e i s u r e t r a v e l i s l i m i t e d n o t o n l y b y e c o n o m i c f a c t o r s , b u t a l s o b y o t h e r c o n s t r a i n t s s u c h a s a v a i l a b l e t i m e a n d f a m i l y s t r u c t u r e . 

F o r t h e s e r e a s o n s r a p i d g r o w t h i n t h e l e i s u r e m a r k e t c a n n o t b e e x p e c t e d t o c o n t i n u e i n d e f i n i t e l y . 

^ h i s e f f e c t h a s b e e n i n c o r p o r a t e d i n t o t h e f o r e c a s t i n g m o d e l b y a s s u m i n g a d e c l i n e o v e r t i m e i n t h e s e n s i t i v i t y o f demand t o p r i c e a n d income c h a n g e s . 

As a r e s u l t ? 

a t a i l i n g o f f i n t h e g r o w t h i n demand a p p e a r s i n t h e f o r e c a s t s , b u t i t h a s n o t b e e n p o s s i b l e t o i d e n t i f y a n y c l e a r u p p e r l i m i t . 

N e v e r t h e l e s s , b y t h e 
1 9 9 0 s t h e e f f e c t s o f s a t u r a t i o n may w e l l b e s i g n i f i c a n t , p a r t i c u l a r l y a t t h e h i g h end o f t h e f o r e c a s t r a n g e a n d e s p e c i a l l y i n t h e S o u t h E a s t where m a r k e t p e n e t r a t i o n h a s p r o c e e d e d f u r t h e r t h a n i n o t h e r a r e a s o f t h e c o u n t r y . 

2+8 
S e c o n d l y , t h e r e i s t h e q u e s t i o n o f w h e t h e r t h e v e r y l a r g e c o m p o n e n t o f f o r e i g n l e i s u r e p a s s e n g e r s f o r e c a s t i n t h e 
1 9 8 0 s Will be a t t r a c t e d to and can be accommodated within the London area. 

Foreign l e i s u r e passengers represent a s i g n i f i c a n t Proportion of the f o r e c a s t t o t a l i n t e r n a t i o n a l demand at the London area a i r p o r t s i n 1990, or around 32 m i l l i o n passenger movements with the high f o r e c a s t . 

This would imply that about 
16 m i l l i o n l e i s u r e passengers w i l l be a r r i v i n g at and departing from the London area a i r p o r t s i n 1990, compared with 5 m i l l i o n at present, and i t i s l i k e l y that a high proportion of them 
" i l  
l spend at l e a s t some of t h e i r time v i s i t i n g London. 

The Government i s considering the i m p l i c a t i o n s which such P o s s i b i l i t i e s could have f o r tourism p o l i c y , but i t i s already evident that such a demand could not be accommodated i n London Without a s u b s t a n t i a l expansion of the e x i s t i n g stock of hotel and other accommodation over- the next 15 years. 

It i s 
^ l i k e l y that such expansion would occur without a r e a l increase i n the l e v e l of h o t e l t a r i f f s , which would i n turn l e a d to some 
^ a u c t i o n i n t o u r i s t demand, and i t may be doubted Whether there be the space a v a i l a b l e i n C e n t r a l London to meet **the higher**  
e n d of the f o r e c a s t demand. 

I t i s a l s o probable **that the**  
congestion at the main t o u r i s t a t t r a c t i o n s w i l l l e a d to **some**  
E d u c t i o n i n demand. 

I t i s not p o s s i b l e to f o r e c a s t the p r e c i s e  
impact of these e f f e c t s on a i r t r a f f i c demand, **but a reduction**  

i
   
  n the incoming l e i s u r e component f o r the London area of 
                                                                                                                                                                                                                  10-15 

cent by 1990 might not be u n r e a l i s t i c . 
                                            This could reduce 

t
  h
      
     e high 1990 
                                                f o r e c a s t by up to 5 m i l l i o n passengers. 

T h i r d l y , the p o s s i b i l i t y must be recognised that there w i l l  

be an upward trend i n o i l prices 
                                  over the next 15 years,. 

Estimates of the timing vary, with some experts p r e d i c t i n g 

s i g n i f i c a n t f u r t h e r movement from the e a r l y 1960s. 
                                                                                                           The 

t r a f f i c f o r e c a s t s assume up to a 50 per cent increase i n f u e l p r i c e s i n r e a l terms by 1990. 
                                                              I f f u e l p r i c e s were to exceed 

t h i s l e v e l there would be some f u r t h e r reduction i n demand 

f o r a i r t r a v e l . 

## Cargo Forecasts

50 
Although the volume of United Kingdom trade c a r r i e d by a i r i s small, amounting to l e s s than i per cent of the t o t a l , the value i s high. 

Over the past 15 years the value of United Kingdom trade by a i r has increased from £526 m i l l i o n , representing 6 per cent of the t o t a l to £3,56U m i l l i o n i n 
1976 
or 15 per cent of t o t a l United Kingdom trade. 

Growth i n a i r cargo was badly a f f e c t e d by the cut back i n trade f o l l o w i n g the f u e l c r i s i s , but there was no f a l l i n a i r cargo's share of the t o t a l va6ae of United Kingdom trade. 

Over the period to 
1990 
i t i.s expected that there w i l l be f u r t h e r grov/th i n a i r cargo and that i t w i l l continue to account f o r a growing part of the value of our trade. 

51
 
A i r cargo i s transported both on a l l - c a r g o **services and**  
i n the holds of passenger-carrying a i r c r a f t . 

The **development**  
and i n t r o d u c t i o n of wide-bodied j e t s has increased the **space** a v a i l a b l e f o r cargo on passenger s e r v i c e s and has l i m i t e d **the**  
grov/th of a l l - c a r g o s e r v i c e s . 

In recent years **a l l - c a r g o**  
movements have accounted f o r a f a i r l y s t a b l e 8-9 per **cent** **of**  

the t o t a l a i r 
                transport movements i n 
                                             the 
                                                  London area. 
                                                                     In 
                                                                        the 
                                                                             

future, although the tonnage could increase by as much as  

5-10 per cent a year, there i s 
                               not expected t o 
                                                be any major  

change i n 
          the proportion of f r e i g h t c a r r i e d on a l l - c a r g o  

movements.  

## Introduction

52 
The A i r p o r t Strategy c o n s u l t a t i o n document emphasised **the**  
importance which the Government attaches to the **environmental**  
implications of a i r p o r t developments. 

S u b s t a n t i a l sections  
Q f both parts of the document were devoted to the way i n **which**  
d i f f e r e n t developments might a f f e c t the communities **surrounding**  
the a i r p o r t s and many of the comments were concerned **with**  
environmental **matters.**  
53 
During the consultations some organisations a r 2 u e d that environmental f a c t o r s should d i c t a t e a i r p o r t s strategy, that the Government should d e c l i n e to meet the demand f o r a i r p o r t 

f a o i l  
              8 , or that a i r p o r t s should he s i t e d at a considerable 
         l
           t
            i
             e  

distance from centres of population. 
                                           Such approaches leave  

out of account the b e n e f i t s to be derived from an e f f i c i e n t  

a i r transport system and f a i l to meet the reasonable needs of  

industry. 
            Furthermore, What are sometimes described as 

"environmental a i r p o r t s " away from centres of population 
                                                           are 

^ 
   no means u n i v e r s a l l y acceptable as experience i n t h i s 
                                                                          . 

country and elsewhere has shown. 

54 
     Notwithstanding the 
                             p r e d i c t e d reductions i n a i r c r a f t 

noise disturbance which were explained i n 
                                          the 
                                              c o n s u l t a t i o n document, a i r c r a f t noise emerged as a matter of widespread 

concern. 
           The Government recognises the 
                                            genuine a n x i e t i e s  

which e x i s t and, 
                 although i t remains confident that 
                                                    the 
                                                         

i n t r o d c u t i o n of 
                               new and q u i e t e r a i r c r a f t w i l l b r i n g increas­

u l 
        

i n g l y dramatic improvements i n 
                                                            the s i t u a t i o n , i t 
                                                                                                w i l l coniin

to maintain and develop a range of ameliorative measures as  

e s s e n t i a l component of i t s a i r p o r t s strategy. 
                                                                                              In the  

                                                                                                  n
Governments view the 
                                   maximum value from d i r e c t measures, sucft  

as those governing a i r c r a f t noise abatement procedures and tft  

noise c e r t i f i c a t i o n of a i r c r a f t , can only be r e a l i s e d i f 
                                                            they 
                                                                 

are supported by f i r m and v/idely understood p o l i c i e s covering  

                                                                                                                                                                      e 
among other things, the i d e n t i f i c a t i o n of those a i r p o r t s whe" the main growth i n 
                     t r a f f i c i s 
                                 to 
                                     be concentrated; the d e f i n i t i o n of a i r c r a f t f l i g h t paths; 
                                                                           and 
                                                                                  the c o n t r o l , under  

the Town 
          & Country Planning Acts, of r e s i d e n t i a l and other  

noise s e n s i t i v e developments i n 
                                 areas subject to a i r c r a f t  

noise.  

## 55 A Key R O L E Of An A I R P O R T Strategy I S To Provide A

framework f o r a co-ordinated approach by the many i n t e r e s t s who can i n f l u e n c e the way environmental problems are tackled-' 
 
8 1 1 
Nevertheless, the consultations confirmed the existence of a apparently inescapable clash of i n t e r e s t s , which has aopeare i n i t s most acute form when proposals f o r new a i r p o r t s have 

been presented. 
                  On the 
                         one hand, there i s 
                                            a l e g i t i m a t e 

demand that a i r c r a f t noise and congestion should be minimised  

in the 
        h e a v i l y populated urban areas that are a f f e c t e d by  

the e x i s t i n g busy " c i t y " a i r p o r t s such as Heathrow, Manchester,  

Birmingham and Glasgow. 
                           On the ottisr hand, there 
                                                     i s 
                                                         

J u s t i f i a b l e , and o f t e f t w e l l a r t i c u l a t e d , resentment among 
                                                                                                                       the 
                                                                                                                                

r e l a t i v e l y much smaller populations who l i v e i n 
                                                                                                   areas which  

retain some r u r a l character and which are seen to 
                                                      be threatened  

hy increased use of a i r p o r t s s i t u a t e d i n 
                                          more open areas,  

^ p r e s e n t a t i o n s on t h i s score have h i g h l i g h t e d p a r t i c u l a r  

resistance to the i n t r o d u c t i o n 
                                 or i n t e n s i f i c a t i o n of a i r c r a f t  

noise m areas which are 
                            claimed to have r e l a t i v e l y low ambient "oise l e v e l s ; 
                t o 
                    the imposition of heavy t r a f f i c on country  

^ d s ; 
           and to changes of character i n 
                                                         an area that can 
                                                                                  he 
                                                                                      

bought about by new house b u i l d i n g and a s s o c i a t e d develop­
ments needed to accommodate those involved i n the **running** **of**  
the a i r p o r t and i n s e r v i c e and r e l a t e d **a c t i v i t i** **,.**  
A I R C R ^ **POISE**  
56  
only d i d the consultations confirm that, of a l l the ems associated with a i r p o r t s , the disturbance caused by 

aipcraf*-f­
*Ur(  
                     u  
                                noise remains the 
                                                                                                        most serious, but they reaffirmed  

the A r t i c u l a r s e v e r i t y of the problem around Heathrow. 
                                                                     At 
                                                                            

Present  

using the 
          Noise and Number Index (KNI) 
                                         as a guide,  

t l l i n 
           t
              n
                 e  35 NNI contour 2 m i l l i o n people are a f f e c t e d by  

a i r c r a f t noise at Heathrow compared with around U50,000 at a l l 

the other p r i n c i p a l a i r p o r t s i n Great B r i t a i n considered i n 

the c o n s u l t a t i o n documents. 
                                                  By 1990 
                                                               the number of people 

a f f e c t e d around Heathrow i s f o r e c a s t to decline to l e s s than 

300,000 due mainly to the v/ider use of l a r g e r quieter aircrai"* 

hut even so the problem w i l l 
                                s t i l  
                                     l be greater at Heathrow 
                                                                   th& 

elsewhere i n the country. 
                            This has been a major c o n s i d e r a t e 

i n the development of an a i r p o r t strategy f o r the South East 

England. 

57

 
   Many of the comments received during the consultations  

drew a t t e n t i o n to the a l l e g e d shortcomings of the Noise and  

Number Index as a measure of noise disturbance. 
                                                  The 
                                                         

Government accepts that there are d e f i c i e n c i e s i n the 
                                                        UNI. 
                                                              

However, i n the absence of an a l t e r n a t i v e which i s as widely  

accepted, and which w i l l permit a comparative examination of  

d i f f e r e n t a i r p o r t s over an extended period, the Government  

considers that the NNI remains as good a measure of 
                                                      a i r c r a f t  

disturbance as i s a v a i l a b l e . 
                                A fundamental change i n the  

s 
    

system would make comparisons with the past d i f f i c u l t to asse

and monitor. 

Nevertheless, there i s general agreement **both**  
i n the United Kingdom and elsewhere that there would be benef-
1­
i n the adoption of a uniform scale f o r the **measurement** **of**  
noise disturbance. 

It i s , t h e r e f o r e , the **Governments**  
J 
i n t e n t i o n to continue, i n c o n s u l t a t i o n with those concerned, '
6 
examine po33ible a l t e r n a t i v e s to the NNI, i n c l u d i n g the S e a l

of Equivalent Continuous Sound L e v e l (Lee.). 
                                                      The Leu. covers 
                                                                       a l l 
                                                                            

forma of noise and has c e r t a i n advantages over the NNI. 
                                                           I t 
                                                                  

would, f o r example, include h e l i c o p t e r noise which was the  

subject of p a r t i c u l a r concern i n the consultations, and f o r  

"hich the Government i s keen to e s t a b l i s h a r e l i a b l e b a s i s f o r  

measurement i n order to assess the s c a l e **of the problem.**  
58 
I t i s accepted that the r e a c t i o n of i n d i v i d u a l people to noise v a r i e s g r e a t l y and t h i s was shown i n the surveys from which the NNI was developed. 

However, f o r purposes of compari­
son the r e a c t i o n o f an "average person" has been adopted and i n this context the 35 NNI i s g e n e r a l l y taken to represent a l e v e l 
*? "low annoyance" to a i r c r a f t noise. 

I t i s recognised that outside the 35 NNI contours there are people whose r e a c t i o n to 
^ c r a f t noise i s more acute than that of the average person a  ^ that i n consequence they s u f f e r more annoyance. 

Where complaints suggest that there may be circumstances which exacerbate the a i r c r a f t noise problem outside the 35 
mil contour, 
8 P e c i a l i n v e s t i g a t i o n s w i l l continue to be made. 

I t has been t e s t e  
d that one of the main reasons f o r the apparent d i s t u r b ­
ence caused by a i r c r a f t i n c e r t a i n areas some distance from S p o r t s i s the lower ambient noise l e v e l s to be found i n those 

Wacee.
             there i s a need to balance the impact of a i r c r a f t 
        v
        m
         i
          l e 

n o i S e , the Government acknowledges that the perception of a i r c r a f t  

noise may be more acute i n areas where the general environment i s  

h o r m a l i y very quiet, but t h i s needs to be weighed against the  

de3ij, - . 
            .. 
      a 

u n i t y of causing disturbance to as few people as  

5
   o
      a  s i b l  . 
                             e  

5

(i 
                        R e g a r d l e s s 
                                                                                         o f 
                                                                                                            t h e 
                                                                                                                                   way a n n o y a n c e 
                                                                                                                                                                                                                      f r o m a i r c r a f t n o i s e 
                                                                                                                                                                                                                                                                                                                                                i s 

m e a s u r e d , 
                    a n d n o t w i t h s t a n d i n g 
                                                            t h e 
                                                                    s p e c i a l 
                                                                                   c a s e 
                                                                                             o f C o n c o r d e , 

t h e 
        e s s e n t i a l 
                              c o n c l u s i o n o f 
                                                           t h e 
                                                                    work u n d e r t a k e n f o r 
                                                                                                               t h e 
                                                                                                                        a i r p

o
  r " 

                                                                                                                                                                                                                                                                       e
                                                                                                                                                                                                                                                                          a
                                                                                                                                                                                                                                                                             r
s t r a t e g y 
                                       c o n s u l t a t i o n 
                                                                                                 d o c u m e n t s 
                                                                                                                                              was 
                                                                                                                                                                t h a t 
                                                                                                                                                                                      o v e r 
                                                                                                                                                                                                            t h e 
                                                                                                                                                                                                                             n e x t 
                                                                                                                                                                                                                                                    15
                                                                                                                                                                                                                                                                                * 

y

t h e r e 
            w o u l d b e 
                               a m a r k e d d e c l i n e 
                                                                   i n t h e 
                                                                                 d e g r e e 
                                                                                                a n d e x t e n t 
                                                                                                                       o f 

d i s t u r b a n c e 
                       f r o m a i r c r a f t n o i s e . 
                                                                     C e r t a i n 
                                                                                     o f 
                                                                                            t h e 
                                                                                                    a s s u m p t i o n s 

e 

o n w h i c h t h e 
                      n o i s e 
                                f o r e c a s t s 
                                                  w e r e b a s e d were 
                                                                              c r i t i c i s e d i n 
                                                                                                      t h

 
          8 

c o n s u l t a t i o n s . 
                                   I t 
                                         was 
                                                  s u g g e s t e d t h a t 
                                                                                 t h e 
                                                                                         f o r e c a s t s 
                                                                                                              assumed

r a t e 
          o f 
                 i n t r o d u c t i o n f o r 
                                                    t h e 
                                                             n e w e r 
                                                                         g e n e r a t i o n 
                                                                                                 o f 
                                                                                                       q u i e t e r 
                                                                                                                        and 

l a r g e r 
             a i r c r a f t t h a t 
                                         was 
                                                u n l i k e l y t o b e 
                                                                              a c h i e v e d . 
                                                                                                      I t 
                                                                                                            was 

                                                                                                                                                                                                                                                                         e
                                                                                                                                                                                                                                                                            r
c o n s i d e r e d 
                                                 t h a t 
                                                                       t h e 
                                                                                        f o r e c a s t 
                                                                                                                                a v e r a g e 
                                                                                                                                                                    number o f p a s s e n g e r s  
                                                                                                                                                                                                                                                                  P 

a i r c r a f t , 
                    w h i c h t h r o u g h i t s 
                                                         i n f l u e n c e 
                                                                              on t h e 
                                                                                            number o f 
                                                                                                                 a i r 

t r a n s p o r t 
                    movements 
                                        ha3 
                                                a s i g n i f i c a n t 
                                                                             e f f e c t 
                                                                                           on t h e 
                                                                                                          n o i s e 

f o r e c a s t s , 
                       was 
                                t o o 
                                        o p t i m i s t i c . 
                                                                      I t 
                                                                            was 
                                                                                     i m p l i e d , p a r t i c u l a r l y 

b y t h o s e 
               c o n c e r n e d w i t h 
                                        t h e 
                                               r e g i o n a l 
                                                              a i r p o r t s w h i c h h a v e 
                                                                                                see* 

r e l a t i v e l y 
                      few 
                              o f 
                                    t h e 
                                            nev/ g e n e r a t i o n 
                                                                           o f 
                                                                                 j e t s , 
                                                                                             t h a t 
                                                                                                        t h e s e 

a i r c r a f t 
                  were 
                            n o t 
                                    i n f a c t 
                                                     s i g n i f i c a n t l y 
                                                                                 q u i e t e r 
                                                                                                 t h a n 
                                                                                                            t h o s e 

c u r r e n t l y 
                    i n 
                          u s e . 

60 
       The f o r e c a s t s 
                            f o r 
                                   t h e 
                                         i n t r o d u c t i o n o f new a i r c r a f t 
                                                                                     a r e 

b a s e d n o t 
                  on a s i m p l e 
                                       e x t r a p o l a t i o n 
                                                                o f p a s t 
                                                                              t r e n d s , 
                                                                                            b u t 
                                                                                                   on 

d e t a i l e d 
                  a n a l y s i s 
                                     o f 
                                           a i r l i n e f l e e t s 
                                                                          i n c l u d i n g : 
                                                                                                  t h e 
                                                                                                          a g e s of 

e x i s t i n g 
                  a i r c r a f t ; 
                                         t h e 
                                                 known r e t i r e m e n t p l a n s 
                                                                                                 o f 
                                                                                                       t h e 
                                                                                                                a i r l * * j 

t h e 
        l i k e l y demands 
                                         o f 
                                                t h e 
                                                        w o r l d

1 s 
          a i r l i n e s ; 
                                                      a n d t h e 
                                                                                      new 

a i r c r a f t 
                  w h i c h a r e b e i n g , 
                                                     o r a r e 
                                                                   e x p e c t e d 
                                                                                      t o be^ d e v e l o p e d . 

L e a v i n g a s i d e 
                           f o r 
                                   t h e 
                                          moment t h e 
                                                                e a r l i e r 
                                                                               r e t i r e m e n t 
                                                                                                     o f 
                                                                                                            vioi** 

a i r c r a f t , 
                    w h i c h t h e 
                                          G o v e r n m e n t i s 
                                                                         a c t i v e l y 
                                                                                             p u r s u i n g 
                                                                                                                  w i t h i n 

the E u r o p e a n C i v i l 
                              A v i a t i o n C o n f e r e n c e 
                                                               ( E C A C ) , 
                                                                             i t 
                                                                                 i s 
                                                                                       f o r e c a s t 

that b y t h e 
                l a t e 1980s a l l b u t a s m a l l p r o p o r t i o n o f 
                                                                           e x i s t i n g 

a i r l i n e f l e e t s w i l  
                                     l 
                                         h a v e 
                                                    t o b e 
                                                                 r e p l a c e d . 
                                                                                           T h e s e 
                                                                                                          r e p l a c e m e n t s 

n i l 
        n o t n e c e s s a r i l y 
                                   b e 
                                         w i d e b o d i e d a i r c r a f t , b u t 
                                                                                        i r r e s p e c t i v e 

of 
    t h e i r 
              c o n f i g u r a t i o n t h e y 
                                               w i l l b e 
                                                            r e q u i r e d t o m e e t , 
                                                                                           a t 
                                                                                                 l e a s t the 
     t h e n c u r r e n t n o i s e 
                                   c e r t i f i c a t i o n 
                                                         s t a n d a r d s . 
                                                                             B r i t i s h 

A i r w a y s 
                i s 
                      g i v i n g 
                                    g r e a t e r 
                                                     p r i o r i t y i n i t s 
                                                                                       f l e e t 
                                                                                                    p l a n n i n g 
                                                                                                                       t o 

the r e p l a c e m e n t 
                            o f 
                                  i t s 
                                         T r i d e n t s w i t h new, 
                                                                           q u i e t e r 
                                                                                           a i r c r a f t . 

The new a i r c r a f t w o u l d c o m p l e m e n t 
                                             B r i t i s h 
                                                        A i r w a y s f l e e t 
                                                                           o f 

* * i s t a r 
                a i r c r a f t , w h i c h i s 
                                                         one 
                                                                  o f 
                                                                        t h e 
                                                                                 q u i e t e s t 
                                                                                                    o f 
                                                                                                           t h e 
                                                                                                                   m o d e r n 

d e r a t i o n 
                 o f w i d e b o d i e d a i r c r a f t , 
                                                            a n d a m a j o r 
                                                                                 c o n s i d e r a t i o n 

i t s 
         s e l e c t i o n 
                                 w o u l d b e n o i s e p e r f o r m a n c e . 
                                                                                                          T h i s 
                                                                                                                       w o u l d 

Produce a s i g n i f i c a n t 
                        r e d u c t i o n 
                                   i n n o i s e 
                                             d i s t u r b a n c e 
                                                           i n 
                                                               t h e 

v
  i o i n i t y 
                                 o f 
                                             H e a t h r o w a n d o t h e r 
                                                                                                                        a i r p o r t s p r e s e n t l y 
                                                                                                                                                                                                     s e r v e d b y 
                                                                                                                                                                                                                                                  * 

T * i d e n t 
                      a i r c r a f t . 

So f a r as 
             t h e 
                   n o i s e 
                           c h a r a c t e r i s t i c s 
                                                 o f t h e 
                                                           new 
                                                                 g e n e r a t i o n 

j e t 
        a i r c r a f t a r e 
                                       c o n c e r n e d 
                                                               t h e r e 
                                                                              i s 
                                                                                     no d o u b t 
                                                                                                           t h a t 
                                                                                                                       t h e s e 
                                                                                                                                      show 

s u b s t a n t i a l 
                        i m p r o v e m e n t 
                                                  o n e a r l i e r a i r c r a f t . 
                                                                                                   F o r e x a m p l e , 
                                                                                                                               a t 

^

e 
        n . o i s  
                                        c e r t i f i c a t i o n m e a s u r i n g p o i n t s 
                                                                                                                                                                                                            u n d e r t h e 
                                                                                                                                                                                                                                                                f l i g h t 
                                                                                                                                                                                                                                                                                                     p a t h ^ ^ 
                              e

^ o i s e 
           c e r t i f i c a t i o n 
                                        p o i n t s 
                                                      a r e 
                                                              6 . 5 
                                                                      km f r o m t h e 
                                                                                               s t a r t 
                                                                                                           o f 
 & K e - o f f 
                 a n d 2 . 0 
                                 km f r o m the 
                                                          r u n w a y t h r e s h o l d 
                                                                                            o n a p p r o a c h ; 
 £ e r e 
           i a 
                 a n a d d i t i o n a l p o i n t 
                                                          u s e d 
                                                                    i n c e r t i f i c a t i o n t e s t s 
                                                                                                                    t o 

the 
     s i d e 
           o f 
               t h e 
                    t a . : e - o f f 
                                 p a t h . 

a Boeing 707 - 320B would on average r e g i s t e r 113 EPNdB

v 'at 

take-off and 116 EPNdB on landing, compared w i t h 97 EPNdB 
                                                             and 

103 EPNdB r e s p e c t i v e l y f o r 
                                 a T r i s t a r , an a i r c r a f t which 
                                                                    i s 

30 per cent heavier. 
                            A reduction of 10 decibels i a equivalent 

to h a l v i n g the apparent n o i s i n e s s . 
                                                             The trend towards the 

quieter a i r c r a f t which v / i l l increase during the 1980s as 
                                                            the 

e a r l i e r j e t s are r e t i r e d from s e r v i c e , i s already apparent a t 

Heathrow where over 20 per cent of a i r c r a f t movements are 
                                                          now 

by a i r c r a f t meeting current noise c e r t i f i c a t i o n standards. 

62 
     The C i v i l A v i a t i o n Authority w i l l take a i r c r a f t noise  

into account when considering competing a p p l i c a t i o n s f o r a  

transport l i c e n c e f o r 
                              s e r v i c e s to and from London a i r p o r t s .  

The Government also takes t h i s problem into account i n carrying 
                                                                                

out a l l i t s duties i n 
                           the c i v i l a v i a t i o n f i e l d .  

63 
     Because of the large number of overseas a i r l i n e s which 

of 

operate i n 
           the United Kingdom and because so 
                                              many of the a i r c r *  

 
  i 0  

used are of f o r e i g n manufacture, the f u l l b e n e f i t from action reduce a i r c r a f t noise can be achieved only through the widest 
 
p o s s i b l e i n t e r n a t i o n a l agreement. 

The Government w i l l , **ther**  
continue i t s e f f o r t s within the I n t e r n a t i o n a l C i v i l **A v i a t i o n**  
e 
 

v  ' PNdB-Perceived Noise Decibels i s 
a scale of **a i r c r a f t**  
n o i s i n e s s as perceived by the 
human ear, i t being **more** 
s e n s i t i v e to some frequencies than others. 
3PHdB-Effecti 
Perceived Noise Decibels i s 
the 
PNdB scale with a **weightifjtf**  
f o r pure tones ( s i n g l e frequency tones) and f o r the **length**  
of time f o r v/hich the higher noise l e v e l s are **experienced.**  
The EPNdB scale i s 
used i n a i r c r a f t c e r t i f i c a t i o n under 
the 
 
r u l e s of the I n t e r n a t i o n a l C i v i l A v i a t i o n 
Organisation. 
 
O r g a n i s a t i o n 
( I C A O ) 
t o s e e k **a g r e e m e n t** or. t h e a d o p t i o n o f P r o g r e s s i v e l y more s t r i n g e n t n o i s e s t a n d a r d s i n p a r t i c u l a r f o r new s u b s o n i c j e t a i r c r a f t . 

New, s t r i c t e r n o i s e s t a n d a r d s 
" i l l be p r e s e n t e d t o P a r l i a m e n t f o r a p p r o v a l a s s o o n a s p r o p o s a l s f o r m u l a t e d i n ICAO h a v e b e e n a g r e e d b y t h e C o u n c i l of the O r g a n i s a t i o n , p r o b a b l y e a r l y i n 1978. 

T h e s e l a t e s t K A O s t a n d a r d s w i l  
l t a k e a d v a n t a g e o f t h e a d v a n c e , t h a t h a v e t e e n made i n a c o u s t i c t e c h n o l o g y s i n c e t h e o r i g i n a l s t a n d a r d s 
* e r e s e t i n 1969. 

A s w i t h t h e o r i g i n a l s t a n d a r d s , t h e r e v i s e d s t a n d a r d s w i l l a p p l y i n i t i a l l y t o new **t y p e s** o f s u b s o n i c j e t a i r c r a f t , h u t d i s c u s s i o n s a r e now p r o c e e d i n g i n ICAO w i t h a view t o a g r e e i n g a d a t e f r o m w h i c h a l  
l new p r o d u c t i o n o f e x i s t i n g s u b s o n i c j e t a i r c r a f t s h o u l d c o n f o r m t o the new s t a n d a r d s . 

D e v e l o p m e n t s i n a c o u s t i c a l t e c h n o l o g y a r e a l s o o e i n g k e p t u n d e r r e v i e w w i t h t h e a i m o f s e t t i n g e v e n m o r e p o r o u s s t a n d a r d s when t h e s e become p r a c t i c a l a n d e c o n o m i c a l l y r e a s o n a b l e . 

W i t h i n t h e f r a m e w o r k o f t h e E u r o p e a n C i v i l A v i , t i o n C o n f e r e n c e , t h e U n i t e d K i n g d o m h a s b e e n p l a y i n g a l e a d i n g 
? a r t i n s t u d i e s o n t h e s c o p e f o r r e s t r i c t i n g t h e u s e o f n o n - n o i s e c e r t i f i c a t e d n i  
c j e t a i r c r a f t a n d - o r e n c o u r a g i n g t h e s u t s
0 
i n t r o d u c t i o n o f new q u i e t e r a i r c r a f t . 

A s a r e s u l t o f t h e s e 
" t u d i e s , t h e G o v e r n m e n t p r o p o s e s t o p r o h i b i t t h e u s e o f n o n - n o . s e c o r t i f  
i c a t e
 
 
j e t a i r c r a f t a c q u i r e d b y a n y UK o p e r a t o r a
 
3
u b s o n i c a f t e r the
 3
-
J September 1978 and to p r o h i b i t from 1 January 1
9
^
2 

                                                                                                             o
                                                                                                               n 
                                                                                                                 
the use of a l l 
                           non-noise c e r t i f i c a t e d subsonic j o t 
                                                                                              a i r c r a f t

the UK r e g i s t e r . 
                      These measures w i l l ensure that a l a r g e 

proportion of the a i r c r a f t using UK a i r p o r t s i n the middle ana 

3ate 1960s w i l l have markedly b e t t e r noise c h a r a c t e r ! s t i e s 
                                                                            t h ^ 

many current a i r c r a f t . 
                         S i m i l a r measures are expected to be 

introduced by 
               other States and the Government w i l l continue to 

seek agreement w i t h i n ECAC on 
                                f u r t h e r measures to promote the 

development and use of a i r c r a f t i n c o r p o r a t i n g the l a t e s t 

advances i n 
            noise abatement technology. 

65. 
      A number of 
                        developments suggest that the average number 

of passengers per a i r c r a f t i n 
                                   the 1990s may 
                                                   be 
                                                       somewhat lower 

than was p r e d i c t e d i n 
                       the c o n s u l t a t i o n documents. 
                                                      The patte--' 

e 

i s l i k e l y to vary as 
                                        between a i r p o r t s depending upon the tyP

of t r a f f i c . 
                For example, at r e g i o n a l a i r p o r t s i t 
                                                            i s l i k e l y 

that the i n t r o d u c t i o n of wide bodied a i r c r a f t w i l l be slower 

1 

than i n 
        the London area because of the lower density of t r ^ -

and that the operation of 
                           older generation 
                                             a i r c r a f t may be 

prolonged beyond the date by 
                              which they might be 
                                                   phased out ^ 

the London a i r p o r t s end other major a v i a t i o n centres. The 

0 

f o r e c a s t s i n 
                         the c o n s u l t a t i o n documents took account of t h i

expected pattern of development and i t 
                                         remains true that the 

general improvement which i s 
                               envisaged i n a i r c r a f t noise w i ^ 

be experienced throughout the **country.**  
66 
A l l f o r e c a s t s involve a degree of uncertr.ir.ty, from **which**  

the
         n e n t of a i r c r a f t noise cannot he exempted. 
                                                                 In 
                                                                        
   : i s s e s 3   

Particular, the f o r e c a s t s as they apply to p a r t i c u l a r a i r p o r t s 

are dependent not only upon the assumptions discussed e a r l i e r 

but also upon the routes followed by a i r c r a f t from a p a r t i c u l a r 

airport and the way i n which a i r l i n e s deploy t h e i r a i r c r a f t . Since the p u b l i c a t i o n of the noise f o r e c a s t s i n the c o n s u l t a t i o n 

a g e n t s a number of developments have 
                                                         taken place which might alter some of the assumptions on which those f o r e c a s t s were 

based. 
         Some developments, such as the slower i n t r o d u c t i o n of 

new a i r c r a f t w i l l tend to reduce or delay the b e n e f i t s envisaged 

aver the period to 1990. 
                           But others w i l l advance the expected 

improvements and i n t e r n a t i o n a l agreement on r e s t r i c t i n g the use 

o
  f  the older a i r c r a f t would accelerate the process s t i l  
                                                                                                                                                                                               l further, 

A t Heathrow where the p r o p o r t i o n of noise c e r t i f i c a t e d a i r c r a f t 

h*a been r i s i n g s t e a d i l y and i s now over 20 per cent of the 

total, Passenger t r a f f i c increased by nearly 13 per cent 

etween I973 and 1976, 
                                                                 but a i r transport movements decreased by 

over i i 

*
* Per cent. 
                 These developments give some expectation of 

trend which w i l l spread to other a i r p o r t s . 
                                                  In general, the 

0 vernment remains convinced that by 1990 the noise s i t u a t i o n 
show a s i g n i f i c a n t improvement on the present p o s i t i o n at 
^ l l  
a * r p o r t s . 

The rate of improvement w i l l vary **between**  
sports and may be somewhat **slov/er than envisaged previously,**  
^
u t **th**  
n e most marked improvement should be at **Heathrow.**  
improvement i n the noise s i t u a t i o n around **a i r p o r t s**  
w i l l ta..e time to develop and i t w i l l "
b e some time before a noticeable improvement i n the present p o s i t i o n can be d i s t i n g u i s h e d . 

In the meantime, the Government, a i r l i n e operators and a i r p o r t a u t h o r i t i e s w i l l continue to implement a wide range of measures to mitigate the e f f e c t s of a i r c r a f t noise. 

It i s the Governments i n t e n t i o n that these various e measures should be maintained and that new p o l i c i e s should "b introduced where these can be shown to be cost e f f e c t i v e and o  
r consistent with s a f e t y . 

The Government b e l i e v e s that a i r p charges which take account o f a i r c r a f t noise l e v e l s could 
 
u  
S 
provide a u s e f u l economic i n c e n t i v e f o r the development and of q u i e t e r a i r c r a f t . 

The Government has therefore sought powers to ensure that a i r p o r t a u t h o r i t i e s , i n t h e i r c h a r g i ^ 
p o l i c i e s , are l e g a l l y e n t i t l e d to d i s c r i m i n a t e between noisy and quieter a i r c r a f t . 

The United Kingdom i s t a k i n g a l e a d i ^ 
0 
part i n discussions i n ECAC and the Organisation f o r Econoifli Cooperation and Development about the form i n which noise r e l a t e d charges could most u s e f u l l y be introduced at major a i r p o r t s . 

The Government has proposed that the charge sho u^ 
1 
 
be r e l a t e d to the a i r c r a f t noise measured under noise c e r t i ^
c a t i o n conditions and that i t should increase with the **inte****  
of the noise. 

With regard to e x i s t i n g p o l i c i e s , the Gover­
0  
confirms the continued use of runway a l t e r n a t i o n at Heath?

0 
and the general p o l i c y under which a i r c r a f t **are required t**  

along minimum noise routes. 
                                It accepts the arguments 
                                                            w h ^ 
                                                                  

1 
     

have been put forward emphasising the importance of s t a b i -

a  
  V 
       

and the need to avoid changes i n these routes once they  h

been **agreed.**  
68 
A i r c r a f t movements at night present s p e c i a l problems; 
from the standpoint of the a i r transport industry, night operations have some important advantages, p a r t i c u l a r l y i n relation to cargo, but f o r people l i v i n g around a i r p o r t s , disturbance of sleep seems to be the most d i s r u p t i v e feature of a i r c r a f t operations. 

I t has been f o r some time the Government'B p o l i c y to obtain a progressive r e d u c t i o n of a i r c r a f t noise at night, and at Heathrow and Gatwick, r e s t r i c t i o n s on movements by Jet a i r c r a f t at night have been gradually tightened. 

However, the Government has decided to develop a long term strategy f o r reducing night noise disturbance by a i r c r a f t and i n March 1977 
i t published a consultation document s e t t i n g out two p o s s i b l e ways i n which this might be achieved at Heathrow and Gatwick. 

These alternatives were e i t h e r to reduce p r o g r e s s i v e l y the number of Permitted night f l i g h t s u n t i l they were eliminated, when the airports would be c l o s e d at night, or gradually to phase out 
^ g h t f l i g h t s by n o i s i e r a i r c r a f t so that the only movements would be by q u i e t e r a i r c r a f t such as t h e ^ f r i s t a r , A300B and n o n - 3 e  
t a i r c r a f t . 

Having considered the responses to the consultation document, the Government decided t o confirm that a l  l f l i g h t s by n o i s i e r a i r c r a f t at night would be phased out 
* t Heathrow and Gatwick over a p e r i o d of about 10 years. 

The Qovernment recognises that t h i s p o l i c y at Heathrow and Gatwick oould lead to an increase of night movements by n o i s i e r a l r c r a f t at Stansted and Luton. 

I t has t h e r e f o r e decided to P h * s e out movements at night by these a i r c r a f t at Stansted. 

T
h e  Government expects the management of Luton A i r p o r t to **take**  
f u U 
account of the Government **p o l i c y on reducing night noise**  
a n d t o f o l l o w s u i t . 

69 
E v i d e n c e i s l i m i t e d as t o how much t h e q u i e t e r a i r c r a f t a l s o d i s t u r b s l e e p , a l t h o u g h i t s u g g e s t s t h a t t h e s e a i r c r a f t w i l l d i s t u r b t h e s l e e p o f f a r f e w e r p e o p l e t h a n o t h e r t y p e s a i r c r a f t . 

A s f o r e s h a d o w e d i n t h e c o n s u l t a t i o n d o c u m e n t , 
" N i g h t D i s t u r b a n c e f r o m A i r c r a f t N o i s e a t H e a t h r o w a n d G a t w i t h e G o v e r n m e n t has d e c i d e d t o f u n d a programme o f r e s e a r c h i n t o t h e r e l a t i o n s h i p b e t w e e n a i r c r a f t n o i s e a n d s l e e p d i s t u r b a n c e . 

T h e r e s u l t s a r e e x p e c t e d t o b e a v a i l a b l e i n 
1 9 8 0 . 

P e n d i n g t h e r e s u l t s o f t h i s r e s e a r c h , q u i e t e r j e t a i r c r a f t s u c h as t h e A300B, T r i s t a r a n d n o n - j e t s w i l l b e a l l o w e d t o o p e r a t e a t H e a t h r o w a n d G a t w i c k w i t h i n q u o t a s r e s t r i c t i o n s w h i c h w i l l b e s e t so a s t o e n s u r e t h a t t h e r e  i no o v e r a l l i n c r e a s e i n a i r c r a f t movements a t t h e s e a i r p o r t s s  
e n i g h t , a n d w h i c h w i l l i n c r e a s e as t h e n o i s i e r q u o t a s d e c r e a When t h e r e s u l t s o f t h e r e s e a r c h o n n o i s e d i s t u r b a n c e a t 

.
      
           v
    t

                                                                                                                                                                                                                                                                    c
a r e 
                  a v a i l a b l e 
                                                              t h e 
                                                                                G o v e r n m e n t w i l l 
                                                                                                                                                        d e c i d e 
                                                                                                                                                                                      w h e t h e r 
                                                                                                                                                                                                                           t o 
                                                                                                                                                                                                                                          r e s t n  

ft 
  *' 
       

a n y w a y , 
                o r t o 
                           p h a s e 
                                       o u t , 
                                                movements 
                                                                   b y t h e s e 
                                                                                    q u i e t e r 
                                                                                                   a i r c r & 

a n y o r a l l 
                    o f 
                         t h e 
                                 d e s i g n a t e d 
                                                     L o n d o n a i r p o r t s . 

 
            0 

70 
        I t 
             w i l l 
                      r e m a i n i m p o r t a n t 
                                                   t o 
                                                        a v o i d c r e a t i n g new a r e a s

h o u s i n g c l o s e 
                           t o 
                                 t h e 
                                         m a j o r a i r p o r t s where 
                                                                                   a i r c r a f t 
                                                                                                     n o i s e 

0 

i n e v i t a b l y 
                     c o n t i n u e 
                                        t o b e 
                                                    a s e r i o u s 
                                                                        p r o b l e m . 
                                                                                              A d v i c e t o  ^

Planning a u t h o r i t i e s i n Great B r i t a i n on the c o n t r o l of development i n areas which are, or are expected to become affected by a i r c r a f t noise i s already contained i n "Planning and Noise" Department of Environment C i r c u l a r 10/73, Welsh Office C i r c u l a r 16/73 
and S c o t t i s h Development Department Circular 23/73. 

The Government intends to r e a f f i r m and c l a r i f y that advice, p a r t i c u l a r l y with regard to proposals f o r housing development between the UO and 60 NNI contours. 

In the case of e x i s t i n g developments the p o s i t i o n can be r e l i e v e d to some extent by the noise i n s u l a t i o n of b u i l d i n g s . 

Grants f** the i n s u l a t i o n of dwellings are a v a i l a b l e at a number of a i r p o r t s . 

The noise i n s u l a t i o n grants schemes f o r Heathrow 

*nd Gatwick 
                    closed 
                            at the end of 1977, 
                                                     and the Government 

intends to consider what f u r t h e r measures are necessary.  

## Access

Airports are major t r a f f i c **generators and questions of**  
r o a d and r a i l **access f i g u r e d prominently i n the consultations**  
Some of those consulted argued against s i g n i f i c a n t 
* £ a n 8 i o   at e x i s t i n g a i r p o r t s on the grounds that these could n
8
lead **to**  

0 0  congestion on the approach roads and a l s o that **t h i s**  
give r i s e to inconvenience and l o s s of amenity **i n the**  
8  a f f e c t e d . 
These **are important considerations and are**  
r e f l e c t e d i n the strategy set out i n the f o l l o w i n g **Section.** Generally, however, the country's a i r p o r t s are w e l l **served ^y**  
the e x i s t i n g and p r e s e n t l y planned motorway **and trunk road**  
o r  
network and the f u r t h e r development of a i r p o r t s envisaged f
 
0 1 1 
the 1980s should not c a l l f o r d i s p r o p o r t i o n a t e expenditure new works. 

In p a r t i c u l a r , completion of the M25, which has been accorded p r i o r i t y to provide an adequate route around London, w i l l not only help industry and commerce and relieve r e s i d e n t i a l areas of heavy t r a f f i c , but w i l l a l s o serve, and l i n k , London
1s two main a i r p o r t s at Heathrow and Gatwick. 

73 
There were also representations that c e n t r a l **Government**  
3 
 
funds should be s p e c i f i c a l l y a v a i l a b l e f o r road improvement around those a i r p o r t s , p a r t i c u l a r l y Heathrow and Gatwick, 
^ 
 

e
   
  S 
        

have a more than purely l o c a l f u n c t i o n . 
                                           Under the 
                                                      p o l i c i

                                                                                          1V
set out i n the Transport P o l i c y White Paper, the Government  

continue to give p r i o r i t y to improving those routes to the  

major ports and other i n d u s t r i a l areas which c a r r y a high  

proportion of i n d u s t r i a l t r a f f i c . 
                                     Within these p o l i c i e s  

0 
    

Government recognises the need f o r adequate access to a i r P

which are important to the country's i n t e r n a t i o n a l trade  

balance of payments. 

The Government w i l l take t h i s **into**  
account i n considering schemes f o r roads f o r which i t i s 
 
responsible. 

As f a r as l o c a l transoort i s concerned howe"^
1"  
o x  
i t must be f o r the l o c a l a u t h o r i t i e s to assess t h e i r **p n**  
6 1 1 
 
i n cases where, as a r e s u l t of a i r p o r t expansion, imorovefli r 
 
to l o c a l roads are thought d e s i r a b l e , and to make any apP
Provision i n t h e i r Annual Transport P o l i c i e s and **Programmes,**  

0
  n  the 
                      assessment of which the d i s t r i b u t i o n of Transport 
                                                                                                                                                                                                    

S u - ) : ) i e m e n t a r y Grant to 
County Councils i n 
England and Wales 
 
based.  

7k 
         i t 
                ,as argued that improvements to p u b l i c transport 
                                                                                                                      to 

airports eould ease p o s s i b l e problems with road aoeess p a r t i c u l a r ­ ly at 
       the 
             times when workers are t r a v e l l i n g t o 
                                                                   and from the airports. 
            The Government agrees that i t i s 
                                                 d e s i r a b l e 
                                                            t o 
                                                               make 

the best use 
             of 
                 p u b l i o t r a n s p o r t . 
                                       Indeed, with the completion of the 
          P i c c a d i l l y Line extension l i n k i n g Heathrow d i r e c t to the 

London Transport underground system, and 
                                           with the improvements 

^ the 
       Gatwick r a i l s e r v i c e s , these two a i r p o r t s w i l l be w e l l 

served by r a i l . 
                   During the 
                                c o n s u l t a t i o n 
                                              process there were 

suggestions f o r an a d d i t i o n a l r a i l l i n k to 
                                                 Heathrow, f o r r a i l 

services f o r Stansted and Luton and r a i l l i n k s to other a i r p o r t s 

d e l u d i n g Edinburgh and Prestwick. 
                                                                   The commercial f e a s i b i l i t y 

of such p o s s i b i l i t i e s must be i n i t i a l l y f o r B r i t i s h R a i l to 

consider. 
            other suggestions f o r improved a i r p o r t bus s e r v i c e s , 

d e l u d i n g s e r v i c e s 
                                  to 
                                       main l i n e r a i l w a y s t a t i o n s are matters 

f o r the 
                                   operators concerned together with the l o c a l a u t h o r i t i e s 

a*d t h e i r Transport P o l i c i e s and 
                                         Programmes. 
                                                          There w i l l be a 

continuing need f o r a i r p o r t a u t h o r i t i e s and p u b l i c transport 

A e r a t o r s to 
                      work c l o s e l y together to co-ordinate interchange 

f a c i l i t i e s , 
                                                     i n v o l v i n g a i r , r a i l and 
                                                                                                                                                                      bus s e r v i c e s and the 

p
  r
    o v i 8 i o n of t r a v e l information. 

75 
      F i n a l l y , proposals were made f o r the use of long distance  

r a i l s e r v i c e s to promote the d i v e r s i o n of t r a f f i c from the  

London a i r p o r t s to a i r p o r t s outside the South East. 
                                                       B i n n i n g ^ 

a i r p o r t , with a r e c e n t l y constructed s t a t i o n on the main l i n e  

from Euston s e r v i n g the a i r p o r t and the National E x h i b i t i o n  

e 
     

Centre, was suggested f o r development i n t h i s context, and ther

were also suggestions f o r a r a i l connection to East Midlands  

a i r p o r t from the St Pancras-Nottingham l i n e . 
                                                                                            A r e l a t i v e l y

 
  1 0 l l*  

r a i l t r i p to an a i r p o r t might he acceptable i n cases where the  

r a i l journey i s i n much the same d i r e c t i o n as that of the onv/ard movement by a i r , and where the a i r passenger has an  

e a s i l y a c c e s s i b l e main l i n e railway s t a t i o n . 
                                                                                           But t r a v e l i s expensive and future supplies of energy and p a r t i c u l a r l y o i l  

e I*  

are uncertain. 
                 Transport systems which would involve consi^

able "dead mileage" as w e l l as l o s s of time through the  

i n t r o d u c t i o n of a d d i t i o n a l inter-modal changes, do not make  

Aft  

sense. 
         Because the majority of a i r t r i p s from t h i s 
                                                        country 

to the South, the Government does not b e l i e v e , therefore, t h ^ 

there i s much scope f o r re-routeing genuine London area 

demands through a i r p o r t s that are located at s u b s t a n t i a l 

distances to the north. 
                          Aa f a r as the 1980s are concerned, * 

i s u n l i k e l y that r a i l transport to a i r p o r t s w i l l play a s i g

1
  1 ^ 

cant r o l e except at Heathrow and Gatwick and, to a smaller 

extent, at Birmingham. 

## Planning

76 
In the course of the consultations there were **r e p r e s e n t**  
t i o n s p a r t i c u l a r l y from within the South **East, that a i r p o r t**  

developments should not 
                        he allowed to 
                                       cut 
                                           across the p r o v i s i o n s 
                                                                   

of regional planning s t r a t e g i e s and development plons. 
                                                                         The 
                                                                                   

Government b e l i e v e s that, while major i n f r a s t r u c t u r e items **such** as a i r p o r t s can r a i s e c o n f l i c t s of i n t e r e s t between **l o c a l**  
regional and n a t i o n a l requirements, ways have to be found of 
 

r e c o n c i l i n g these d i f f e r e n t i n t e r e s t s . 
                                                                                   This has 
                                                                                                     been one 
                                                                                                                       of 
                                                                                                                              

the purposes of 
                   the c o n s u l t a t i o n s and 
                                                of the r e s u l t i n g a i r p o r t s  

strategy.  

77

 
   Many of 
          the 
              land-use planning consequences of large scale  

airport expansion r e s u l t from the 
                                     employment o p p o r t u n i t i e s  

provided by an a i r p o r t and i n 
                                  a i r p o r t r e l a t e d a c t i v i t i e s and  

l o c a l s e r v i c e s . 
                                    The prospects of a d d i t i o n a l employment have  

been welcomed at a i r p o r t s i n 
                               the 
                                   A s s i s t e d Areas. 
                                                       Indeed, from most areas of the country, i n c l u d i n g the 
                                            London area, 
                                                           there 
                                                                   

^ s r e c o g n i t i o n of 
                                the 
                                       b e n e f i t s which increased, secure a i r p o r t  

employment could b r i n g . 
                           But the 
                                   burden of 
                                              many of 
                                                       the 
                                                           

representations, p a r t i c u l a r l y from the 
                                         South East, was that demands f o r housing induced by major a i r p o r t expansion would  

threaten v i l l a g e s and valued areas of countryside, many of them  

j o y i n g 
            t
             h
                 p r o t e c t i o n afforded by Green B e l t p o l i c i e s .  
               e ?8  

R e f l e c t i n g these considerations, the Government^ a i r p o r t  

t^ategy
                important objective the growth of t r a f f i c at  
       n
        a
         a
            
           a
            s
              
             a
               n 

Sele  

cted r e g i o n a l a i r p o r t s and p a r t i c u l a r l y at a i r p o r t s i n the  

o
  e
     a  Areas. 
                                              However, the 
                                                                                              London area a i r p o r t s w i l l  

ttixiue through the 
                          1980s to 
                                      c a t e r f o r 
                                                     the 
                                                          greater part of 
                                                                                the 
                                                                                       

n a t i o n a l demand f o r a i r t r a v e l . 
                                                                  During the consultations  

concern was expressed that the e x i s t i n g a i r p o r t s i n the South  

East would expand more or l e s 3 i n d e f i n i t e l y , exacerbate  

environmental problems and congestion, and cause serious  

d i f f i c u l t i e s f o r the l o c a l a u t h o r i t i e s responsible f o r planning  

and s e r v i c i n g the areas a f f e c t e d . 
                                          U n c e r t a i n t i e s about the  

precise ways i n which a large and complex f a c i l i t y such as an  

a i r p o r t may be used and operated i n the f u t u r e can never be  

e n t i r e l y eliminated. 
                                             However, the Government b e l i e v e s that  

i t s strategy with i t s acceptance of l i m i t a t i o n s on the number  

and size of terminal to be b u i l t at p a r t i c u l a r a i r p o r t s , w i l  
                                                                    l  

meet the s i t u a t i o n .  

79
 
As regards procedures f o r c o n t r o l l i n g the **development** of 
a i r p o r t s , many l o c a l a u t h o r i t i e s and amenity groups i n the South East expressed d i s s a t i s f a c t i o n at the extent of the 
developments which the BAA i s permitted to carry out at i t s 
a i r p o r t s under the Town and Country Planning General 
Development Order 
1977 
and the Town and Country Planning 
(General Development) (Scotland) Order 1975* 
The Government recognises the e f f o r t s which the BAA makes to inform, consul^ 
e and respond to l o c a l i n t e r e s t s . 

Nevertheless, i t accepts t h l o g i c of the argument that the present provisions of the a General Development Order were framed before the advent of ^
1  
1 
a i r c r a f t and when runways were regarded as the main d e t e n n i ^
of a i r p o r t capacity whereas passenger and cargo terminals ha v^ 
now emerged as s i g n i f i c a n t f a c t o r s . 

The Government, which intends that c o n t r o l over the p r o v i s i o n of major new terminal capacity should he a feature of i t s a i r p o r t strategy, i s 
1 
carrying out a general review of the s t a t u t o r y undertakers Provisions i n the General Development Order. 

In the course of this i t w i l l he d i s c u s s i n g with the BAA and the l o c a l authority a s s o c i a t i o n s modifications designed to b r i n g under normal planning c o n t r o l the p r o v i s i o n by the BAA of major Passenger and cargo terminal b u i l d i n g s . 

In the meantime, the Secretary of State f o r the Environment, has made a d i r e c t i o n under a r t i c l e h of the General Development Order making i t necessary f o r the BAA to seek s p e c i f i c planning permission f o r proposal to b u i l d a f o u r t h terminal at **Heathrow.**  
SO 
There was some c r i t i c i s m i n the course **of the c o n s u l t a t i o n s**  
**out the s i t u a t i o n at l o c a l a u t h o r i t y owned a i r p o r t s where **the**  
l Q o a l planning a u t h o r i t y could have **a d i r e c t i n t e r e s t i n any**  
deposed development. 

The Government i s s a t i s f i e d , **however,**  
tfcat the s t a t u t o r y planning arrangements governing **l o c a l**  
a u t h o r i t i e s ' own development proposals provide **adequate**  
a afeguards and are operating e f f e c t i v e l y .  
Thus a l l the main a i r p o r t developments **provided f o r i n the**  
trategy w i l l be subject to s t a t u t o r y planning **procedures.**  
S
e  allow f o r p u b l i c i n q u i r y i n cases where t h i s i s **j u s t i f i e d**  
a**nd th**  
ne Secretary of State f o r the Environment has already  
ann  
unced h i s i n t e n t i o n to hold such an i n q u i r y into the BAA
fs  
proposed Heathrow f o u r t h terminal. 

The Government **believes**  
that a i r p o r t s , as important p u b l i c transport f a c i l i t i e s **and**  
5  
sources of employment, should be treated as i n t e g r a l component of r e g i o n a l s t r a t e g i e s and of l o c a l a u t h o r i t i e s
1 plans. 

Thej 
 
cannot be regarded as developments to be accommodated, i  
f 
 
p o s s i b l e , only a f t e r other planning considerations **have been**  

                                                                                                                                                                                                   o
                                                                                                                                                                                                      r 
                                                                                                                                                                                                        
met, nor can they be imposed on communities without regard  
                                                                                                                                                                                               f 

the implications f o r the l o c a l i t y . 
                                      With t h i s i n mind the  

Government^ 
            objective i s to seek to improve the arrangements  

f o r c o n s u l t a t i o n over the development of a i r p o r t s p o l i c y witn  

the l o c a l planning a u t h o r i t i e s and the a v i a t i o n i n t e r e s t s .  

## Section Hi A National Airpootg System Introduction

82 
Having e s t a b l i s h e d the framework f o r a n a t i o n a l a i r p o r t s 

strategy i n 
            S e c t i o n 1, i t 
                            i s 
                               necessary to r e l a t e t h i s to 

individual a i r p o r t s , taking account of the 
                                              demand described i n 

Section 2 and the environmental considerations o u t l i n e d i n 
 
Section 3. 

83 
     one of the 
                    main lessons to 
                                         be l e a r n t from the R o s k i l l 

Commission on the t h i r d London a i r p o r t i s 
                                            the need f o r caution 

in the planning of a i r p o r t s capacity. 
                                                     While the growth of a i r 

transport has now resumed, f o l l o w i n g the r e c e s s i o n of the l a s t 

few years,
                            
                            t 
                                    decisions which f o l l o w r e l a t e to the short and 
                               h
                                  e 

"Wdium term up to the l a t e 1980s. 
                                        I t w i l l be necessary to  

give f u r t h e r c o n s i d e r a t i o n to the longer term requirements  

especially f o r 
               the 
                    London area, but a l s o more widely i n  

c o - o p e r a t i o n with l o c a l planning a u t h o r i t i e s .  

## T H E  London Area Airports

J-nere are four main a i r p o r t s i n 
                                                the 
                                                      London area: 
                                                                            Heathrow 

D
  y 
        1978, when e x i s t i n g redevelopment work i s completed, 

a
  v
     e  a capacity of 30 m i l l i o n passengers a year; 
                                                                                                                                                                                  Gatwick 

n t h 
       £ 
           0 

capacity of 16 m i l l i o n passengers when r e b u i l d i n g 
                                                     i s 

aed i n 1978; 
                 Stansted capable of handling 1 m i l l i o n 

8 e r*gers and Luton with a capacity of 
                                                                                                                                                      3 m i l l i o n passengers a 

y
   e
      a  r . 
                              H 
                                Heathrow, Gatwick and Stansted are 
                                                                                                                                                                                         owned and operated 

by the B r i t i s h A i r p o r t s Authority, while Luton i s owned by 
 
the Luton Borough C o u n c i l . 

There are other **a i r p o r t s i n the**  
London area, including Southend, but the Government does **not**  

consider that any of 
                      these can make any major c o n t r i b u t i o n 
                                                             to the handling of 
                   a i r transport movements though, as i s explained  

i n paragraphs 
                               -/%""/ 
                                         , 
                                            some of 
                                                           them are expected to f u l f i l 
                                                                                                               an 
                                                                                                                      

important r o l e as 
                  short haul and general a v i a t i o n a i r p o r t s .  

85 
     The e x i s t i n g main a i r p o r t s i n the London area are 

geographically conveniently grouped round the c a p i t a l and 
                                                           well 

placed i n r e l a t i o n to 
                      the e x i s t i n g and developing trunk road 

and motorway network. 
                               A d d i t i o n a l l y , Gatwick i s d i r e c t l y served 

by the B r i t i s h R a i l l i n e to Central London and, with the 

completion of 
              the P i c c a d i l l y l i n e extension i s connected to the extensive London Transport underground system. 
                                                   Movement 

between a l l Tour a i r p o r t s , and e s p e c i a l l y between Heathrow and 

Gatwick, w i l l be f a c i l i t a t e d when the 1125, which i s r e c e i v i n g 

top p r i o r i t y , i s completed. 
                                               i a c h of 
                                                            the a i r p o r t s i s capable 

of expansion so 
                    that together they could meet the f o r e c a s t a i r 

t r a f f i c demand i n the 1980s. 
                                                              Hence the London area a i r p o r t s 

of Heathrow, Gatwick, Stansted and Luton should be 
                                                                capable 
                                                                         of 

development, during the 1980s, as 
                                  a single category A gateway 

i n t e r n a t i o n a l a i r p o r t s system. 
                                                              The 
                                                                      capacity of about 50 

m i l l i o n passengers a year which w i l l be a v a i l a b l e at 
                                                                                                       these 

a i r p o r t s from 1973 should be s u f f i c i e n t to 
                                                                                     cater f o r demand 

into the early l.)80s, but t h i s w i l l require some r e d i s t r i b u t i o n 

of t r a f f i c among the a i r p o r t s and a c l e a r e r d e f i n i t i o n of the 

roles of 
         the four a i r p o r t s . 

86 
     The most 
                 i m m e d i a t e 
                              o b j e c t i v e 
                                            is 
                                               t o 
                                                   b u i l d up t r a f f i c 
                                                                          a t 

Gatwick t o 
           u s e 
                t h e 
                     e x t e n s i v e 
                                new f a c i l i t i e s 
                                                  now 
                                                       n e a r i n g 

c o m p l e t i o n a t 
                          t h a t 
                                      a i r p o r t . a n d t o 
                                                                   r e l i e v e 
                                                                                   t h e 
                                                                                            s e r i o u s 
                                                                                                            c o n g e s t i o n 

which i s 
           e x p e c t e d a t 
                           H e a t h r o w f r o m a b o u t 
                                                     1 9 8 1 . 
                                                                The 
                                                                      S e c r e t a r y 

of S t a t e 
              f o r 
                    T r a d e a n n o u n c e d 
                                               t h e 
                                                      G o v e r n m e n t s 
                                                                            p o l i c y f o r 
                                                                                                t h e 

t r a n s f e r 
                  o f 
                         s e r v i c e s 
                                             f r o m H e a t h r o w t o 
                                                                                   G a t w i c k o n 5 A p r i l 
                                                                                                                               1 9 7 7 . 

T h i s p o l i c y , 
                          w h i c h 
                                       i s 
                                              c r u c i a l t o 
                                                                      t h e 
                                                                              a c c o m m o d a t i o n 
                                                                                                             o f 
                                                                                                                    a i r 

t r a f f i c 
                i n t h e 
                                L o n d o n a r e a 
                                                           a t 
                                                                  s t a n d a r d s 
                                                                                         w h i c h a i r 
                                                                                                                p a s s e n g e r s 

should e x p e c t , 
                 r e q u i r e s 
                           t h e 
                                f u l l 
                                      c o - o p e r a t i o n 
                                                      o f 
                                                         t h e 
                                                              a i r l i n e 

o p e r a t o r s , 
                       f o r whom t h e 
                                                    f a c i l i t i e s 
                                                                             have b e e n p r o v i d e d , 
                                                                                                                           a n d 
                                                                                                                                     o f 

the o t h e r 
               a v i a t i o n 
                               a u t h o r i t i e s 
                                                    c o n c e r n e d . 
                                                                          T h e n e e d 
                                                                                          f o r f l e x i b i l i t y 
                        h a s b e e n e m p h a s i s e d 
                                                                    e a r l i e r , 
                                                                                        b u t 
                                                                                                 w i t h i n t h i s 
                                                                                                                            m u l t i 

a i r p o r t 
                s y s t e m t h e 
                                        G o v e r n m e n t e n v i s a g e s 
                                                                                       t h a t 
                                                                                                  i n g e n e r a l 
                                                                                                                           t e r m s 

Heathrow a n d G a t w i c k w i l l 
                                      d e v e l o p 
                                                   as 
                                                       t h e 
                                                             two 
                                                                   m a j o r 
                                                                             i n t e r n a t i o n a l 

a i r p o r t s f o r 
                          s c h e d u l e d 
                                                s e r v i c e s , 
                                                                      t h a t 
                                                                                 t h e 
                                                                                          p r i n c i p a l r o l e 
                                                                                                                            f o r 

S t a n s t e d 
                  w i l l b e 
                                    f o r 
                                              t h e 
                                                      h a n d l i n g o f 
                                                                                  l o n g 
                                                                                             r a n g e 
                                                                                                           c h a r t e r 
                                                                                                                              s e r v i c e s 

which a r e most 
                    s u i t e d 
                             t o 
                                  t h e 
                                       a i r p o r t ' s 
                                                     f a c i l i t i e s , 
                                                                       a n d 
                                                                             t h a t Luton w i l l 
            c o n t i n u e 
                      t o 
                          h a n d l e 
                                  s h o r t 
                                         a n d medium r a n g e 
                                                              c h a r t e r 

f l i g h t s , 
                   b u t 
                             i n f u t u r e 
                                                    c o n c e n t r a t i n g 
                                                                                      i n c r e a s i n g l y 
                                                                                                                     on 
                                                                                                                             p a s s e n g e r s 

from t h e 
          S o u t h E a s t 
                       o f 
                           E n g l a n d . 
                                        I f 
                                            L u t o n B o r o u g h C o u n c i l 
                                                                       a n d 

the BAA were 
            t o a g r e e 
                      t o 
                         a t r a n s f e r 
                                    o f 
                                        o w n e r s h i p 
                                                  o f 
                                                     L u t o n 

a i r o o r t t h i s 
                           w o u l d a s s i s t 
                                                       t h e 
                                                                BAA i n e x e r c i s i n g 
                                                                                                        i t s 
                                                                                                                 m a j o r 

e x e c u t i v e a n d c o - o r d i n a t i n g 
                                                           r o l e 
                                                                      i n 
                                                                            the 
                                                                                     d e v e l o p m e n t 
                                                                                                               o f 
                                                                                                                      t h e London a i r p o r t s 
                  s y s t e m . 

## Heathrow

37 
H e a t h r o w i s t h e l a r g e s t i n t e r n a t i o n a l a i r p o r t i n t h e w o r l d 

and i t has "been 
                  an 
                      important f a c t o r i n the development 
                                                               of 

B r i t i s h c i v i l a v i a t i o n since the Second World War. 
                                                                                                        I t plays 

a major r o l e i n the country's trade and commerce and i n i n t e r ­

n a t i o n a l tourism; and 
                                             i t provides d i r e c t l y over 50,000 jobs. 

Against t h i s background the c o n s u l t a t i o n document put forward, 

as an 
       option f o r the 1980s, a scheme aimed at r e a l i s i n g 

Heathrow

fs f u l l p o t e n t i a l as 
                                                               a p o s s i b l e f i v e terminal a i r p o r t . 

This would involve the a c q u i s i t i o n , by 
                                          the BAA, of a d d i t i o n a l land between the runways at Perry Oaks a t 
                                             the western end 
                                                             of 

the a i r p o r t and the replacement of the important sewage sludge 

d i s p o s a l f a c i l i t i e s at 
                                            present l o c a t e d on 
                                                                                  t h i s land. 

88 
     The 
         Government has considered c a r e f u l l y the representations 

which have been made both f o r and against t h i s p r o j e c t , which 

would increase the capacity of the a i r p o r t to 
                                               over 50 m i l l i o n 

passengers a year. 
                     Heathrow occupies a r e s t r i c t e d s i t e which 

i s markedly smaller than that of most other i n t e r n a t i o n a l 

a i r p o r t s though these handle s i g n i f i c a n t l y l e s s t r a f f i c . The 

Government does not consider that i t would be 
                                               f e a s i b l e 
                                                       to 

handle s a t i s f a c t o r i l y such a volume of 
                                        t r a f f i c at Heathrow 
                                                             or 

to provide, at 
                 a reasonable cost, adequate road, and p o s s i b l y 

r a i l , access. 
                                F i n a l l y , and although even with such a develop­

ment the l e v e l of noise disturbance could be expected t o improve c o n s i s t e n t l y and s i g n i f i c a n t l y over the years, noise disturbance at Heathrow w i l l remain worse than at any other a i r p o r t i n the United Kingdom. 

The p r o v i s i o n of a f i f t h terminal would reduce to some degree the improvement i n noise disturbance which those who l i v e i n the Heathrow area might o t h e r w i s e be e n t i t l e d t o e x p e c t a n d c a s t d o u b t on t h e c o n t i n u e d p r a c t i c a b i l i t y o f t h e p o l i c y o f runway a l t e r n a t i o n . 

&9 
I n t h e l i g h t o f t h e s e c o n s i d e r a t i o n s , t h e G o v e r n m e n t c o n c l u d e d t h a t H e a t h r o w
1 s u l t i m a t e d e v e l o p m e n t s h o u l d n o t go b e y o n d t h a t o f a f o u r t e r m i n a l a i r p o r t ; 
a l e v e l o f e x p a n s i o n w h i c h , a s was e x p l a i n e d when the G o v e r n m e n t a n n o u n c e d , i n J u l y 1974, t h e c a n c e l l a t i o n o f t h e M a p l i n P r o j e c t , was c a l l e d f o r w h e t h e r o r n o t M a p l i n w e r e b u i l t . 

The B A A c u r r e n t l y p r o p o s e s t o b u i l d a f o u r t h t e r m i n a l o n the s o u t h s i d e o f H e a t h r o w . 

T h i s p r o p o s a l f i g u r e s i n t h e B A A * 8 M a s t e r P l a n f o r H e a t h r o w , p u b l i s h e d i n M a r c h 
1976, a * i d was t h e s u b j e c t o f a B a c k g r o u n d N o t e , u p o n w h i c h t h e l o c a l p l a n n i n g a u t h o r i t i e s were c o n s u l t e d i n J a n u a r y 1977. 

As a l r e a d y s t a t e d , i n p a r a g r a p h 81, t h i s p r o p o s a l w i l l b e the s u b j e c t o f a p u b l i c i n q u i r y . 

## S S ^ W I C K

9 
0 
W i t h t h e c o m p l e t i o n o f e x i s t i n g w o r k s n e x t y e a r , Gatwick w i l l h a v e a c a p a c i t y of 16 m i l l i o n p a s s e n g e r s a y e a r  
. 

The a i r p o r t f s s i n g l e r u n w a y p r e s e n t s a n e f f e c t i v e C
0 * s t r a i n t on t h e n u m b e r o f a i r t r a n s p o r t movements a n d h e * c e on t h e e x t e n t t o w h i c h G a t w i c k m i g h t b e d e v e l o p e d , but as the c o n s u l t a t i o n document explained, the capacity 
 
of the single runway should be s u f f i c i e n t to sustain **the** t r a f f i c from a second terminal which would r a i s e **the** capacity of Gatwick to 25 m i l l i o n passengers a **year.**  
91 
During the course of the consultations doubts **were**  
expressed about the p r a c t i c a b i l i t y of handling t h i s **volume**  
of t r a f f i c with a single runway; 
about the **d i f f i c u l t i e s**  
which would be involved i  
f the runway had to be **closed;**  
and about the problem of runway maintenance. 

There **i s**  
at present no a i r p o r t i n the world which i s **handling** a  
throughput of about 25 m i l l i o n passengers a year o f f a 
 
single runway. 

Indeed, there are very few a i r p o r t s **with**  
t h i s amount of t r a f f i c . 

However, t h e B r i t i s h **A i r p o r t s**  
Authority i s convinced that there are no **o v e r r i d i n g**  
reasons v/hy such l e v e l s of t r a f f i c should **not be accommodated**  
with a s i n g l e runway. 

The runway capacity at **Gatwick**  
w i l l be 160 thousand a i r transport movements per **year**  
and with the i n c r e a s i n g numbers of passengers per **a i r c r a f t**  
expected i n the London area i n the p e r i o d up to 1990 **there**  
i s no reason to suppose that the longer term **u t i l i s a t i o n**  
of two terminals at Gatwick would be i n h i b i t e d by **runway**  
constraints. 

There would remain the p e s s i b i l i t y **that**  
the runway might be obstructed, with the r e s u l t **that the**  
airport would have to be c l o s e d . 

Experience suggests  
that the p r o b a b i l i t y of t h i s happening i s very low, and 
 
for t h i s reason, and recognising that other runways **are**  
available i n the London area, the Government does **not**  
consider that expenditure of £10-20 m i l l i o n **on the**  
Provision of a second runway, which would **be required on**  
only rare occasions, would be j u s t i f i e d . 

As f a r as  
maintenance i s concerned, the B r i t i s h **A i r p o r t s Authority has**  
already c a r r i e d out major **r e p a i r s and r e s u r f a c i n g of the**  
runway at Gatwick **without any i n t e r r u p t i o n to services and**  

there i
         
        0 
         no reason to suppose that t h i s cannot continue.  

92 
    Gatwick i s within an area which was 
                                                   i d e n t i f i e d as a major  

growth area i n the S t r a t e g i c Plan f o r the South East, though  

**ring the c o n s u l t a t i o n s there were representations that there  

could be d i f f i c u l t i e s i n coping with the increased employment  

*nd the growth of road t r a f f i c which could a r i s e i f the BAA went afcead with a second terminal i n the 1980s. 
                                                   The r a i l * l i x * at  

G*twick, which provides a frequent t r a i n s e r v i c e to and from  

V i c t o r i a already o f f e r s a convenient means of transport f o r  

a  iarge p r o p o r t i o n of a i r passengers. 
                                                                                                                                             The Government  

b e l i e v e s 
                  t h a t 
                           t h e 
                                   o p p o r t u n i t y w h i c h t h i s 
                                                                                 a f f o r d s 
                                                                                                 f o r 
                                                                                                         a n 

i n t e g r a t e d 
                      r a i l / a i r 
                                        s y s t e m 
                                                       s h o u l d be 
                                                                           a c t i v e l y 
                                                                                              p u r s u e d b y 

B r i t i s h 
                £ a i l  
                       , 
                           BAA a n d t h e 
                                                   a i r l i n e s 
                                                                      c o n c e r n e d . 

93 
     A s was 
              e x p l a i n e d 
                          i n P a r t 1 o f 
                                         t h e 
                                             c o n s u l t a t i o n 
                                                             d o c u m e n t , 

w h i l e 
            t h e 
                     number o f p e o p l e 
                                                         t r o u b l e d b y 
                                                                                  a i r c r a f t n o i s e 
                                                                                                                  a t 
                                                                                                                        G a t w i c k 

i s 
       o n l y a f r a c t i o n of t h o s e 
                                                                    a f f e c t e d 
                                                                                         a t 
                                                                                                 H e a t h r o w , 
                                                                                                                          n o i s e 

d i s t u r b a n c e 
                        a t 
                              G a t w i c k i s 
                                                    e x p e c t e d 
                                                                       t o 
                                                                             i n c r e a s e 
                                                                                               o v e r 
                                                                                                         t h e 
                                                                                                                  n e x t 
                                                                                                                            few 

y e a r s 
            as 
                  t r a f f i c 
                                   r i s e s 
                                               a t 
                                                     t h e 
                                                             a i r p o r t t o 
                                                                                    u t i l i s e 
                                                                                                     t h e 
                                                                                                             new 

c a p a c i t y 
                  w h i c h w i l l become 
                                                       a v a i l a b l e 
                                                                            i n 1978. 
                                                                                                  By t h e 
                                                                                                                 t i m e 
                                                                                                                            t h e 

s e c o n d 
              t e r m i n a l w o u l d b e 
                                                    r e q u i r e d , 3ome t i m e 
                                                                                              i n t h e 
                                                                                                            m i d 1 9 8 0 s , 

i t 
       i s 
              f o r e c a s t 
                                     t h a t 
                                                 t h e 
                                                           n o i s e 
                                                                          s i t u a t i o n 
                                                                                                   a r o u n d G a t w i c k w o u l d be 

improved and 
             the 
                 a d d i t i o n a l 
                             c a p a c i t y 
                                      e n v i s a g e d would be u n l i k e l y 

to reverse t h i s c o n t i n u i n g 
                                 i m p r o v e m e n t . 
                                                    G o v e r n m e n t p o l i c y 
                                                                           f o r 

r e d u c i n g 
                 d i s t u r b a n c e 
                                         a t 
                                               n i g h t 
                                                           v / i l l 
                                                                     e n s u r e 
                                                                                   t h a t 
                                                                                            t h e 
                                                                                                    g r o w t h 
                                                                                                                   o f 

t r a f f i c 
                a t 
                      G a t w i c k w i l l n o t b e 
                                                                a c c o m p a n i e d b y a g r o w t h o f 
                                                                                                                         n i g h t 

d i s t u r b a n c e . 

94 
     I n t h e 
             l i g h t 
                    o f 
                       t h e s e 
                              c o n s i d e r a t i o n s 
                                               t h e 
                                                    G o v e r n m e n t 
                                                                s e e s 

no o b j e c t i o n 
                       t o 
                            the 
                                   B A A b r i n g i n g f o r w a r d f o r e x a m i n a t i o n 
                                                                                                    t h r o u g h 

t h e 
        a p p r o p r i a t e p l a n n i n g p r o c e d u r e s 
                                                                              p r o p o s a l s 
                                                                                                   f o r 
                                                                                                             t h e 
                                                                                                                      d e v e l o p i n g 

o f 
       G a t w i c k d u r i n g t h e 1980s a s 
                                                                        a two 
                                                                                       t e r m i n a l a i r p o r t w i t h 
                                                                                                                                           a n 

u l t i m a t e 
                  c a p a c i t y 
                                    o f 
                                          a r o u n d 25 m i l l i o n p a s s e n g e r s a 
                                                                                                           y e a r . 

## S T A N S T E D

95 
     For 
         various reasons, i n c l u d i n g the 
                                               c o l l a p s e of r e s i d e n t a i r l i n e s , the e x i s t i n g terminal f a c i l i t i e s at Stansted, which 

have s u f f i c i e n t capacity to 
                              handle 1 m i l l i o n passengers 
                                                              a year, have been very much under u t i l i s e d i n 
                                         recent years. 
                                                            Over 

time t h i s surplus capacity w i l l be brought into use. 
                                                             Part 1 

of the 
       c o n s u l t a t i o n document considered two p o s s i b l e l e v e l s of 

further development f o r 
                          the 
                              1960s: to k m i l l i o n passengers 
                                                                 a ^ a r , which would involve an extension of 
                                                                       the 
                                                                             e x i s t i n g terminal 

and associated f a c i l i t i e s , and 
                                   to 
                                      16 m i l l i o n passengers 
                                                                a year, 

"hlch would reproduce at Stansted the 
                                          l e v e l of 
                                                    development now 

^ i n g provided at Gatwick. 

Both these developments would be 

contained within the e x i s t i n g boundaries 
                                            of 
                                               the 
                                                    a i r p o r t and 

*ould not involve any f u r t h e r runway development. 

## 96

D u r i n g t h e c o n s u l t a t i o n s t h e r e was a good d e a l o f l o c a l 
^ P o s i t i o n t o , b u t a l s o some s u p p o r t f o r , t h e d e v e l o p m e n t o f St; 
t
$tan^
t e a - 
The o p p o s i t i o n c o n c e n t r a t e d o n t h r e e i s s u e s . 

Pi: 
r s t * 
t h a t e a r l i e r i n q u i r i e s h a d c o n c l u d e d t h a t S t a n s t e d s h o u l d t be d e v e l o p e d ; 
s e c o n d l y , t h a t a d d i t i o n a l n o i s e d i s t u r b a n c e W o u i n 
^ 
D 
e u n a c c e p t a b l e i n a n a t t r a c t i v e r u r a l e n v i r o n m e n t ; 
a n d i r d l y , t h a t e x p a n s i o n w o u l d c o n f l i c t w i t h t h e s t r a t e g i c p l a n f 0 Jl a. i n e S o u t h E a s t o f E n g l a n d a n d t h e g e n e r a l p l a n n i n g o b j e c t i v e s of  
t h n e l o c a l a u t h o r i t i e s . 

T h e e a r l i e r i n q u i r i e s a n d t h e R o s k i l l M i s s i o n were c o n c e r n e d w i t h t h e p r o v i s i o n o f a m a s s i v e new a i P O l * t a t S t a n s t e d , i n v o l v i n g t h e a c q u i s i t i o n o f a d d i t i o n a l land  
f n 
 
x o r  
t h e a c c o m m o d a t i o n o f f o u r r u n w a y s and c a p a c i t y f o r up t o 
50 
m i l l i o n p a s s e n g e r s a y e a r . 

What was c o n s i d e r e d i n t h e c o n s u l t a t i o n document was a much more modest d e v e l o p m e n t w h i c h b o r e l i t t l e r e s e m b l a n c e t o the p r o j e c t w i t h w h i c h t h e R o s k i l l C o m m i s s i o n was c o n c e r n e d . 

The s u p p o r t f o r some e x p a n s i o n o f t h e a i r p o r t e m p h a s i s e d two p o i n t s : 
t h e n e e d t o u s e more e f f e c t i v e l y t h e r e s o u r c e s a v a i l a b l e a t , a n d t h e p o t e n t i a l o f , t h e a i r p o r t ; 
a n d t h e m a i n t e n a n c e o f e x i s t i n g e m p l o y m e n t a n d t h e a d d i t i o n a l j o b s w h i c h w o u l d b e p r o v i d e d . 

97 
I n r e l a t i o n t o a i r c r a f t n o i s e d i s t u r b a n c e , S t a n s t e d i s p e r h a p s one o f t h e most s a t i s f a c t o r y e x i s t i n g a i r p o r t s i n G r e a t B r i t a i n a t w h i c h t o accommodate t h e e x p a n s i o n o f a i r t r a f f i c . 

The c o n s u l t a t i o n document d e m o n s t r a t e d t h a t f e w e r p e o p l e w o u l d b e a f f e c t e d a t S t a n s t e d i n 1990 
w i t h a t h r o u g h p u t o f 
16 
m i l l i o n p a s s e n g e r s t h a n a t a l m o s t a n y o t h e r a i r p o r t i n G r e a t B r i t a i n . 

I t i n d i c a t e d t h a t a r o u n d 2,000 p e o p l e w o u l d b e a f f e c t e d b y n o i s e a t S t a n s t e d i n 1990 
w i t h a t h r o u g h p u t o f 
16 m i l l i o n p a s s e n g e r s a y e a r c o m p a r e d w i t h o v e r 200,000 a t H e a t h r o w w i t h 38 
m i l l i o n p a s s e n g e r s . 

H e r t f o r d s h i r e C o u n t y C o u n c i l , i n t h e i r s u b m i s s i o n o n t h e c o n s u l t a t i o n d o c u m e n t , p r o v i d e d a l t e r n a t i v e e s t i m a t e s o f n o i s e d i s t u r b a n c e a t S t a n s t e d t a k i n g i n t o a c c o u n t t e s t a n d t r a i n i n g f l i g h t s a n d i n c l u d i n g l e s s o p t i m i s t i c a s s u m p t i o n s c o n c e r n i n g t h e r a t e o f i n t r o d u c t i o n o f q u i e t e r a i r c r a f t . 

A s a i r t r a n s p o r t movements i n c r e a s e t e s t and t r a i n i n g f l i g h t s c a n b e e x p e c t e d t o d e c l i n e , b u t i n a n y u S 
c a s e t h e s e a l t e r n a t i v e e s t i m a t e s do n o t a l t e r t h e b a s i c c o n d  
t h a t , i n t e r m s o f a i r c r a f t n o i s e d i s t u r b a n c e , S t a n s t e d h a s 
98 
The Government i s conscious that the development **of an**  
airport i n a p r i m a r i l y r u r a l area could be i n t r u s i v e **and,**  
because of the e x i s t i n g low ambient noise l e v e l , cause **somewhat**  
greater noise disturbance than might be the case i n some **other**  
^ e a s . 

However, as a guide to p u b l i c p o l i c y , the **Government**  
does not accept that because populations surrounding **e x i s t i n g**  
airports may have become accustomed, to some **extent, to high**  

W l  
    8
           i  e  
               , they should be expected to t o l e r a t e the  
      o
       f
         
         n
          0 
             8  

^ P o s i t i o n of yet f u r t h e r noise disturbance. 
                                                                                       The Government  

^ a i d e r s that the p r i n c i p a l c r i t e r i o n should be the numbers  

0 f People expected to be a f f e c t e d by p a r t i c u l a r a i r p o r t  

developments.  

## 99

Stansted i s well s i t u a t e d , access by the M11 
to outer  

o ndon
                    
                   i 8 
                             good and the a i r c r a f t noise s i t u a t i o n i s superior to  

n
   a  t at any other a i r p o r t i n the London area. 
                                                                                                                                                                                                                  Moreover, the  

  ^Port has a good runway and adequate f a c i l i t i e s , a l l 
                                                              of which  
ape  

grossly under u t i l i s e d . 
                            The Government sees no objection  

*
*
 k
  e BAA b r i n g i n g forward proposals to develop the a i r p o r t to  

Ccommodate I4 m i l l i o n passengers a year so that these may 
                                                                                                                                                        be 

a m i n e d through the appropriate planning procedures. 
                                                                                                                                                                                              On the 

Q**ther** h 
nand development of Staasted to a capacity of 16 m i l l i o n 
p a s s e n g e r s a y e a r w o u l d r a i s e w i d e r i s s u e s , i n c l u d i n g m a j o r c h a n g e s i n t h e p l a n n i n g p o l i c i e s f o r t h e a r e a . 

T h e r e f o r e , a s i s e x p l a i n e d l a t e r i n t h i s d o c u m e n t , a m a j o r e x p a n s i o n o f S t a n s t e d w o u l d "be o n l y one o f t h e o p t i o n s t o "be e x a m i n e d t o meet l o n g e r t e r m demand i n t h e L o n d o n a r e a . 

L u t o n 
100 
L u t o n a i r p o r t i s c u r r e n t l y h a n d l i n g a b o u t 
2 m i l l i o n p a s s e n g e r s a y e a r ; 
a l t h o u g h b e f o r e t h e r e c e s s i o n i n a i r t r a v e l t h e t h r o u g h p u t o f t h e a i r p o r t was i n e x c e s s o f 
3 m i l l i o n p a s s e n g e r s . 

W i t h m o d i f i c a t i o n a n d a d d i t i o n s t o t h e e x i s t i n g t e r m i n a l , L u t o n a i r p o r t c o u l d h a n d l e 
5 m i l l i o n p a s s e n g e r s a y e a r . 

T h i s g r o w t h i n t r a f f i c was c o n s i d e r e d i n t h e c o n s u l t a t i o n d o c u m e n t , a l o n g w i t h a m o r e f u n d a m e n t a l r e d e v e l o p m e n t o f t h e a i r p o r t t o i n c r e a s e t h e c a p a c i t y t o 
10 m i l l i o n p a s s e n g e r s a y e a r b y t h e p r o v i s i o n o f a new t e r m i n a l . 

101 
T h e r e was s u p p o r t , n o t a b l y f r o m t h e B e d f o r d s h i r e l o c a l a u t h o r i t i e s , f o r a n e x p a n s i o n o f t h e a i r p o r t ' s c a p a c i t y t o a r o u n d 5 m i l l i o n p a s s e n g e r s a y e a r . 

T h i s was i n f l u e n c e d b y t h e b e n e f i t s w h i c h were s e e n t o f l o w f r o m p o s s i b l e i n c r e a s e s i n a i r p o r t a n d s e r v i c e employment i n a n a r e a t h a t i s h e a v i l y d e p e n d e n t on i n d u s t r i e s a s s o c i a t e d w i t h v e h i c l e m a n u f a c t u r e . 

H o w e v e r , t h e r e was a l s o c o n s i d e r a b l e o p p o s i t i o n , p a r t i c u l a r l y f r o m H e r t f o r d s h i r e , t o a n y i n c r e a s e d u s e o f t h e a i r p o r t m a i n l y on t h e g r o u n d s t h a t t h i s w o u l d g i v e r i s e t o n o i s e p r o b l e m s a n d to demands f o r new h o u s i n g . 

102 
B e c a u s e o f i t s p r e - e m i n e n t r o l e i n h a n d l i n g c h a r t e r f l i g h t s , L u t o n a i r p o r t h a s h a d a g r e a t e r p r o p o r t i o n o f n i g h t f l i g h t s , c o m p a r e d w i t h d a y t i m e f l i g h t s , t h a n o t h e r a i r p o r t s i n the L o n d o n a r e a . 

T h e G o v e r n m e n t h a s a n n o u n c e d i t s i n t e n t i o n s t e a d i l y t o r e d u c e n i g h t t i m e d i s t u r b a n c e a t H e a t h r o w a n d Gatwick. 

I t w o u l d e x p e c t t h e same s i t u a t i o n t o o b t a i n a t Luton. 

G e n e r a l l y , a s i n t h e c a s e o f S t a n s t e d , a i r c r a f t n o i s e at L u t o n a f f e c t s f e w e r p e o p l e t h a n a t o t h e r a i r p o r t s i n t h e London a r e a a n d t h e r e g i o n s . 

A t h r o u g h p u t o f 
5 m i l l i o n passengers a y e a r , w h i c h w o u l d b u i l d up o v e r a p e r i o d , s h o u l d not a f f e c t t h e f o r e c a s t o f a n o v e r a l l i m p r o v e m e n t i n t h e n o i s e s i t u a t i o n , w h i c h b y 1990, s h o u l d b e s i g n i f i c a n t l y b e t t e r t h a n at p r e s e n t . 

103 
The G o v e r n m e n t does n o t c o n s i d e r t h a t L u t o n a i r p o r t i s s u i t a b l e f o r m a j o r d e v e l o p m e n t . 

H o w e v e r , L u t o n i s a n i n t e g r a l part o f t h e L o n d o n a i r p o r t s s y s t e m w i t h i n w h i c h i t f u l f i l s a n important r o l e . 

T h e G o v e r n m e n t h a s c o n c l u d e d t h e r e f o r e t h a t Luton a i r p o r t s h o u l d b e r e s t r i c t e d t o a c a p a c i t y o f 
5 
m i l l i o n passengers a y e a r . 

As p o i n t e d o u t i n p a r a g r a p h 8 6 , t h e t r a n s f e r o f o w n e r s h i p o f t h e a i r p o r t t o t h e B A A w o u l d b e c o n s i s t e n t w i t h i t s r o l e i n t h e L o n d o n a i r p o r t s s y s t e m . 

A d e q u a c y o f p r o p o s e d d e v e l o p m e n t s 
10U 
The d e v e l o p m e n t s o u t l i n e d above w o u l d p r o v i d e t e r m i n a l c a p a c i t y t o h a n d l e a p p r o x i m a t e l y 
72 
m i l l i o n p a s s e n g e r s a y e a r . 

E v e n a t t h e h i g h e s t p a s s e n g e r f o r e c a s t , t h e s e t e r m i n a l d e v e l o p ­
m e n t s s h o u l d b e s u f f i c i e n t t o accommodate demand up t o a n d b e y o n d t h e m i d d l e o f t h e 1980s and q u i t e p o s s i b l y i t c o u l d p r o v e a d e q u a t e up t o 
1990, 
105 
The a b i l i t y o f e a c h a i r p o r t t o u t i l i s e i t s t e r m i n a l f a c i l i t i e s i s a f f e c t e d b y i t s r u n w a y c a p a c i t y t o c a t e r f o r t h e a n t i c i p a t e d number o f a i r t r a n s p o r t m o v e m e n t s . 

A n i m p o r t a n t e l e m e n t i n a s s e s s i m g t h e l e v e l o f a i r c r a f t movements i s a n e s t i m a t e o f t h e a v e r a g e number o f p a s s e n g e r s p e r a i r c r a f t w h i c h d e p e n d s on v a r i o u s f a c t o r s , i n c l u d i n g t h e r a t e o f g r o w t h o f t r a f f i c , t h e f l e e t r e p l a c e m e n t p l a n s o f a i r l i n e s a n d t h e t y p e o f t r a f f i c h a n d l e d . 

T h e most r e c e n t i n d i c a t i o n s a r e t h a t t h C t p r o g r e s s i v e i n t r o d u c t i o n o f t h e l a r g e r a i r c r a f t w i l l b e s l o w e r t h a n p r e v i o u s l y a n t i c i p a t e d w h i c h , w i t h t h e h i g h e r p r o p o r t i o n o f s h o r t h a u l t r a f f i c w h i c h i s now f o r e c a s t , w i l l r e d u c e t h e a v e r a g e number o f p a s s e n g e r s p e r a i r c r a f t e x p e c t e d a t t h e L o n d o n a r e a g r o u p o f a i r p o r t s t o b e t w e e n 150 
a n d 
165 
i n 
1 9 9 0 . 

The l a t e s t e s t i m a t e s o f runway c a p a c i t y a t t h e f o u r 
0 
L o n d o n a i r p o r t s a r e : 
2 7 5 , 0 0 0 a i r t r a n s p o r t movements a t H e a t h r
1 6 0 , 0 0 0 a t G a t w i c k and ^.20,000 a t L u t o n a n d S t a n s t e d c o m b i n e d . 

 
1 
T h e c a p a c i t i e s f o r H e a t h r o w a n d G a t w i c k r e p r e s e n t a r e d u c t i o n t h e e a r l i e r e s t i m a t e s due m a i n l y t o new s t a n d a r d s o f s e p a r a t i o n b e t w e e n a i r c r a f t a r r i v i n g a n d d e p a r t i n g . 

H o w e v e r , e v e n assuming t h a t t h e a v e r a g e number o f p a s s e n g e r s p e r a i r c r a f t i s towards the b o t t o m o f t h i s r a n g e a t e a c h a i r p o r t , runway c a p a c i t y s h o u l d b e s u f f i c i e n t t o accommodate t h e maximum l e v e l s of development e n v i s a g e d i n t h e s t r a t e g y f o r t h e 
1 9 8 0 s . 

106 
The CAA h a s g i v e n f u r t h e r c o n s i d e r a t i o n t o t h e a b i l i t y of the a i r t r a f f i c c o n t r o l s y s t e m t o accommodate a i r t r a f f i c demand, n o t o n l y i n r e l a t i o n t o r u n w a y s , b u t a l s o i n r e s p e c t o f the r o u t e s y s t e m w i t h i n t h e a i r s p a c e s u r r o u n d i n g t h e m a j o r a i r p o r t s a n d t h e r a d i a t i n g a i r r o u t e s . 

T h i s h a s r e v e a l e d no major p r o b l e m s i n h a n d l i n g any o f t h e l i k e l y a i r p o r t c a p a c i t y combinations t h a t m i g h t b e c o n s i d e r e d i n t h e p e r i o d t o 
1 9 9 0 . 

## The L O N G E R T E R M

1
0
7 
I f a i r t r a f f i c c o n t i n u e s t o g r o w , i n t h e l o n g e r t e r m a d d i t i o n a l c a p a c i t y w i l l b e r e q u i r e d . 

No f u r t h e r d e v e l o p m e n t at Heathrow b e y o n d a f o u r t h t e r m i n a l , a t G a t w i c k b e y o n d a second t e r m i n a l , a n d a t L u t o n b e y o n d a s i n g l e t e r m i n a l , i s envisaged. 

F o r t h e l o n g e r t e r m t h e r e f o r e t h e p o s s i b i l i t i e s are a major e x p a n s i o n a t S t a n s t e d ; 
t h e d e v e l o p m e n t o f a n e x i s t i n g m i l i t a r y a i r f i e l d a s a c i v i l a i r p o r t f o r t h e L o n d o n area; 
o r the c o n s t r u c t i o n o f a new a i r p o r t . 

T h e G o v e r n m e n t w i l l , t h e r e f o r e , s e e k a d v i c e o n t h e l o n g e r t e r m p r o v i s i o n o f a i r p o r t s c a p a c i t y , t a k i n g i n t o a c c o u n t t h e n e e d t o i n v o l v e t h e l o c a l a u t h o r i t i e s more c l o s e l y i n t h e i d e n t i f i c a t i o n o f a v a i l a b l e o p t i o n s . 

## Costs

108 
The former Maplin strategy was based on the **completion**  
of a f o u r t h terminal at Heathrow and the opening of the **f i r s t**  

phase of the 
             Maplin development i n 
                                    the e a r l y 1980s, 
                                                       This would have made a second terminal at Gatwick unnecessary and  

would have made p o s s i b l e the closure of Stansted and Luton  

to a i r transport movements. 
                                            The present strategy w i l l r e l y  

on a second Gatwick terminal together with Stansted and Luton to provide capacity f o r some 18 m i l l i o n passengers a year,  

equivalent to the capacity which would have been provided by  

b u i l d i n g one of Maplin*s runways and two of i t s proposed 
 
terminals.  
109 
The c a p i t a l cost, exclusive of i n t e r e s t charges, involved i n providing a runway and two terminals at Maplin would have been £680 m i l l i o n based on estimates given i n the Maplin Review updated to end-1976 p r i c e s . 

This would cover the r e l o c a t i o n of the Defence Establishments and land reclamation as w e l l as 

the costs of 
             new a i r p o r t f a c i l i t i e s . 
                                       On the 
                                               same b a s i s , using 

updated costs given i n 
                       the c o n s u l t a t i o n document, the present 

strategy costs f o r Gatwick, Stansted and Luton would be about 

£150 
      m i l l i o n . 110 
       A d d i t i o n a l l y , Maplin on a remote and i n a c c e s s i b l e s i t e 

some 50 miles from London would have had l i t t l e chance of 

success unless i t were provided at the outset with a motorway 

l i n k a t l e a s t 
                             t o 
                                   t h e 
                                           M25 
                                                    a n d w i t h 
                                                                        a h i g h - s p e e d 
                                                                                                    r a i l w a y . 

T h e s e , 
              w i t h 
                          l o c a l 
                                       r o a d a n d r a i l 
                                                                       c o n n e c t i o n s , 
                                                                                                    w o u l d h a v e 
                                                                                                                              c o s t 

about £ 1 * 1 0 m i l l i o n a t end-1976 p r i c e s . 
                                                                  T h e c o s t s 
                                                                                   o f 
                                                                                        a n y 
                                                                                               r o a d 

a n d r a i l 
                                   i m p r o v e m e n t 
                                                                                     schemes 
                                                                                                                       t h a t 
                                                                                                                                            m i g h t b e 
                                                                                                                                                                                  c a l l e d 
                                                                                                                                                                                                               f o r 
                                                                                                                                                                                                                                 i n 

c o n n e c t i o n 
                      w i t h 
                                 i n c r e a s e d 
                                                      u s e 
                                                               o f 
                                                                     G a t w i c k , 
                                                                                         S t a n s t e d 
                                                                                                            a n d 
                                                                                                                     L u t o n 

v ' o u l d n o t 
                                      be 
                                                   s i g n i f i c a n t 
                                                                                                    i n c o m p a r i s o n w i t h t h e 
                                                                                                                                                                                                 c o s t s 
                                                                                                                                                                                                                          o f 
                                                                                                                                                                                                                                       a c c e s s 

t
     o 
                   M a p l i n . 

## Airports Outside T H E South E A S T

Hi w h e r e a s t h e r e q u i r e m e n t i n t h e L o n d o n a r e a i s f o r a d d i t i o n a l t e r m i n a l c a p a c i t y t o a c c o m m o d a t e t h e d e m a n d , o u t s i d e 
* e S o u t h E a s t o f E n g l a n d a n d i n S c o t l a n d a n d W a l e s t h e p r o b l e m i * to a c h i e v e a more e f f e c t i v e use o f t h e e x i s t i n g f a c i l i t i e s . 

f a r i n g i n m i n d t h e r e l a t i v e demands i n t h e c a t c h m e n t a r e a s , tfce G o v e r n m e n t c o n s i d e r s t h a t t h e r e i s no s c o p e f o r more t h a n gateway i n t e r n a t i o n a l a i r p o r t s 
( C a t e g o r y A ) , a t M a n c h e s t e r 
* * * G l a s g o w / P r e s t w i c k , o u t s i d e t h e S o u t h E a s t d u r i n g t h e p e r i o d to  i
9 
^ 
9
0 

## S S L I I J ^ S N £ L A N D

A f t e r t h e S o u t h E a s t , C e n t r a l E n g l a n d , w h i c h i s t a k e n t o a e t h e M e r s e y s i d e , M a n c h e s t e r , Y o r k s h i r e a n d B i r m i n g h a m 
^ U r b a t i o n s , r e p r e s e n t s t h e l a r g e s t c a t c h m e n t a r e a f o r a i r c J-n G r e a t B r i t a i n . 

T h e G o v e r n m e n t c o n s i d e r s t h a t i n the l o o n jvvs t h e a r e a s h o u l d b e a b l e t o s u s t a i n one i n t e r n a t i o n a l g a t e w a y a i r p o r t and t h a t i t s h o u l d b e a t M a n c h e s t e r , 
113 
A t t h e p r e s e n t t i m e M a n c h e s t e r a i r p o r t , w h i c h i s a m a j o r b a s e f o r B r i t i s h A i r w a y s a n d u s e d b y many i n t e r n a t i o n a l a i r l i  
n e i s h a n d l i n g a b o u t 
2j m i l l i o n p a s s e n g e r s a y e a r . 

B y 1990, and w i t h t h e i m p l e m e n t a t i o n o f t h e p o l i c i e s e n v i s a g e d i n p a r a g r a p h s 
22 
a n d 2U, i t i s f o r e c a s t t h a t t h r o u g h p u t m i g h t i n c r e a s e t o e S 
a r o u n d 6 m i l l i o n p a s s e n g e r s . 

T h e e x i s t i n g t e r m i n a l f a c i l i t i  
a t M a n c h e s t e r a n d a s i n g l e runway s h o u l d b e a d e q u a t e t o accommodate t h i s l e v e l o f t r a f f i c . 

T h e s t a t e o f t h e p r e s e n t runway a t M a n c h e s t e r i s g i v i n g some c a u s e f o r c o n c e r n a n d c o n s i d e r a t i o n i s b e i n g g i v e n t o w h e t h e r , a n d i f so how, i t b e s t r e n g t h e n e d a n d i m p r o v e d . 

I t i s p o s s i b l e a l s o t h a t a l i m i t e d e x t e n s i o n o f t h e r u n w a y may be r e q u i r e d t o e n a b l e the a i r p o r t t o f u l f i l c o m p l e t e l y i t s r o l e as a c a t e g o r y A a i r p o r t ' 
11U 
' D u r i n g t h e c o n s u l t a t i o n p r o c e s s , p a r t i c u l a r a t t e n t i o n e  
S 
was d r a w n t o t h e f u t u r e o f L i v e r p o o l a i r p o r t . 

I t was s u g g t h a t a i r t r a f f i c i n t h e N o r t h West o f E n g l a n d m i g h t b e d i s t r i b u t e d b e t w e e n M a n c h e s t e r a n d L i v e r p o o l a i r p o r t s ; 
t h a t two a i r p o r t s m i g h t b e owned a n d o p e r a t e d t o g e t h e r b y a c o n s o r t i u m o f t h e r e l e v a n t l o c a l a u t h o r i t i e s ; 
t h a t L i v e r p
0
0 ^ 
a i r p o r t m i g h t b e r e d e v e l o p e d w i t h a new p a s s e n g e r t e r m i n a l , c o n t r o l t o w e r a n d r e l a t e d f a c i l i t i e s a l o n g s i d e t h e new r u n t f
0 ^ 
J 
when t h e 
" o l d " a i r p o r t c o u l d b e d i s p o s e d o f f o r n o n - a e r o n a u t Purposes; or that Liverpool a i r p o r t might be placed on a **care**  
Qnd maintenance **b a s i s .**  
115 
T h e b a s i s o f t h e G o v e r n m e n t ' s a i r p o r t s p o l i c y i s t h a t n a t i o n a l i s a t i o n o f t h e f a c i l i t i e s o u t s i d e t h e S o u t h E a s t o f E n g l a n d , a n d c o n c e n t r a t i o n o f a i r s e r v i c e s a t a l i m i t e d number of a i r p o r t s , a r e 
3 i k e l y t o b e among t h e most e f f e c t i v e ways Q f s e e k i n g t o r e d r e s s t h e b a l a n c e i n a i r t r a n s p o r t b e t w e e n t h e S o u t h E a s t a n d t h e r e s t o f G r e a t B r i t a i n , T h e G o v e r n m e n t d o e s n o t c o n s i d e r t h a t t h e a l l o c a t i o n o f t r a f f i c b e t w e e n M a n c h e s t e r a n d L i v e r p o o l a n d common o w n e r s h i p o f t h e two a i r p o r t s i s l i k e l y t o a s s i s t t h i s o b j e c t i v e . 

I n t h e G o v e r n m e n t s v i e w i t i s more l i k e l y t o r e s u l t i n l o w e r f r e q u e n c i e s a n d a more l i m i t e d range o f s e r v i c e s f o r t h e N o r t h West w h i l e n o t g u a r a n t e e i n g a 
"viable f u t u r e f o r L i v e r p o o l . 

U 6 
The Government **b e l i e v e s that L i v e r p o o l a i r p o r t should**  
f u l f i l a l o e a l r o l e as a category C a i r p o r t providing **some**  
scheduled feeder s e r v i c e s , notably to Ireland and the I s l e of 
 

fen 
   and perhaps to 
                 London and other major centres i n 
                                                 England, 
                                                          

Scotland and 
              Wales; some charter services to 
                                                    the 
                                                        more popular ^ s t i n s t i o n s ; 
                           and f a c i l i t i e s f o r business and general a v i a t i o n  

f T Meraeyslde. 
                                                                In such a r o l e the 
                                                                                                                                      Government does 
                                                                                                                                                                                               not 
                                                                                                                                                                                                              

V i s a g e that L i v e r p o o l a i r p o r t would be handling more than  

1

m i l  
         passengers a year by 1990. 
                                                  The immediate f u t u r e of  
     U
       o
        n 

L i v e r p o o l 
                   a i r p o r t must b e 
                                                   a m a t t e r f o r 
                                                                              t h e 
                                                                                     l o c a l 
                                                                                                  a u t h o r i t i e s 

c o n c e r n e d . 
                          R e d e v e l o p m e n t , 
                                                        as 
                                                               e n v i s a g e d 
                                                                                   i n p a r a g r a p h 
                                                                                                              1 1 4 , 

m i g h t h a v e 
                   some a t t r a c t i o n , b u t 
                                                         t h i s 
                                                                 w o u l d h a v e 
                                                                                     t o be 
                                                                                                c o n s i d e r ^ 

on i t s 
        c o m m e r c i a l m e r i t s 
                             a n d n o t 
                                      o n t h e 
                                               a s s u m p t i o n o f G o v e r n i n g 

f i n a n c i a l 
                    s u p p o r t . 

117 
         T h e r e a r e 
                          two m a i n a i r p o r t s 
                                                       i n t h e 
                                                                  M i d l a n d s : 
                                                                                     B i n n i n g ^ 

a n d E a s t M i d l a n d s . 
                                      B i r m i n g h a m a i r p o r t , 
                                                                            w h i c h h a n d l e s 
                                                                                                       o v e r t
                                                                                                                                                                                                                                                                                                                                                                     c
                                                                                                                                                                                                                                                                                                                                                                         l 
1 m i l l i o n p a s s e n g e r s 
                                                                                                                            a y e a r , 
                                                                                                                                                                           i s 
                                                                                                                                                                                             l o n g e s t a b l i s h e d , 
                                                                                                                                                                                                                                                                                                        i s 
                                                                                                                                                                                                                                                                                                                        w e l l

s i

i n r e l a t i o n t o 
                             t h e 
                                     n a t i o n a l m o t o r w a y a n d r a i l 
                                                                                            s y s t e m s a n d the 

N a t i o n a l 
                 E x h i b i t i o n C e n t r e a n d i s 
                                                                    a b a s e f o r 
                                                                                          B r i t i s h 
                                                                                                          A i r w a y s ­

                                                                                                                                                                                                                  n
                                                                                                                                                                                                                     e
I n d u s t r y a n d commerce 
                                                                             i n t h e 
                                                                                                     West M i d l a n d s h a s 
                                                                                                                                                                     a n i m p o r t a n t

f o r 
       a i r c o m m u n i c a t i o n s a n d w i t h t h e 
                                                                       l a r g e 
                                                                                   p o p u l a t i o n o f 
                                                                                                                t h e 

a r e a 
          t h e r e 
                     i s 
                           l i k e l y 
                                         t o be a g r o w i n g demand f o r a w i d e r r a n g 

s c h e d u l e d 
                    a n d c h a r t e r s e r v i c e s . 
                                                                     On t h e 
                                                                                   o t h e r h a n d , 
                                                                                                            t h e 

a i r D o r t o c c u p i e s a r e s t r i c t e d s i t e , a n d w i t h b u i l t up a r e a ^ 
t h e n o r t h a n d , w e s t has d i f f i c u l t a i r c r a f t n o i s e a n d e n v i r o n p r o b l e m s w h i c h h a v e b e e n t h e s u b j e c t o f e x t e n s i v e r e p r e s e n t M o r e o v e r , a t t i m e s , the e x i s t i n g t e r m i n a l i s s e r i o u s l y c o n £
a n d i m p r o v e d t e r m i n a l a n d r e l a t e d f a c i l i t i e s , w h i c h c o u l d  r c o s t l y , w o u l d b e r e q u i r e d t o accommodate t h e f o r e c a s t growth t r a f f i c i n t h e 1980s. 

T h e l o c a l a u t h o r i t y ov/ners a r e p r e s e n t l y c o n s i d e r i n g p r o p o s a l s t o i n c r e a s e t h e c a p a c i t y
 
0 ^ 
t h e a i r p o r t . 

the m a i n c o n c e n t r a t i o n o f p o p u l a t i o n i n t h e M i d l a n d s , i s a l s o w e l l s i t e d i n r e l a t i o n t o t h e m o t o r w a y n e t w o r k a n d h a s a n i m p o r t a n t i n d u s t r i a l a n d c o m m e r c i a l c a t c h m e n t a r e a . 

F e w e r p e o p l e a r e a f f e c t e d b y a i r c r a f t n o i s e t h a n a t B i r m i n g h a m a n d the a i r p o r t
1 s m o d e r n c o n s t r u c t i o n l e n d s i t s e l f more r e a d i l y to e x p a n s i o n t h a n B i r m i n g h a m a i r p o r t . 

H o w e v e r , E a s t M i d l a n d s 
^oes n o t h a v e a t p r e s e n t t h e n u c l e u s o f d o m e s t i c a n d s h o r t h * u l i n t e r n a t i o n a l s e r v i c e s w h i c h a r e p r o v i d e d a l r e a d y f r o m B i r m i n g h a m , a n d a b u i l d up o f t r a f f i c f r o m t h e p r e s e n t l e v e l 
0 - 
n e a r l y 
6 0 0 , 0 0 0 p a s s e n g e r s a y e a r m i g h t b e somewhat s l o w e r t h a n a t B i r m i n g h a m . 

U9 
Tj u e a r m g i n mind t h e l i m i t e d s c o p e f o r d i v e r t i n g 
" t r a f f i c 
*
0
l n 
^ke L o n d o n a r e a , the G o v e r n m e n t d o e s n o t c o n s i d e r t h a t t h e 
"inlands c o u l d s u s t a i n a c a t e g o r y A a i r p o r t i n t h e p e r i o d up t o 
1990. 

H o w e v e r , t h e G o v e r n m e n t h a s c o n c l u d e d t h a t t h e r e i s 
 
k e l  
e y t l y to be s u f f i c i e n t demand f o r a i r s e r v i c e s i n t h e M i d l a n d s J u s t i f y b o t h B i r m i n g h a m and E a 3 t M i d l a n d s a i r p o r t s f u l f i l l i n g 
^
e r o l e s o f c a t e g o r y B a i r p o r t s i n the p e r i o d up t o 
1990. 

fte l i g h t o f t h e e x i s t i n g d i v i s i o n o f t r a f f i c , a n d s u b j e c t t o P r o v i s i o n o f a d d i t i o n a l t e r m i n a l c a p a c i t y , B i r m i n g h a m , w i t h g r e a t e r p r o p o r t i o n o f s c h e d u l e d s e r v i c e s , m i g h t b e h a n d l i n g b e **t w e e n** o 
* 
and 3 m i l l i o n p a s s e n g e r s a y e a r b y 1 9 9 0 . 

A t t h e same t i m ^  
m e t a n d v / i t h some m o d e s t e x t e n s i o n t o the t e r m i n a l a n d 
 
0 t h e r  
- T . 

t l ?aff i  
c A
d c l l i t i e s  
f E a s t M i d l a n d s , w i t h more e m p h a s i s on c h a r t e r 
* 
raight be h a n d l i n g a b o u t l  
£ m i l l i o n p a s s e n g e r s a y e a r . 

120 
I n the l o n g e r t e r m , i f a i r t r a f f i c c o n t i n u e s t o g r o w , and d e v e l o p more s t r o n g l y i n t h e r e g i o n s o u t s i d e t h e S o u t h E a s t , e i t h e r E a s t M i d l a n d s o r B i r m i n g h a m c o u l d be e x p e c t e d t o d e v e l o p i n t o a C a t e g o r y A a i r p o r t . 

I n v i e w o f t h e r e s t r i c t e d s i t e and e n v i r c n m e n t a l p r o b l e m s a t B i r m i n g h a m , E a s t M i d l a n d s m i g h t have t h e g r e a t e r p o t e n t i a l t o assume t h a t r o l e . 

I t w i l l b e i m p o r t a n t t o see how t h e two a i r p o r t s d e v e l o p i n t o t h e 
1 9 8 0 s . 

121 
F i n a l l y , i n t h e C e n t r a l E n g l a n d a r e a , c o n s i d e r a t i o n must be g i v e n t o Y o r k s h i r e a n d i l u m b e r s i d e a n d s p e c i f i c a l l y t o t h e p o s i t i o n o f L e e d s / B r a d f o r d a i r p o r t . 

The l i m i t e d l e n g t h o f t h e r u n w a y a t L e e d s / B r a d f o r d p l a c e s a s e r i o u s c o n s t r a i n t on t h e a i r c r a f t w h i c h c a n u s e t h e a i r p o r t anci t h e s e r v i c e s t h a t c a n b e o p e r a t e d . 

F o r l o n g h a u l s e r v i c e s Y o r k s h i r e a n d H u m b e r s i d e w i l l c o n t i n u e t o be s e r v e d b y M a n c h e s t e r a n d t h e L o n d o n a i r p o r t s . 

The f e e d e r s e r v i c e t o L o n d o n i s a t r i s k b e c a u s e o f runway l i m i t a t i o n s w h i c h a l s o a f f e c t t h e p r o v i s i o n o f s h o r t h a u l s c h e d u l e d a n d c h a r t e r s e r v i c e s w h i c h a r e f o r c e d t h e r e f o r e t o u s e o t h e r a i r p o r t s . 

Some o f t h i s t r a f f i c may u s e M a n c h e s t e r , o r E a s t M i d l a n d s , o r t h e a i r p o r t s i n the N o r t h E a s t , b u t a n i m p o r t a n t p a r t o f i t g o e s t h r o u g h t h e L o n d o n 
 
1 
$ 
a i r p o r t s . 

The G o v e r n m e n t d o e s n o t c o n s i d e r t h a t t h e demand s u c h a s t o J u s t i f y t h e m a s s i v e e x p e n s e w h i c h w o u l d b e i n v o l v e d i n t h e p r o v i s i o n o f a new a i r p o r t i n Y o r k s h i r e find H u m b e r s i d e * 
v H o w e v e r , i t c o n s i d e r s t h a t Y o r k s h i r e c o u l d s u s t a i n a c a t e g
0 1 '
r e g i o n a l a i r p o r t . 

T h e G o v e r n m e n t d o e s n o t e n v i s a g e a n e x t e n s i v e r o l e f o r s u c h a n a i r p o r t w i t h i n a n a t i o n a l s t r a t e g y , b u t f o r L e e d s / B r a d f o r d a i r p o r t t o meet t h i s r e q u i r e m e n t w o u l d i n v o l v e a n e x t e n s i o n o f the e x i s t i n g r u n w a y . 

C o n s i d e r a t i o n o f t h i s w o u l d b e i n t h e f i r s t i n s t a n c e a m a t t e r f o r t h e l o c a l a u t h o r i t i e s . 

122 
A t t h e C e n t r a l E n g l a n d e i r o o r t s t h e m a i n p r o b l e m s o f a i r c r a f t n o i s e d i s t u r b a n c e a r e a t M a n c h e s t e r a n d S i r m i h g h a m where a t p r e s e n t l e v e l s o f t r a f f i c more p e o p l e a r e a f f e c t e d hy n o i s e t h a n a t a n y o t h e r a i r p o r t i n G r e a t B r i t a i n w i t h t h e e x c e p t i o n o f H e a t h r o w , G a t w i c k a n d G l a s g o w . 

A t b o t h M a n c h e s t e r and B i r m i n g h a m a i r p o r t s , a n d a t t r a f f i c l e v e l s w h i c h now seem r e a l i s t i c , a s i g n i f i c a n t i m p r o v e m e n t i n t h e n o i s e s i t u a t i o n i s f o r e c a s t b e t w e e n now a n d 1 9 9 0 . 

T h e c o n c e n t r a t i o n o f a i r s e r v i c e s a t a l i m i t e d n u m b e r o f a i r p o r t s o u t s i d e t h e S o u t h E a s t s h o u l d a s s i s t t h i s p r o c e s s t o t h e e x t e n t t h a t i t e n c o u r a g e s t h e 
" i n s t i t u t i o n o f new, l a r g e r q u i e t e r a i r c r a f t f o r t h e s m a l l e r , Q l a e r and n o i s i e r a i r c r a f t w h i c h m i g h t o t h e r w i s e be u s e d . 

N e v e r t h e l e s s , t h e G o v e r n m e n t r e c o g n i s e s t h a t a i r c r a f t n o i s e i s i n t r u s i v e w h e r e v e r i t i s ; 
t h a t some r e g i o n a l a i r p o r t s a l r e a d y e x o e r i e n c e f a r more n o i s e d i s t u r b a n c e t h a n some a i r p o r t s i n t h e L o n d o n a r e a ; 
a n d t h a t t h e r e i s no j u s t i f i c a t i o n f o r r e l i e v i n g tne S o u t h E a s t a i r p o r t s , p a r t i c u l a r l y G a t w i c k , S t a n s t e d a n d L
u t o n , b y i m p o s i n g a n i n c r e a s e d n o i s e b u r d e n o n , f o r e x a m p l e , M a n c h e s t e r a n d B i r m i n g h a m a i r p o r t s . 

T h e i n t r o d u c t i o n o f new l u i e t e r a i r c r a f t a n d t h e a c t i o n b e i n g t a k e n t o i m p o s e s t r i c t e r n o i a e c e r t i f i c a t i o n r e q u i r e m e n t s w i l l b e n e f i t r e g i o n a l a i r p o r t s as welJ 
as t h o s e i n t h e L o n d o n a r e a , a l t h o u g h t h e r a t e o f i m p r o v e m e n t may be somewhat s l o w e r . 

A p a r t f r o m M a n c h e s t e r , L i v e r p o o l , B i r m i n g h a m , E a s t M i d l a n d s and L e e d s / B r a d f o r d a i r p o r t s w h i c h h a v e b e e n c o n s i d e r e d a l r e a d y t h e r e a r e a number o f o t h e r a i r p o r t s i n C e n t r a l E n g l a n C * 
s u c h as B l a c k p o o l , C o v e n t r y , H u m b e r s i d e a n d N o r w i c h . 

The G o v e r n m e n t d o e s n o t e n v i s a g e a m a j o r r o l e f o r a n y o f t h e s e a i r p o r t s w i t h i n t h e n a t i o n a l a i r p o r t s s y s t e m . 

N o r w i c h , and p e r h a p s B l a c k p o o l , c a n b e e x p e c t e d t o f u l f i  
l a c a t e g o r y C 
r o l e a n d H u m b e r s i d e may a l s o d e v e l o p as a t h i r d l e v e l a i r p o r t . 

m a i n p u r p o s e o f C o v e n t r y i s l i k e l y to b e a s a c a t e g o r y D , g e n e r a l a v i a t i o n a e r o d r o m e . 

N o r t h e r n E n g l a n d 
12U 
T h e r e a r e t h r e e a i r p o r t s i n N o r t h e r n E n g l a n d , a t a n
(
 
i N e w c a s t l e , T e e s - s i d e a n d C a r l i s l e . 

T h e N o r t h E a s t o f E n g l p r e s e n t s p a r t i c u l a r p r o b l e m s where N e w c a s t l e a n d T e e s - s i d e a i r p o r t s a r e o n l y a b o u t i+0 m i l e s a p a r t . 

H o w e v e r , u n l i k e the s i t u a t i o n i n t h e N o r t h W e s t , v/here M a n c h e s t e r i s a v e r y much l a r g e r a i r p o r t t h a n L i v e r p o o l , t h e r e i s n o t t h e same d i s p a r i t y s i n s i z e b e t w e e n the two N o r t h E a s t e r n a i r p o r t s . 

N e i t h e r  i a t t h e r e t h e same p o t e n t i a l d e m a n d . 

By 1990 
i t i s f o r e c a s t t h  
o r t h e r e w i l l b e a b o u t 
2 m i l l i o n p a s s e n g e r s u s i n g t h e two a i r p
^ 
Newcastle i s long established, **handles about three times** **as**  
much t r a f f i c as Tees-side, has r a t h e r more extensive **f a c i l i t i e s**  

and l  
      a 
      U S  
       e d by B r i t i s h Airways. 
                                  On the other hand the future  

growth of Tees-side might generate a s u b s t a n t i a l l y increased demand f o r 
           a i r s e r v i c e s . 
                            By 1990 neither a i r p o r t should have  

a  serious noise disturbance problem.  

125 
      The Government does not agree, as has 
                                                     been suggested,  

that eteps should be taken to l i m i t the expansion o f Newcastle  

airport to enable Tees-side to catch up. 
                                               I t 
                                                  b e l i e v e s that  

the North East generally would b e n e f i t from some 
                                                        concentration 
                                                                         

^ 
   services at one or other of the 
                                        two a i r p o r t s , since t h i s  

"ould provide both b e t t e r frequencies 
                                          and 
                                               a wider range of  

services than might otherwise be p o s s i b l e ; 
                                                and i t 
                                                        recognises 
                                                                    

that each a i r p o r t could s u s t a i n some domestic s e r v i c e s ,  

p a r t i c u l a r l y a London s e r v i c e , and perhaps some short haul  

^ r v i c e s to 
                    Europe. 
                                       The Government considers that i n p r a c t i c e 
                                                                                                                      

^ c a s t l e has c e r t a i n advantages over Tees-side, notably as a  

^ase f o r B r i t i s h Airways, and i t remains unconvinced that the  

growth of industry i t s e l f w i l l generate s u f f i c i e n t demand 
                                                              to 
                                                                  

0 vercome the e x i s t i n g advantage of Newcastle.  

l26 
                 m
                   , 
                                   
                  J-ne Government does not envisage circumstances i n which  
a cate  

Sory A i n t e r n a t i o n a l gateway a i r p o r t could be required i n 
                                                               

North East of England, or 
                          at t h i s stage that a major  

e x t e n s i o n 
                    t o 
                           t h e 
                                   r u n w a y s a t 
                                                          e i t h e r 
                                                                        o f 
                                                                               t h e 
                                                                                       a i r p o r t s 
                                                                                                          c o u l d 
                                                                                                                       he 

j u s t i f i e d . 
                           The G o v e r n m e n t b e l i e v e s 
                                                                             t h a t 
                                                                                        t h e 
                                                                                                N o r t h E a s t 
                                                                                                                        w i l l 

b e n e f i t 
                f r o m a c o n c e n t r a t i o n 
                                                            o f 
                                                                  a i r s e r v i c e s 
                                                                                             a t 
                                                                                                     N e w c a s t l e . 

H o w e v e r , 
                  g i v e n 
                              t h e 
                                      f a c i l i t i e s 
                                                             w h i c h a r e a v a i l a b l e 
                                                                                                      a t 
                                                                                                             t h a t 

a i r p o r t 
               a n d a t 
                             T e e s - s i d e , 
                                                    a n d t h e 
                                                                    i m p o r t a n c e o f 
                                                                                                m a i n t a i n i n g 

good c o n n e c t i o n s 
                            f r o m T e e s - s i d e 
                                                      f o r 
                                                             i t s 
                                                                    i n d u s t r i a l h i n t e r l a n d , 

t h e 
        G o v e r n m e n t c o n s i d e r s 
                                                      t h a t 
                                                                 t h e r e 
                                                                              a r e 
                                                                                       v a l i d 
                                                                                                    r e a s o n s 
                                                                                                                     t o 
                                                                                                                            s u p p o r t 

t h e 
        c o n t i n u i n g o p e r a t i o n o f b o t h a i r p o r t s . 
                                                                                                  I t 
                                                                                                        h a s 
                                                                                                                 c o n c l u d e d , t h e r e f o r e , 
                       t h a t 
                                 N e w c a s t l e 
                                                      s h o u l d d e v e l o p 
                                                                                     a s 
                                                                                            a c a t e g o r y B 

r e g i o n a l 
                  a i r p o r t a n d t h a t T e e s - s i d e 
                                                                        s h o u l d b e 
                                                                                           a c a t e g o r y C a i r p o r t , 
                  w i t h a d e q u a t e 
                                               d o m e s t i c 
                                                                  s e r v i c e s 
                                                                                    a n d , where demand 
                                                                                                                           i s 

s u f f i c i e n t , 
                         some s h o r t 
                                                h a u l 
                                                          i n t e r n a t i o n a l s e r v i c e s . 
                                                                                                                 T h e 

G o v e r n m e n t 
                     i s 
                           aware 
                                       t h a t 
                                                 d i s c u s s i o n s 
                                                                         a r e p r o c e e d i n g b e t w e e n 
                                                                                                                       the 

N e w c a s t l e 
                    A i r p o r t 
                                    A u t h o r i t y 
                                                         a n d t h e 
                                                                         BAA w i t h a v i e w 
                                                                                                          t o 
                                                                                                                 t h e BAA 

t a k i n g 
             o v e r 
                        the 
                               a i r p o r t . 
                                                      R e c o g n i s i n g t h e 
                                                                                      s i g n i f i c a n c e 
                                                                                                                o f 
                                                                                                                      a i r t r a n s p o r t 
                    d e v e l o p m e n t 
                                            i n t h e 
                                                          N o r t h E a s t , 
                                                                                  t h e 
                                                                                          G o v e r n m e n t 
                                                                                                                 t a k e s 

t h e 
        v i e w 
                   t h a t 
                              t h i s 
                                         a c t i o n b y t h e 
                                                                       two a u t h o r i t i e s 
                                                                                                           i s 
                                                                                                                   c o n s i s t e n t 

w i t h 
          t h e 
                 g u i d e l i n e s 
                                       i n t h i s 
                                                       W h i t e P a p e r . 

127 
        T h e p r e d o m i n a n t r o l e 
                                     o f 
                                         C a r l i s l e 
                                                      a i r p o r t i s 
                                                                     a s 
                                                                          a 

c a t e g o r y 
                  D g e n e r a l 
                                       a v i a t i o n a n d t r a i n i n g a e r o d r o m e . 
                                                                                                                G i v e n 

i t s 
         e x c e l l e n t 
                                w e a t h e r 
                                                   r e c o r d a n d i t s 
                                                                                      r e m o t e n e s s 
                                                                                                               f r o m 
                                                                                                                             c e n t r e s 

e 

o f p o p u l a t i o n i t 
                                  w i l l 
                                            b e 
                                                  t h e 
                                                           G o v e r n m e n t s 
                                                                                     i n t e n t i o n 
                                                                                                          t o 
                                                                                                                 e n c o u r a £

a 
    g r e a t e r 
               u s e 
                    o f C a r l i s l e 
                                     a i r p o r t f o r t r a i n i n g . 
                                                                      T h i s 
                                                                              c o u l d 

r e l i e v e 
                p r e s s u r e 
                                   on a i r p o r t s p a r t i c u l a r l y i n t h e 
                                                                                                      S o u t h E a s t 
                                                                                                                              o f 

                                                                                                                                                                                                                                                o
                                                                                                                                                                                                                                                    n
E n g l a n d where 
                                                       s u c h a c t i v i t i e s 
                                                                                                                     a r e a c o n s i d e r a b l e 
                                                                                                                                                                                                b u r d e n b o t h

a i r p o r t 
                c a p a c i t y 
                                  a n d o n t h e 
                                                        s u r r o u n d i n g c o m m u n i t i e s . 

## South Vales And South **/Jest England**

128 
       There are f i v e s i g n i f l e a n t a i r p o r t s i n 
                                                         South Wales and 
                                                                              

South West England; 
Glamorgan, B r i s t o l , and Exeter which can 
 
be considered as a group and Bournemouth and **Southampton!1)**  
"hich may a l s o be taken together. 

The a i r p o r t s at Bournemouth 
 

and Southampton are s u f f i c i e n t l y close to 
                                                   t h e 
                                                        South East to 
                                                                          

have the 
         prospect, i d e n t i f i e d i n 
                                  the c o n s u l t a t i o n document, 
                                                               of 
                                                                   

a t t r a c t i n g t r a f f i c from the 
                                                        London area. 
                                                                                       B r i s t o l and  

Glamorgan a i r p o r t s might a l s o i n 
                                  theory take t r a f f i c d i v e r t e d  

forn the 
         London area. 
                          However, i n 
                                        the l i g h t of 
                                                       the considera­

tion given to r e g i o n a l d i v e r s i o n i n 
                                         Section 1, the 
                                                          Government 
                                                                       

considers that i t would be wrong to assess the r o l e s of a i r p o r t s  

to 
  South Wales and South West England on the 
                                          b a s i s of 
                                                   a major transfer of t r a f f i c from the 
                               South East. 
                                               Taking t h i s into  

account, i t 
             i s 
                u n l i k e l y that t r a f f i c over t h i s wide area w i l l a n ,ount to 
                                       more than 3 m i l l i o n passengers i n 
                                                                                                                                                                                       a l l 
                                                                                                                                                                                                       by 1990. 
                                                                                                                                                                                                                                                      In  

^ e s e circumstances there i s 
                               a danger that the a v a i l a b l e 
                                                               t r a f f i c  

^ I d be spread very t h i n l y among the a i r p o r t s and thus, as 
                                                                                                was  

t i n t e d out 
                    by the C i v i l A v i a t i o n Authority i n t h e i r study of  

a i r p o r t s i n 
                                          the 
                                                         region, l e a d to 
                                                                                                                    a poorer s e r v i c e 
                                                                                                                                                                                        p a r t i c u l a r l y  

0 1 1  scheduled f l i g h t s than might be the case i f t r a f f i c were  

concentrated at fewer a i r p o r t s .  

A t 
      p r e s e n t , 
                          G l a m o r g a n a n d B r i s t o l 
                                                                           a i r p o r t s 
                                                                                               h a n d l e 
                                                                                                               a 

^ t h a m p t o n 
                   A i r p o r t 
                                  i s 
                                       w i t h i n 
                                                   t h e 
                                                          S o u t h E a s t 
                                                                             E c o n o m i c 
                                                                                             P l a n n i n g 

                      n 
                                    D
                                        u
Bon
                          '
                                            t 
                                                        i t 
                                                                       c o v e r s b r o a d l y 
                                                                                                                                                  t h e 
                                                                                                                                                                       same c a t c h m e n t 
                                                                                                                                                                                                                                                   a r e a 
                                                                                                                                                                                                                                                                              as 
a i ^ ^ ^ ^ t  
                                             h 
                                                         A i r o o r t 
                                                                                                  a n d i t 
                                                                                                                                      i s 
                                                                                                                                                     c o n v e n i e n t 
                                                                                                                                                                                                             t o 
                                                                                                                                                                                                                            c o n s i d e r 
                                                                                                                                                                                                                                                                          t h e 
                                                                                                                                                                                                                                                                                                two 

l
   r P o r t s 
                                                         t o g e t h e r . 

s i m i l a r v o l u m e 
                             a n d t y p e 
                                                o f 
                                                      t r a f f i c , 
                                                                        c o n c e n t r a t i n g m a i n l y 
                                                                                                                   on c h a r t e r 
                s e r v i c e s , 
                                    s c h e d u l e d 
                                                        d o m e s t i c 
                                                                          f l i g h t s 
                                                                                          a n d a 
                                                                                                       f e w 

i n t e r n a t i o n a l 
                            s c h e d u l e d 
                                                s e r v i c e s . 
                                                                         I t 
                                                                               i s 
                                                                                    l i k e l y 
                                                                                                   t h a t 
                                                                                                             S o u t h 

W a l e s , 
              t h e 
                      B r i s t o l 
                                      c o n u r b a t i o n a n d S o u t h West E n g l a n d 
                                                                                                             g e n e r a l l y ^ 

c o u l d 
            s u s t a i n 
                            o n e , 
                                     b u t 
                                              n o t 
                                                      t w o , 
                                                                c a t e g o r y 
                                                                                  B r e g i o n a l 
                                                                                                        a i r p o r t s . 

N e i t h e r 
                o f 
                     t h e 
                             two 
                                     a i r p o r t s 
                                                       i s 
                                                             i d e a l l y 
                                                                             s u i t e d 
                                                                                           t o 
                                                                                                 accommodate 

t h e 
        demand i n b o t h S o u t h W a l e s a n d S o u t h W e s t 
                                                                                                   o f 
                                                                                                          E n g l a n d . 

T h e r e 
            i s 
                 h o w e v e r 
                                 a s i g n i f i c a n t 
                                                            d i f f e r e n c e 
                                                                                  i n t h e 
                                                                                                 f a c i l i t i e s 

a v a i l a b l e 
                    a t 
                          t h e 
                                  two 
                                          a i r p o r t s . 
                                                                  A l t h o u g h few p e o p l e 
                                                                                                            a r e 

a f f e c t e d b y a i r c r a f t n o i s e a t e i t h e r a i r p o r t , the c o n s u l t a t i o n showed some o p p o s i t i o n t o e x p a n s i o n a t B r i s t o l . 

On t h e o t h e r h a n d , none o f t h e many r e p r e s e n t a t i o n s r e c e i v e d s u g g e s t e d t h a t G l a m o r g a n a i r p o r t was e n v i r o n m e n t a l l y u n a c c e p t a b l e . 

F u r t h e r ^ 
m o r e , e x p a n s i o n o f t r a f f i c a t G l a m o r g a n w o u l d s u p p o r t t h e s G o v e r n m e n t s r e g i o n a l d e v e l o p m e n t p o l i c i e s s i n c e t h e a i r p o r t  i i n a D e v e l o p m e n t a r e a , c l o s e t o a S p e c i a l D e v e l o p m e n t A r e a . 

130 
A t B r i s t o l , t h e p r e s e n t t e r m i n a l i s no more t h a n adeq.uat f o r t h e e x i s t i n g l e v e l s o f t r a f f i c a n d i t s d e v e l o p m e n t as a c a t e g o r y B a i r p o r t w o u l d r e q u i r e c o n s i d e r a b l e e x p e n d i t u r e on n t new t e r m i n a l f a c i l i t i e s a n d some e x t e n s i o n o f t h e r u n w a y m i £  
a l s o b e n e c e s s a r y as w e l l as i m p r o v e m e n t s t o t h e n a v i g a t i o n a l 
 
l S 
f a c i l i t i e s . 

I n c o n t r a s t , a t G l a m o r g a n t h e m o d e r n t e r m i n a l
0 
more t h a n a d e q u a t e , a s a r e t h e r u n w a y and o t h e r f a c i l i t i e s ,  
*
e meet a l l f o r e s e e a b l e demands up t o 
1990. 

I n t h e l i g h t o f t h c o n s i d e r a t i o n s , i n c l u d i n g t h e e x p e n d i t u r e w h i c h w o u l d b e i n v o l v e d i n t h e f u r t h e r d e v e l o p m e n t o f B r i s t o l a i r p o r t a n d w h i c h , among o t h e r r e a s o n s , w o u l d r u l e o u t a new a i r p o r t f o r S e v e r n s i d e o r t h e a d a p t a t i o n o f P i l t o n a s a c i v i l a i r p o r t , t h e Government has c o n c l u d e d t h a t G l a m o r g a n s h o u l d h f v e t h e r o l e Q f a c a t e g o r y B a i r p o r t . 

B r i s t o l a i r p o r t may c o n t i n u e t o f u l f i l a l o c a l r o l e as a c a t e g o r y C a i r p o r t , b u t t h i s i s a m a t t e r w h i c h t h e l o c a l a u t h o r i t i e s w i l l w i s h t o c o n s i d e r . 

1
3
1 
D u r i n g t h e c o u r s e o f t h e c o n s u l t a t i o n s i t was s u g g e s t e d t h a t a c o m b i n a t i o n o f G l a m o r g a n a n d E x e t e r a i r p o r t s w o u l d m e e t most s a t i s f a c t o r i l y t h e r e q u i r e m e n t s o f S o u t h W a l e s a n d S o u t h West E n g l a n d . 

W h e t h e r t h e r e s h o u l d b e any c l o s e a n d p e r m a n e n t a s s o c i a t i o n b e t w e e n G l a m o r g a n a n d E x e t e r a i r p o r t s w i l l b e f o r the l o c a l a u t h o r i t i e s t o c o n s i d e r , b u t g i v e n t h e r e l a t i v e r e m o t e n e s s o f C o r n w a l l a n d D e v o n , E x e t e r a i r p o r t seems l i k e l y t o r e t a i n i t s u s e f u l n e s s a n d t o e x p a n d i t s r o l e a s a l o c a l , c a t e g o r y C , a i r p o r t . 

132 
f u l f i l a s i m i l a r r o l e , a n d s c h e d u l e d s e r v i c e s t o t h e C h a n n e l I s l a n d s , to meet a demand f r o m a much w i d e r a r e a t h a n t h a t s u r r o u n d i n g the two a i r p o r t s , a r e o f i m p o r t a n c e . 

S o u t h a m p t o n h a s a s i g n i f i c a n t a d v a n t a g e o v e r B o u r n e m o u t h i n t e r m s o f i t s l o c a t i o n , i t a l s o has a l a r g e r c a t c h m e n t a r e a and a more e x t e n s i v e 
*ange o f s e r v i c e s . 

On t h e o t h e r h a n d , S o u t h a m p t o n a i r p o r t p r i v a t e l y owned a n d f r o m t i m e t o t i m e t h e r e h a v e b e e n d o u b t s a b o u t i t s f u t u r e . 

F u r t h e r m o r e , i t o c c u p i e s a r e s t r i c t e d s i t e w h i c h a f f o r d s l i t t l e s c o p e f o r e x p a n s i o n t o e n a b l e t h e a i r p o r t t o embrace a w i d e r r o l e . 

T h e r e i s room f o r f u r t h e r d e v e l o p ­
ment a t B o u r n e m o u t h a i r p o r t , b u t t h e r e i s c o n s i d e r a b l e l o c a l o p p o s i t i o n t o i t s e x p a n s i o n . 

T h e G o v e r n m e n t doe3 n o t e n v i s a g e a n y m a j o r change i n t h e r o l e s o f B o u r n e m o u t h a n d S o u t h a m p t o n a i r p o r t s o r a n y r e q u i r e m e n t f o r s i g n i f i c a n t a d d i t i o n a l d e v e l o p ­
ment a t e i t h e r a i r p o r t . 

T h e p r i n c i p a l r o l e f o r a n y a i r p o r t i n t h i s a r e a i s t o p r o v i d e a l i n k w i t h t h e C h a n n e l I s l a n d s . 

T h e G o v e r n m e n t c o n s i d e r s t h a t i n t h i s c o n n e c t i o n S o u t h a m p t o n h a s c e r t a i n a d v a n t a g e s o v e r B o u r n e m o u t h , t h a t i t s h o u l d r e c e i v e p r e f e r e n c e i n t h e l i c e n s i n g o f s e r v i c e s t o t h e C h a n n e l I s l a n d s , t h a t t h e a i r p o r t management s h o u l d b e e n c o u r a g e d t o m a i n t a i n and d e v e l o p t h e r o l e o f S o u t h a m p t o n as a c a t e g o r y C a i r p o r t , a n d t h a t B o u r n e m o u t h
1 s f u n c t i o n w i l l be l a r g e l y as a c a t e g o r y D 
a i r p o r t . 

133 
D u r i n g the c o u r s e o f t h e c o n s u l t a t i o n s a g o o d d e a l o f c o n c e r n was e x p r e s s e d a b o u t a i r c r a f t n o i s e a t B r i s t o l , B o u r n e m o u t h a n d S o u t h a m p t o n a i r p o r t s , a n d i n r e l a t i o n t o t h e v o l u m e o f t r a f f i c t h e r e a r e a s i g n i f i c a n t number o f p e o p l e a f f e c t e d b y n o i s e a t S o u t h a m p t o n . 

H o w e v e r , g i v e n t h e l i m i t e d r o l e s w h i c h a r e now e n v i s a g e d f o r B o u r n e m o u t h and B r i s t o l a i r p o r t s , and t h e p h y s i c a l c o n s t r a i n t s on S o u t h a m p t o n a i r p o r t ^ 
t h e G o v e r n m e n t d o e s n o t c o n s i d e r t h a t a i r c r a f t n o i s e d i s t u r b a n ^ 
s h o u l d be a m a j o r p r o b l e m a t a i r p o r t s i n S o u t h W a l e s a n d S o u t h West E n g l a n d . 

F i n a l l y , u n d e r t h e G o v e r n m e n t s d e v o l u t i o n p r o p o s a l s , the W e l s h A s s e m b l y w o u l d h a v e r e s p o n s i b i l i t y f o r p l a n n i n g and e n v i r o n m e n t a l m a t t e r s a s s o c i a t e d w i t h any f u t u r e a i r p o r t development i n W a l e s . 

## ^ T L A N D

As the c o n s u l t a t i o n document r e c o g n i s e d , S c o t l a n d f o r m s R e l a t i v e l y d i s t i n c t u n i t i n a i r p o r t p l a n n i n g t e r m s . 

T h e 
8 c o p  f
 
d i v e r t i n g L o n d o n t r a f f i c t o S c o t l a n d a p a r t f r o m e o r t f a f f j .  w i t h S c o t t i s h o r i g i n s o r d e s t i n a t i o n s a t p r e s e n t c l n t
 
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t h r o u g h L o n d o n , i s n e g l i g i b l e , a n d , w i t h t h e n g
 
P l a i t e d e x c e p t i o n o f t h e e x t e n t t o w h i c h p e o p l e i n t h e B o r d e r s m i S h t l o o k t o w a r d s t h e N o r t h o f E n g l a n d , t h e r e i s no o v e r l a p 
^"i th t h e c a t c h m e n t a r e a s o f a i r p o r t s i n E n g l a n d a n d 7 / a l e s . 

Hi  
8 t o r i c a l l y j a i r t r a v e l has b e e n more d e v e l o p e d on d o m e s t i c 
0 u t e s i n S c o t l a n d t h a n i n t h e E n g l i s h r e g i o n s . 

T h e d i s t a n c e s S o l v e d a n d t h e r e l a t i v e a t t r a c t i v e n e s s o f a i r t r a v e l t o Q n , c o m p a r e d w i t h r o a d a n d r a i ^ . , have c o n t r i b u t e d g r e a t l y the g r o w t h o f G l a s g o w a n d E d i n b u r g h a i r p o r t s t o become t h e C
o n d and f o u r t h l a r g e s t o u t s i d e t h e L o n d o n a r e a i n 1976, a n d 
0
u S h the i m p o r t a n c e o f t h e L o n d o n r o u t e c o u l d d i m i n i s h , t h i s 
8 h o u l d -u^ 
oe more t h a n o f f s e t b y t h e d e v e l o p m e n t o f d i r e c t r o u t e s 
0 t h e r d e s t i n a t i o n s . 

I n r e c e n t y e a r s , A b e r d e e n , S u m b u r g h ana v i r*v A r i c w a l i a i r p o r t s h a v e a l l e x p e r i e n c e d a b o v e a v e r a g e g r o w t h 
^ 
i n t e r l i n e p a s s e n g e r i s one who c h a n g e s p l a n e s a t a n r P o r t a n d has no o t h e r r e a s o n f o r v i s i t i n g t h e a i r p o r t . 

i n p a s s e n g e r a n d a i r c r a f t movements as a r e s u l t o f t h e s t i m u l u s o f o i l r e l a t e d a c t i v i t i e s , a n d A b e r d e e n h a s b e e n t h e f a s t e s t g r o w i n g a i r p o r t i n t h e U n i t e d K i n g d o m . 

F i n a l l y , t h e S c o t t i s h H i g h l a n d s a n d I s l a n d s a e r o d r o m e s , w h i l e n o t so s i g n i f i c a n t i n t e r m s o f t h e number o f p a s s e n g e r s h a n d l e d , h a v e a n i m p o r t a n t s o c i a l f u n c t i o n i n t h e i s o l a t e d c o m m u n i t i e s w h i c h t h e y s e r v e . 

136 
T h e r e i s no s h o r t a g e o f r u n w a y o r t e r m i n a l c a p a c i t y i n S c o t l a n d a n d a l l t h e m a j o r a i r p o r t s h a v e e x t e n s i v e m o d e r n f a c i l i t i e s , o r a r e b e i n g p r o v i d e d w i t h them b y t h e B A A w h i c h owns A b e r d e e n , E d i n b u r g h , G l a s g o w a n d P r e s t w i c k a i r p o r t s . 

T h e s i t u a t i o n i n C e n t r a l S c o t l a n d i s c o m p l e x a n d t h e r e i s p r o b a b l y a g r e a t e r e x c e s s o f a i r p o r t c a p a c i t y i n t h i s r e g i o n t h a n a n y w h e r e e l s e i n G r e a t B r i t a i n . 

I t i s p r o b a b l e t h a t e c o n o m i e s i n o p e r a t i o n f o r b o t h a i r l i n e a n d a i r p o r t managements w i t h c o n s e q u e n t b e n e f i t s t o p a s s e n g e r s , w o u l d r e s u l t f r o m a b e t t e r m a t c h b e t w e e n c a p a c i t y a n d d e m a n d . 

U n d e r t h e G o v e r n ­
m e n t f 8 
d e v o l u t i o n p r o p o s a l s r e s p o n s i b i l i t y f o r a i r p o r t s i n S c o t l a n d i s t o b e t r a n s f e r r e d t o t h e S c o t t i s h A s s e m b l y , s u b j e c t t o a g r e e m e n t o n t h e a r r a n g e m e n t s f o r a i r p o r t s o p e r a t e d b y t h e BAA a n d CAA a n d t o t h e r e s e r v a t i o n o f f u n c t i o n s r e l a t e d t o the r e g u l a t i o n a n d s a f e t y o f c i v i l a v i a t i o n g e n e r a l l y . 

U l t i m a t e l y t h e r e f o r e , l o n g e r t e r m p o l i c i e s f o r a i r p o r t s i n S c o t l a n d w i l l be a m a t t e r f o r t h e d e v o l v e d a d m i n i s t r a t i o n , b u t t h e G o v e r n m e n t b e l i e v e s t h a t i t may b e h e l p f u l i n t h i s c o n t e x t t o s e t down a t t h i s t i m e i t s v i e w s o n a i r p o r t d e v e l o p m e n t i n S c o t l a n d . 

C e n t r a l S c o t l a n d 
137 
Prom t i m e t o t i m e i t h a s b e e n s u g g e s t e d t h a t t h e r a t i o n a l i s a t i o n o f t h e C e n t r a l S c o t l a n d a i r p o r t s y s t e m s h o u l d he a c h i e v e d b y c o n s t r u c t i n g a c o m p l e t e l y new a i r p o r t b e t w e e n E d i n b u r g h a n d G l a s g o w . 

V e r y l i t t l e s u p p o r t f o r a new a i r p o r t was e x p r e s s e d d u r i n g t h e c o n s u l t a t i o n s , a n d i n t h e G o v e r n m e n t s view s u c h a p r o j e c t , w h i c h w o u l d be e x t r e m e l y e x p e n s i v e , w o u l d r e p r e s e n t a n u n j u s t i f i a b l e w a s t e o f e x i s t i n g a s s e t s . 

T h e P o t e n t i a l r o l e of t h e a i r s t r i p a t Dundee was a l s o e x a m i n e d , b u t 
^ 
v i e w o f t h e i m p r o v e d r o a d c o m m u n i c a t i o n s b e t w e e n T a y s i d e a n d e x i s t i n g a i r p o r t s , t h e r e i s no c a s e f o r e x p a n s i o n o f t h e a i r s t r i p b e y o n d t h e p u r e l y l o c a l r o l e o f a c a t e g o r y D g e n e r a l a v i a t i o n a i r p o r t . 

The G o v e r n m e n t has no d o u b t , t h e r e f o r e , t h a t the a i r p o r t n e e d s o f C e n t r a l S c o t l a n d s h o u l d b e met f o r t h e f o r e s e e a b l e f u t u r e b y t h e e x i s t i n g f a c i l i t i e s a t E d i n b u r g h , 
^ a s g o w a n d P r e s t - w i c k . 

- V i t h i n e x i s t i n g p o l i c i e s , P r e s t w i c k I n d i e s t h e t r a n s a t l a n t i c t r a f f i c f o r t h e w h o l e o f S c o t l a n d ; 
Glasgow c a t e r s f o r d o m e s t i c a n d E u r o p e a n s e r v i c e s f o r t h e W e s t o f S c o t l a n d ; 
a n d E d i n b u r g h p r o v i d e s d o m e s t i c a n d some E u r o p e a n 
8
e r v i c e s f o r t h e E a s t C o a s t . 

H o w e v e r , d u r i n g t h e c o n s u l t a t i o n s there was some p r e s s u r e f o r t h i s d i v i s i o n o f t r a f f i c t o b e a h a n d o n e d op m o d i f i e d , a n d s p e c i f i c a l l y f o r some P r e s t w i c k t r a f f i c to be t r a n s f e r r e d t o G l a s g o w a n d f o r E d i n b u r g h , w i t h i t s m o d e r n 
, ; f a c i l i t i e s , t o be a l l o w e d t o d e v e l o p more f r e e l y a n d t o  
oater* f  
-
A o r B w i d e r r a n g e o f s e r v i c e s . 

W i t h r e g a r d t o the l a t t e r , 
 
t h e p G -J  
i s no d o u b t t h a t i n t h e p a s t t r a f f i c a t E d i n b u r g h was P r e s s e d as a r e s u l t o f t h e b a d l y a l i g n e d runway a n d t h e l a c k o f a d e q u a t e t e r m i n a l f a c i l i t i e s ; 
t r a f f i c i n c r e a s e d b y 20 p e r c e n t i n t h e f i r s t y e a r o f o p e r a t i o n s w i t h t h e new r u n w a y . 

M o r e o v e r ! 

t h e i n c r e a s i n g i m p o r t a n c e o f E d i n b u r g h as t h e c a p i t a l o f S c o t l a n d a n d t h e i n d u s t r i a l d e v e l o p m e n t o n t h e e a s t e r n s i d e o f S c o t l a n d b o t h s u g g e s t t h a t t h e r e l a t i v e i m p o r t a n c e o f E d i n b u r g h i s l i k e l y t o i n c r e a s e . 

138 
The r e s p e c t i v e r o l e s o f P r e s t w i c k a n d G l a s g o w a r e c l o s e l y r e l a t e d b o t h t o e a c h o t h e r a n d a l s o t o E d i n b u r g h . 

A l t h o u g h a n e x t e n s i o n o f t h e runway a t G l a s g o w a n d some o t h e r d e v e l o p m e n t w o u l d b e n e c e s s a r y b e f o r e t h e a i r p o r t c o u l d h a n d l e a l l l o n g h a u l t r a f f i c , e i t h e r G l a s g o w o r P r e 3 t w i c k i s c a p a b l e
 
0 ? 

h a n d l i n g t h e j o i n t demand a n t i c i p a t e d up t o 
1990. 

S a v i n g a f o r t h e a i r l i n e s a n d t h e B A A , a n d p e r h a p s a b e t t e r s e r v i c e f o r S c o t l a n d , c o u l d be a c h i e v e d b y c o n c e n t r a t i n g s e r v i c e s a t one of o t h e r a i r p o r t . 

I n t h i s c o n n e c t i o n , G l a s g o v / a i r p o r t i s b e t t e r p l a c e d f o r t h e m a i n c e n t r e s o f p o p u l a t i o n , h a s a l r e a d y a n e x t e n s i v e r o u t e n e t w o r k a n d h a n d l e s n e a r l y s i x t i m e s a s many p a s s e n g e r s a s P r e s t w i c k . 

On t h e o t h e r h a n d , P r e s t w i c k w o u l d n o t r e q u i r e any e x t e n s i o n o f i t s r u n w a y , i t has a s u p e r i o r a w e a t h e r r e c o r d t o Gta.sgow a n d a i r c r a f t n o i s e p r e s e n t s l e s s o f p r o b l e m . 

A t t h e p r e s e n t t i m e P r e s t w i c k f u l f i l  
s a n i m p o r t a n t r o l e as a d i v e r s i o n a i r p o r t a n d as a b a s e f o r t e s t a n d t r a i n i n g a c t i v i t i e s . 

H o w e v e r , i f t h e b u l k o f i t s p a s s e n g e r and c a r g o e s e r v i c e s were t r a n s f e r r e d t o G l a s g o w i t i s d i f f i c u l t to e n v i s a £
e a v i a b l e r o l e f o r P r e s t w i c k a n d t h e e x p e c t a t i o n must b e t h a t  ^ 
a i r p o r t w o u l d c l o s e . 

139 
The c o n c e n t r a t i o n o f s e r v i c e s a t G l a s g o w o r P r e s t w i c i c 
"nfl t h e e n d i n g o f r e s t r i c t i o n s on t h e use b y c e r t a i n s e r v i c e s o f E d i n b u r g h a i r p o r t c o u l d i n t h e l o n g r u n i n c r e a s e a i r s e r v i c e s a n d p r o d u c e a n o v e r a l l b e n e f i t f o r S c o t l a n d a s a w h o l e . 

However, t h e c l o s u r e o f G l a s g o w a i r p o r t o r , p e r h a p s m o r e P r o b a b l y , P r e s t w i c k a i r p o r t c o u l d i n v o l v e w i d e r c o n s i d e r a t i o n s . 

The Government t a k e s t h e v i e w t h a t t h i s i s a n i s s u e w h i c h t h e P r o p o s e d S c o t t i s h A s s e m b l y w o u l d w i s h t o e x a m i n e . 

I n v i e w of t h i s , a n d t h e n e e d t o s t u d y t h e e f f e c t s o f t h e new f a c i l i t i e s 
^ 
E d i  
b u h o v e r a n e x t e n d e d p e r i o d , t h e G o v e r n m e n t h a s c o n c l u d e d n r g 
^ a t e x i s t i n g p o l i c i e s r e l a t i n g t o t h e a l l o c a t i o n o f t r a f f i c 
^ o n g t h e t h r e e l o w l a n d a i r p o r t s s h o u l d b e m a i n t a i n e d g e n e r a l l y , b * t t h a t some g r e a t e r f l e x i b i l i t y c o u l d b e f o l l o w e d i n t h e development o f t r a f f i c a t E d i n b u r g h . 

North. 

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The d i s c o v e r y a n d e x p l o i t a t i o n o f o i  
l i n t h e N o r t h S e a r a n s f o r m e d a number o f t h e a e r o d r o m e s i n t h e N o r t h e r n p a r t o o t l a n d , i n O r k n e y a n d i n S h e t l a n d , a n d e s p e c i a l l y A b e r d e e n arid Sumburgh b o t h o f w h i c h h a v e e x p e r i e n c e d v e r y f a s t r a t e s o f growth i i n r e c e n t y e a r s . 

C o n s i d e r a b l e d e v e l o p m e n t b y b o t h t h e 
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a n d t h e B A A , s u p p o r t e d by t h e G o v e r n m e n t , has b e e n n e c e s s a r y at a umber o f t h e s e a e r o d r o m e s , a n d f u r t h e r i n v e s t m e n t w i l l b e 
^ n i r e d a t some o f t h e m . 

U n t i l 
1975, A b e r d e e n was o p e r a t e d 
^ A A b u t w i t h a c o n s i d e r a b l e g r o w t h o f t h e a i r p o r t , as a o f o i l - r e l a t e d a c t i v i t i e s , r e s p o n s i b i l i t y f o r i t was n a f e r r e d t o t h e B A A , w i t h i t s w i d e r e x p e r i e n c e o f a i r p o r t management a n d o f o p e r a t i n g l a r g e a n d e x p a n d i n g a i r p o r t s . 

A s i m i l a r s i t u a t i o n t o t h a t w h i c h l e d t o a c h a n g e i n o w n e r s h i p a t A b e r d e e n i s now d e v e l o p i n g a t S u m b u r g h a n d , t o a l e s s e r e x t e n t a t I n v e r n e s s a n d K i r k w a l l . 

141 
The c o n s u l t a t i o n document s a i d t h a t t h e p o s s i b i l i t y o f t r a n s f e r r i n g r e s p o n s i b i l i t y f o r t h e 
8 H i g h l a n d s a n d I s l a n d s a e r o d r o m e s f r o m the CAA t o t h e BAA was b e i n g 
0 
e x a m i n e d . 

As t h e s e a e r o d r o m e s a r e o f m a j o r i m p o r t a n c e  t t h e c o m m u n i t i e s t h e y s e r v e a n d i n a number o f i n s t a n c e s v i t a l t o t h e d e v e l o p m e n t o f t h e o i l i n d u s t r y , t h e G o v e r n ­
ment w i s h e d t o a s s e s s t h e n e e d , p a r t i c u l a r l y a t t h o s e a e r o d r o m e s u s e d b y t h e o i l i n d u s t r y , f o r w i d e r a i r p o r t management e x p e r i e n c e a n d r e s o u r c e s t o h a n d l e t h e r a p i d l y g r o w i n g t r a f f i c ; 
t o p l a n a n d s u p e r v i s e t h e e x t e n s i v e n u  
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a d d i t i o n a l i n v e s t m e n t r e q u i r e d ; 
a n d t o e x p l o i t a n y r e v e e a r n i n g p o t e n t i a l . 

T h e G o v e r n m e n t b e l i e v e d i t was i m p o r t e r l  
t a l s o t o e s t a b l i s h t h e a d v a n t a g e s i n t e r m s o f t h e G o v e r n i n d e v o l u t i o n p r o p o s a l s t o b e d e r i v e d f r o m a s s o c i a t i n g t h e o  
r H i g h l a n d s a n d I s l a n d s a e r o d r o m e s w i t h the f o u r m a j o r a i * * P
i n S c o t l a n d as p a r t o f t h e l a r g e l y a u t o n o m o u s S c o t t i s h A i r p o r t s D i v i s i o n o f t h e B A A . 

1U2 
W i t h some s i g n i f i c a n t e x c e p t i o n s , S c o t t i s h o p i n i o n g e n e r a l l y was o p p o s e d t o any c h a n g e i n o w n e r s h i p o f t h e H i g h l a n d s a n d I s l a n d s a e r o d r o m e s ; 
p a r t l y b e c a u s e i t was t h o u g h t t h a t t h e BAA w o u l d b e i n s u f f i c i e n t l y s e n s i t i v e t o l o c a l o p i n i o n , b u t p r i m a r i l y b e c a u s e i t was c o n s i d e r e d t h a t t h e c h a n g e c o u l d l e a d t o a n i n c r e a s e i n t h e c o s t o f a i  
r t r a v e l i n t h e a r e a . 

T h e e v i d e n c e a v a i l a b l e t o t h e Government d o e s n o t s u g g e s t t h a t e i t h e r o f t h e s e f e a r s i s j u s t i f i e d . 

H o w e v e r , g i v e n t h e p r o p o s a l s i n t h e S c o t l a n d B i l l f o r t h e d e v o l u t i o n o f r e s p o n s i b i l i t y f o r a e r o d r o m e s , i t c o n s i d e r s t h a t i t i s p r e f e r a b l e t o l e a v e t h e f u t u r e o w n e r s h i p a n d management o f t h e a e r o d r o m e s f o r d e c i s i o n oy the d e v o l v e d a d m i n i s t r a t i o n . 

T h e G o v e r n m e n t has c o n c l u d e d t h e r e f o r e t h a t , f o r t h e p r e s e n t , t h e H i g h l a n d s and I s l a n d s a e r o d r o m e s ^ w i t h one e x c e p t i o n / 
s h o u l d r e m a i n t h e r e s p o n s i b i l i t y o f t h e C A A . 

^ 3 
^ I n t h e c a s e o f S u m b u r g h w h i c A i s now i n a s i m i l a r P o s i t i o n t o t h a t r e a c h e d e a r l i e r a t A b e r d e e ^ t h e G o v e r n m e n t has c o n c l u d e d t h a t t h e management p r o b l e m s i n v o l v e d i n t h e h a n d l i n g o f t h e s h a r p g r o w t h o f o i l i n d u s t r y t r a f f i c , i n c o n t r o l l i n g i n v e s t m e n t a t t h e a e r o d r o m e , a n d i n d e v e l o p i n g t h e a e r o d r o m e ^ 
f a c i l i t i e s a r e s u c h t h a t a d e c i s i o n s h o u l d n o t b e f u r t h e r d e l a y e d . 

A c c o r d i n g l y , i t h a s b e e n d e c i d e d t h a t S u m b u r g h s h o u l d be t a k e n o v e r b y t h e BAA w i t h o u t d e l a y ^ j / 
E x p e n s i v e f a c i l i t i e s h a v e b e e n p r o v i d e d f o r t h e o i l i n d u s t r y , p a r t i c u l a r l y a t S u m b u r g h , a n d t h e G o v e r n m e n t c o n s i d e r s t h a t i t s t r a f f i c s h o u l d p a y a l a r g e r a n d f a i r e r s h a r e o f t h e c o s t o f t h e s e f a c i l i t i e s . 

T h e C A A */and* 
t h e B A  
^ w i l l t h e r e f o r e b e r e q u e s t e d t o d e v e l o p c h a r g i n g p o l i c i e s a t t h e H i g h l a n d s a n d I s l a n d s a e r o d r o m e a w h i c h r e f l e c t t h i s a i m . 

## General A V I A T I O N

 
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1UU. 

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e B r i t a i n " was c o n c e r n e d e s s e n t i a l l y w i t h a i r p o r t f a c i l  
r e q u i r e d t o meet t h e demand f o r a i r t r a n s p o r t movements-
T h i s i s o n l y p a r t o f c i v i l a v i a t i o n a n d t h e G o v e r n m e n t e S 
r e c o g n i s e s t h a t g e n e r a l a v i a t i o n , a n d w i t h i n t h a t b u s i n a v i a t i o n , i s a n i m p o r t a n t u s e r a n d i n some c a s e s t h e maJ 
u s e r , o f a i r p o r t f a c i l i t i e 8 . 

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I n u  
s c o n s i d e r a t i o n o f g e n e r a l a v i a t i o n f a c i l i t i e s the Government has b e e n i n f l u e n c e d b y two m a i n f a c t o r s : 
t h a t the a c c o m m o d a t i o n o f g e n e r a l a v i a t i o n p r e s e n t s no p r o b l e m i n terms o f t h e a v a i l a b i l i t y o f a e r o d r o m e s o u t s i d e t h e S o u t h E a s t of E n g l a n d a n d t h a t i t s p r i n c i p a l c o n c e r n s h o u l d be f o r h u s i n e s s a v i a t i o n w h i c h , i n t h e f a c i l i t i e s i t r e q u i r e s h a s a e l o s e a f f i n i t y t o a i r l i n e o p e r a t i o n s . 

F a c i l i t i e s f o r p r i v a t e a n d r e c r e a t i o n a l f l y i n g a r e a v a i l a b l e t h r o u g h o u t t h e c o u n t r y and, r e c o g n i s i n g a l w a y s t h e n e e d t o t a k e f u l  
l a c c o u n t o f t h e 
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o f l o c a l c o m m u n i t i e s , t h e i r u s e a n d d e v e l o p m e n t s h o u l d c o n t i n u e t o b o p r i m a r i l y t h e c o n c e r n o f t h e l o c a l p l a n n i n g a u t h o r i t i e s . 

## !H6 A

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A S i n t h e c a s e o f c o m m e r c i a l a v i a t i o n , t h e m a i n p r o b l e m l n S b u s i n e s s a v i a t i o n i s t h e a v a i l a b i l i t y o f a d e q u a t e a i r p o r t a c i l i t i e s i n t h e S o u t h E a s t o f E n g l a n d . 

T h e C i v i l A v i a t i o n t h o r i t y a n d t h e S t a n d i n g C o n f e r e n c e on L o n d o n a n d S o u t h E a s t S i o n a l P l a n n i n g h a v e b e e n s t u d y i n g t h i 3 
i s s u e a n d t h u s h a v e 
^Plemented t h e G o v e r n m e n t
1 s c o n s u l t a t i o n s on a i r p o r t s t r a t e g y , T
h e y hav o p r o d u c e d two r e p o r t s as the b a s i s f o r c o n s u l t a t i o n s W
i * h tho c o n c e r n e d a n d f o r t h e i r a d v i c e t o t h e G o v e r n m e n t on 
0 Iae f a c i l i t i e s f o r g e n e r a l a v i a t i o n i n t h e S o u t h E a s t , t h a t a d v i c e t h e C A A a n d t h e S t a n d i n g C o n f e r e n c e c o n c l u d e d t h a t l i s t i n  
g a e r o d r o m e s s h o u l d b e a b l e t o accommodate t h e ejcpg^-f.- , t e o
 - 
g r o w t h i n g e n e r a l a v i a t i o n i f t h e i r f a c i l i t i e s w e r e 
^ P r o v e d e a a n d i f b u s i n e s s a v i a t i o n w e r e a c c o r d e d some p r e c e d e n c e o v e r r e c r e a t i o n a l f l y i n g , p a r t i c u l a r l y a t a number o f s e l e c t e d a e r o d r o m e s . 

1U7 
T h e BAA r e c o g n i s e s t h e i m p o r t a n c e o f i n t e r l i n i n g t o b u s i n e s s a v a i t i o n a n d i t i s t h e A u t h o r i t y f s p o l i c y t o a l l o w p r o v i s i o n f o r b u s i n e s s a v i a t i o n movements a t H e a t h r o w a n d a t G a t w i c k . 

H o w e v e r , w i t h i n c r e a s i n g c o n g e s t i o n p a r t i c u l a r l y H e a t h r o w i n t h e p e a k h o u r s t h e BAA c o n s i d e r s t h a t i t s h o u l d give p r i o r i t y t o a i r t r a n s p o r t m o v e m e n t s , w h i c h u t i l i s e s c a r c e e 1  
, r e s o u r c e s t o t h e b e n e f i t o f t h e g r e a t e s t number o f a i r p a s s e n £
and f r e i g h t . 

T h e G o v e r n m e n t s u p p o r t s t h e B A A i n t h i s p o l i c y
- ' 
b u t i t r e c o g n i s e s as a r e s u l t t h e n e e d f o r a l t e r n a t i v e a c c o m m o d a t i o n f o r b u s i n e s s a v i a t i o n i n t h e S o u t h E a s t , i n to p a r t i c u l a r a t l o c a t i o n s r e a d i l y a c c e s i b l e t o C e n t r a l L o n d o n , i n d u s t r y on t h e o u t s k i r t s o f L o n d o n a n d t o s c h e d u l e d i n t e r ­
n a t i o n a l a i r s e r v i c e s . 

F o l l o w i n g t h e a d v i c e o f t h e C A A ano 
3 
S t a n d i n g C o n f e r e n c e , b a s e d on t h e i r s t u d i e s a n d t h e c o n s u l t t h e y h a v e u n d e r t a k e n , t h e G o v e r n m e n t c o n s i d e r s t h a t t h e a i r P 
t a t B i g g i n H i l l  
, L e a v e s d e n , L u t o n , N o r t h o l t , S o u t h e n d a n d Stafl c o u l d s a t i s f a c t o r i l y f i l  
l t h a t r o l e . 

1U8 
L u t o n , S o u t h e n d a n d S t a n s t e d a r e f u l l y d e v e l o p e d c o m m e r c i a l a i r p o r t s w i t h t h e a b i l i t y t o h a n d l e a l l **t y p e s** of b u s i n e s s a v i a t i o n i n c l u d i n g e x e c u t i v e j e t s . 

B u t n o n e o f f u l f i l s t h e r e q u i r e m e n t f o r a b u s i n e s s a v i a t i o n a i r p o r t c l o s e to L o n d o n a n d t o H e a t h r o w a n d G a t w i c k . 

T h e C A A i d e n t i f i e d B i g g i n H i l  
l a n d N o r t h o l t a s m e e t i n g t h i s l a s t a n d most i m p o r t a n t r e q u i r e m e n t . 

N o r t h o l t , w h i c h i s o n l y 5 m i l e s f r o m H e a t h r o w , i s owned b y t h e M i n i s t r y o f D e f e n c e a n d w h i l e t h e M i n i s t r y i s b i l l i n g t o c o n t i n u e t o make t h e a e r o d r o m e a v a i l a b l e f o r c i v i l o p e r a t i o n s , t h e r e a r e e n v i r o n m e n t a l a n d o p e r a t i o n a l c o n s t r a i n t s , E l a t i n g t o t h e r u n w a y a n d i t s p r o x i m i t y t o H e a t h r o w w h i c h l i m i t the t y p e a n d number o f movements b y c i v i l a i r c r a f t a t N o r t h o l t . 

I n v i e w o f t h e l i m i t e d e x t e n t t o w h i c h f u r t h e r c i v i l u s e o f N o r t h o l t i s p o s s i b l e , t h e C A A a n d S t a n d i n g C o n f e r e n c e e o n c l u d e d t h a t t o accommodate demand f r o m t h e N o r t h a n d We3t o f London g r e a t e r u s e m i g h t be made o f L e a v e s d e n f o r n o n - j e t b u s i n e s s a v i a t i o n . 

L e a v e s d e n a i r p o r t w h i c h i s 25 m i l e s f r o m L o n d o n a n d c l o s e t o t h e M l a n d M25 i s owned b y t h e M i n i s t r y o f D e f e n c e a n d i s a t p r e s e n t on l e a s e t o R o l l s R o y c e L t d . 

T h e i r i e a s e e x p i r e s i n J u n e 
1978 
a n d d i s c u s s i o n s a r e c u r r e n t l y b e i n g 
6 
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to d e c i d e f u t u r e a r r a n g e m e n t s . 

I n t h e l i g h t o f t h e l i m i t e d a d d i t i o n a l u s e t h a t c a n b e 
^ d e o f N o r t h o l t a n d L e a v e s d e n , e s p e c i a l l y b y e x e c u t i v e j e t s , t h e Government b e l i e v e s t h a t t h e f u t u r e u s e o f B i g g i n H i l  
l i s Of Ti P a r t i c u l a r i m p o r t a n c e . 

B i g g i n H i l l  
, w h i c h i s owned b y t h e r i ( i o n B o r o u g h o f B r o m l e y , i s 
15 
m i l e s f r o m c e n t r a l L o n d o n and w i t h i n UO m i n u t e s o f G a t w i c k and 70 
m i n u t e s o f H e a t h r o w by The G o v e r n m e n t p r o p o s e s , t h e r e f o r e , t o o p e n d i s c u s s i o n s B o r o u g h C o u n c i l a n d o t h e r s c o n c e r n e d w i t h a v i e w t o e s t a b l i B i g g i n H i l  
l as a m a j o r b u s i n e s s a v i a t i o n a i r p o r t f o r t h e L o  
a r e a . 

I m p r o v e m e n t s i n i t s f a c i l i t i e s w o u l d b e r e q u i r e d ana t h i s r o l e i t w o u l d become a n i n t e g r a l p a r t o f t h e L o n d o n air? 

s y s t e m . 

I n t h e s e c i r c u m s t a n c e s t h e B o r o u g h C o u n c i l may f s a t r a n s f e r o f o w n e r s h i p t o the B A A . 

P l y i n g c l u b s now a t  ^ 
a e r o d r o m e may n e e d t o b e r e l o c a t e d s i n c e t h e s e may n o t b e c o m p a t i b l e w i t h a n e x t e n d e d r o l e f o r B i g g i n H i l l a s a b u s i n e a v i a t i o n a e r o d r o m e . 

151 
A f i n a l b u t i m p o r t a n t a s p e c t o f g e n e r a l a v i a t i o n  i h e l i c o p t e r o p e r a t i o n s . 

T h e G o v e r n m e n t r e c o g n i s e s t h e need f o r a n d t h e a d v a n t a g e s o f a h e l i p o r t t e r m i n a l i n L o n d o n , 
^ 
m i g h t b e o p e r a t e d b y t h e B A A . 

The G o v e r n m e n t i s a n x i o u s h e l i c o p t e r s e r v i c e s t o the c a p i t a l s h o u l d c o n t i n u e a n d I
1 ­
m a i n t a i n c l o s e c o n t a c t w i t h t h e o p e r a t o r s o f s u c h s e r v i c e s t h e l o c a l a u t h o r i t i e s who l a y down t h e c o n d i t i o n s f o r the o f h e l i p o r t s , b o t h o n f u t u r e d e v e l o p m e n t s a n d t h e e n v i r o n ^ 
i m p l i c a t i o n s o f s u c h o p e r a t i o n s . 

## Summary And Conclusions Development Op A N A T I O N A L Airports System

152 
T h e s t r a t e g y f o r a n a t i o n a l a i r p o r t s p o l i c y o u t l i n e d i n t h i s Y / h i t e P a p e r i s b a s e d o n t h e r e c o g n i t i o n t h a t t h e a i r t r a n s p o r t i n d u s t r y t h r o u g h t h e p r o v i s i o n o f s p e e d y a n d c o n v e n i e n t t r a v e l makes a v a l u a b l e c o n t r i b u t i o n t o t h e e c o n o m y ; 
the p r i n c i p l e t h a t a i r t r a n s p o r t f a c i l i t i e s s h o u l d n o t i n g e n e r a l b e s u b s i d i s e d b y t h e t a x p a y e r o r r a t e p a y e r ; 
t h e n e e d to t a k e c a r e f u l a c c o u n t o f t h e e n v i r o n m e n t a l i m p a c t o f a i r p o r t 
^ v e l o p m e n t s ; 
t h e more e f f e c t i v e u s e o f e x i s t i n g a i r p o r t a n d o t h e r i n f r a s t r u c t u r e r e s o u r c e s ; 
t h e a d o p t i o n o f a f l e x i b l e a p p r o a c h i n p l a n n i n g a n d d e v e l o p m e n t w h i c h c a n b e r e l a t e d t o 
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d w i t h a i r p o r t s i n t h e d e v e l o p m e n t o f p o l i c y . 

153 
T 
^n t h e S o u t h E a s t , a d d i t i o n a l c a p a c i t y i s n e c e s s a r y i n the i q p n 
-7uus t o meet t h e f o r e c a s t demand f o r a i r t r a v e l ; 
i n other o a r e a s t h e r e a r e u n d e r u s e d a n d l o s s - m a k i n g a i r p o r t s . 

T h e V e r n m e n t f s o b j e c t i v e i s t o a c h i e v e a g r e a t e r u s e o f a i r p o r t s OUtsidf, 4.x. 

^
c wie S o u t h E a s t , b u t t h e d i v e r s i o n o f p a s s e n g e r s w i t h C
l n s d e s t i n a t i o n s i n t h e S o u t h E a s t t o a i r p o r t s i n o t h e r 
^ t s
* 4.v 
0 f  
W
 
1 
one c o u n t r y n e i t h e r makes s e n s e i n t r a n s p o r t t e r m s n o r W o u l d i t i 
, 
*** -Lead t o a n o v e r a l l d e c r e a s e i n t h e n u m b e r s o f p e o p l e c u oy a i r c r a f t n o i s e . 

The l i m i t e d s c o p e f o r d i v e r t i n g g e r s f r o m t h e L o n d o n a i r p o r t s t o t h o s e i n o t h e r r e g i o n s a o e a ft t h e r e f o r e remove t h e demand f o r a d d i t i o n a l a i r p o r t c a p a c i t y i n t h e S o u t h E a s t o f E n g l a n d . 

H o w e v e r , i n t h e l i g h t o f u n c e r t a i n t i e s b o t h i n t h e s c a l e a n d g e o g r a p h i c a l p a t t e r n of demand y n d t h e c o n t i n u i n g r e q u i r e m e n t f o r r e s t r a i n t i n p u b l i c e x p e n d i t u r e , t h e r e i s a n e e d f o r p a r t i c u l a r c a u t i o n i n t h e c o n s i d e r a t i o n o f p r o j e c t s i n v o l v i n g t h e commitment o f v a s t p u b l i c r e s o u r c e s . 

15LL 
I n p r e s e n t c i r c u m s t a n c e s c l e a r l y f o r e s e e a b l e demands i n 
0 
t h e L o n d o n a r e a s h o u l d be met b y b r i n g i n g f o r w a r d p r o p o s a l s f t h e l i m i t e d e x p a n s i o n o f t h e e x i s t i n g a i r p o r t s . 

O u t s i d e the L o n d o n a r e a , a i r s e r v i c e s s h o u l d b e e n c o u r a g e d t o c o n c e n t r a t e e a t a few s e l e c t e d r e g i o n a l a i r p o r t s w h i c h m i g h t t h e r e b y b e a b l t o o f f e r a r a n g e a n d f r e q u e n c y o f s e r v i c e t o meet l o c a l demand a n d a t the same t i m e p r o v i d e a s t i m u l u s t o a i r t r a v e l o u t s i d e t h e S o u t h E a s t o f E n g l a n d . 

T H E DEMAND *?0i\* 
A I R TRANSPORT 
155 
I n 1976 
Uh m i l l i o n p a s s e n g e r s u s e d a i r p o r t s i n G r e a t l B r i t a i n a n d 31 
m i l l i o n o f t h e s e p a s s e d t h r o u g h t h e f o u r L o n d a i r p o r t s o f H e a t h r o w , G a t w i c k . , S t a n s t e d a n d L u t o n . 

I t i s o r t
 
S 
f o r e c a s t t h a t i n 1990 
t h e number o f p a s s e n g e r s a t a l l a i r P  
e i n G r e a t B r i t a i n w i l l b e b e t w e e n 8
6 
a n d 117 
m i l l i o n a n d a t  ^ 
e L o n d o n a i r p o r t s b e t w e e n 66 
a n d 89 
m i l l i o n . 

T w o - t h i r d s o f  ^ 
f o r e c a s t i n c r e a s e i s a t t r i b u t e d t o t h e g r o w t h o f l e i s u r e t r a ^ 
F o r e c a s t i n g o v e r so l o n g a p e r i o d i n v o l v e s c o n s i d e r a b l e u n c e r t a i n t i e s , b u t t h e c o n t i n u i n g r a p i d g r o w t h o f l e i s u r e t r a f f i c i n t h e L o n d o n a r e a i s s u b j e c t t o p a r t i c u l a r u n c e r t a i n t y , s i n c e i t i n v o l v e s t h e a b i l i t y o f L o n d o n t o accommodate e v e r i n c r e a s i n g numbers o f t o u r i s t s , t h e e x t e n t t o w h i c h f o r e i g n t o u r i s m c a n b e a t t r a c t e d t o a r e a s away f r o m L o n d o n , a n d t h e way i n w h i c h t h e d o m e s t i c demand f o r l e i s u r e f l i g h t s w i l  
l d e v e l o p i n the r e g i o n s where demand h a s h i t h e r t o l a g g e d f a r b e h i n d t h a t i n the S o u t h E a s t . 

The f o r e c a s t s s u g g e s t c o n t i n u e d g r o w t h a f t e r 
1990, b u t the p r o s p e c t s f o r t h e 1990s a n d b e y o n d a r e a m a t t e r o f e v e n g r e a t e r u n c e r t a i n t y . 

T h e G o v e r n m e n t h a s c o n c l u d e d t h a t : 
t h e p r e s e n t f o r e c a s t s r e p r e s e n t t h e b e s t a v a i l a b l e g u i d e f o r t h e p e r i o d up t o 1990 b u t , i n v i e w o f t h e u n c e r t a i n t i e s , i t has d e c i d e d t o m o n i t o r t h e p r e s e n t f o r e c a s t s a n d k e e p t h e a s s u m p t i o n s a n d m e t h o d o l o g y u n d e r r e v i e w , w i t h a v i e w t o t h e p r e p a r a t i o n o f f o r e c a s t s f o r t h e l a t e 1990s a n d b e y o n d . 

T
H
E LONDON AREA 
15?  
Cn the b a s i s o f the l a t e s t a i r t r a f f i c f o r e c a s t s t h e 
" "
r r j n e n t has r e a c h e d o r c o n f i r m e d t h e f o l l o w i n g c o n c l u s i o n s on t h e h a n d l i n g o f demand i n t h e S o u t h E a s t up t o 
1990. 

(2) 
 
T h e r e 
i s 
no r e q u i r e m e n t f o r o r p o s s i b i l i t y 
o f 
a 
new a i r p o r t a n d t h e 
d e c i s i o n 
t o 
a b a n d o n 
the 
I c a p l
a i r p o r t 
p r o j e c t 
i s 
r e a f f i r m e d . 
(3) 
 
T h e BAA p r o p o s a l s 
f o r 
a f o u r t h t e r m i n a l a t 
Heathrow 
a i r p o r t 
t o 
r a i s e 
t h e 
c a p a c i t y 
t o 38 
m i l l i o n 
p a s s e r s 
a y e a r 
s h o u l d b e 
e x a m i n e d 
a t 
a p u b l i c 
i n q u i r y . 
(U) 
 
P r o p o s a l s 
s h o u l d b e b r o u g h t 
f o r w a r d b y 
the 
BAA ?
a s e c o n d 
t e r m i n a l a t 
G a t w i c k a i r p o r t t o 
r a i s e 
the 
c a p a c i t y 
t o 
25 
m i l l i o n p a s s e n g e r s 
a 
y e a r . 
(5) 
 
P r o p o s a l s 
s h o u l d b e b r o u g h t 
f o r w a r d b y t h e 
BAA to 
e x t e n d c a p a c i t y a t S t a n s t e d A i r p o r t t o h a n d l e h 

m i l l i o n 
p a s s e n g e r s 
a 
y e a r . 
(6) 
 
C a p a c i t y a t 
L u t o n A i r p o r t 
s h o u l d b e 
r e s t r i c t e d 
to 
c a t e r 
f o r 5 m i l l i o n p a s s e n g e r s 
a 
y e a r . 
158 
T h e f o u r a i r p o r t s t o g e t h e r w o u l d t h u s p r o v i d e a t o t a l c a p a c i t y f o r t h e L o n d o n a r e a o f a b o u t 
72 
m i l l i o n p a s s e n g e r s ­
-
t h e G i v e n t h e p a r t i c u l a r u n c e r t a i n t i e s a b o u t t h e h i g h e r end 01 
r a n g e o f a i r t r a f f i c f o r e c a s t s , a n d t h e n e e d t o a v o i d t h e p r e m a t u r e a n d p e r h a p s u n n e c e s s a r y commitment o f c o s t l y a n a r i s k new a i r p o r t d e v e l o p m e n t s , t h e G o v e r n m e n t r e g a r d s t h e s e p r o p o s e d d e v e l o p m e n t s a s s u f f i c i e n t f o r a c c o m m o d a t i n g a i r i n the L o n d o n a r e a d u r i n g t h e 1980s. 

T h e p r o p o s e d d e v e l o p m e n t s a* 
(h) 
(5) 
a n d (6) 
w i l l , l i k e t h a t a t 
(3) 
h e s u b j e c t t o t h e 
^ c e s a s r y p l a n n i n g p r o c e d u r e s a n d t h e s e , t o g e t h e r w i t h t h e way l n w h i c h demand f o r a i r t r a v e l d e v e l o p s , w i l l b e r e l e v a n t t o t h e 
^ d e r a n d t i m i n g o f t h e v a r i o u s p r o j e c t s . 

T h e r e s h o u l d b e n o f a t h e r e x p a n s i o n o f t h e L o n d o n a i r p o r t s i n t h e c u r r e n t p h a s e o f a i r p o r t s t r a t e g y . 

159 
I n t h e l o n g e r t e r m a d d i t i o n a l c a p a c i t y w i l l a l m o s t 
 
a i n l y
 
r e q u i r e d i n t h e L o n d o n a r e a . 

H o w e v e r , t h e 
 
D
e e i*nment a c c e p t s t h a t l i m i t s s h o u l d b e p l a c e d o n t h e g r o w t h of e 
-^-sting a i r p o r t s a n d has c o n c l u d e d t h a t : 

(7) 
 
H e a t h r o w ' s 
u l t i m a t e 
d e v e l o p m e n t 
w o u l d b e 
l i m i t e d 
t o 
n o t 
more t h a n f o u r 
t e r m i n a l s ; 
( 
) 
t h e 
p r o p o s a l f o r 
a s e c o n d 
runway a t 
G a t w i c k 
s h o u l d 
n o t b e 
r e v i v e d , 
w h i c h e f f e c t i v e l y 
l i m i t s 
d e v e l o p ­
ment 
a t 
G a t w i c k t o 
a two 
t e r m i n a l 
a i r p o r t j 
(9)  
L u t o n a i r p o r t i s 
n o t 
s u i t a b l e 
f o r 
d e v e l o p m e n t 
a s 
a 
m a j o r a i r p o r t t o 
accommodate 
more 
t h a n 
t h e 
5 m i l l i o n p a s s e n g e r s 
e n v i s a g e d 
i n c o n c l u s i o n 
( 6 ) . 
With  
a c o n t i n u i n g i n c r e a s e i n t h e u s e o f l a r g e r a i r c r a f t a n d i m p r o v e m e n t s i n a i r t r a f f i c c o n t r o l , a n y l o n g e r t e r m p r o v i s i o n f o r t h e L o n d o n a r e a s h o u l d n o t i n v o l v e t h e c o n s t r u c t i o n o f a f o u r runway a i r p o r t as e n v i s a g e d i n the e a r l i e r S t a n s t e d and R o s k i l l p r o p o s a l s . 

I n the l i g h t of t h i s , t h e G o v e r n m e n t w i l l c o n s i d e r how a d d i t i o n a l c a p a c i t y b e y o n d 1990 
c a n b e p r o v i d e d . 

T h i s w i l l i n c l u d e 
(10) 
( a ) 
a m a j o r e x p a n s i o n o f S t a n s t e d ; 
o r 
(b) 
 
t h e d e v e l o p m e n t o f a n e x i s t i n g m i l i t a r y a i r f i e l d as a c i v i l a i r p o r t ; 
o r 
( c ) 
 
t h e c o n s t r u c t i o n o f a new a i r p o r t . 

## The Rest Of England And Wales

161 
O u t s i d e t h e S o u t h E a s t i t i s n o t e n v i s a g e d t h a t a n y a i r p o r t s w h e t h e r f o r p a s s e n g e r o r c a r g o t r a f f i c w i l l be 
9 
bieve r e q u i r e d . 

T h e G o v e r n m e n t b e l i e v e s t h a t e f f o r t s t o acru­
g r e a t e r u s e o f a i r p o r t s o u t s i d e t h e S o u t h E a s t w i l l be y.s e 
 
s b y 
 
t h e d e v e l o p m e n t o f a c o h e r e n t a i r p o r t s p o l i c y w h i c h some r a t i o n a l i s a t i o n o f t h e e x i s t i n g p a t t e r n o f a i r p o r t i d e n t i f i e s a l i m i t e d r a n g e o f a i r o o r t s a t v / h i c h oassi s e r v i c e s m i g h t b e c o n c e n t r a t e d . 

I n a d d i t i o n , t h e Gov ci c o n s i d e r s t h a t i t s h o u l d b e p o s s i b l e t o a c h i e v e a g r e a t a i r , P o r t s o u t s i d e t h e S o u t h E a s t b y c h a r t e r a n d l e i s u r e s e r v i c e s B e r i n g f o r B r i t i s h h o l i d a y m a k e r s t r a v e l l i n g o v e r s e a s a n d b y doming t o u r i s t t r a f f i c . 

The G o v e r n m e n t h a s r e a c h e d t h e f o l l o w i n g c o n c l u s i o n s Levant to the d e v e l o p m e n t o f r e g i o n a l a i r p o r t s i n E n g l a n d a n d W a l e s . 

(11) 
 
T h e r e i s 
no r e q u i r e m e n t 
f o r 
a new a i r p o r t 
o u t s i d e 
t h e 
S o u t h E a s t 
o f E n g l a n d a n d w i t h 
t h e 
p r e p o n d e r ­
a n c e o f 
c a r g o 
c a r r i e d on p a s s e n g e r a i r c r a f t 
a n 
a l l 
c a r g o 
a i r p o r t w o u l d n o t 
b e 
v i a b l e . 
(12) 
 
M a n c h e s t e r 
I n t e r n a t i o n a l 
a i r p o r t , 
w h i c h i s 
w i t h i n 
a n A s s i s t e d 
A r e a , 
i s 
w e l l 
l o c a t e d 
t o 
s e r v e 
i m p o r t a n t c e n t r e s o f p o p u l a t i o n a n d i n d u s t r y a n d has a d e q u a t e f a c i l i t i e s t o meet e x p e c t e d demand u n t i l a t l e a s t 1990. 

I t s h o u l d c o n s o l i d a t e i t s 

p o s i t i o n 
a s 
a g a t e w a y 
i n t e r n a t i o n a l 
a i r p o r t and 
as 
t h e 
p r i n c i p a l a i r p o r t 
o u t s i d e 
t h e 
S o u t h E a s t 
o f 
E n g l a n d . 
(13)  T h e r e 
i s 
no 
r e q u i r e m e n t 
f o r a s e c o n d 
g a t e w a y 
a i r p o r t , 
b u t 
e l s e v / h e r e 
i n C e n t r a l 
E n g l a n d , 
B i r m i n g h a m a n d E a s t M i d l a n d s a i r p o r t s , 
as 
c a t e g o r y 
B a i r p o r t s , 
s h o u l d 
f u l f i l 
i m p o r t a n t 
r o l e s 
i n 
s e r v i n g 
t h e 
r e q u i r e m e n t s 
o f 
t h e 
M i d l a n d s f o r 
s h o r t 
a n d medium r a n g e s c h e d u l e d a n d c h a r t e r s e r v i c e s . 

L e e d s / B r a d f o r d a i r p o r t s h o u l d f u l f i l a s i m i l a r , t h o u g h l e s s e x t e n s i v e r o l e , i n t h e s m a l l e r n c a t c h m e n t a r e a o f Y o r k s h i r e a n d H u m b e r s i d e .  
I
t h e l o n g e r t e r m , d e p e n d i n g on t h e d e v e l o p m e n t o f d e m a n d , E a s t M i d l a n d s a i r p o r t may assume a w i d e r r o l e i n t h e n a t i o n a l a i r p o r t s s y s t e m . 

(1U) 
I n N o r t h e r n E n g l a n d demand i s 
l i k e l y 
t o 
r e m a i n 
i n s u f f i c i e n t 
t o 
j u s t i f y 
a g a t e w a y 
i n t e r n a t i o n a l 
a i r p o r t . 
N e w c a s t l e 
a i r p o r t , a s 
t h e 
m a i n 
r e g i
o n u  
e 

c a t e g o r y 
3 a i r p o r t f o r t h e 
r e g i o n , 
s h o u l d 
c o n t i ^
e 

t o m a i n t a i n i t s 
e x i s t i n g 
a d v a n t a g e 
o v e r 
T e e s - s i d
e 

a i r p o r t 
i n t e r m s 
o f t h e 
amount 
o f 
t r a f f i c 
a n d t h
e 

r a n g e 
o f 
s e r v i c e s , 
h u t 
t h e 
l o c a t i o n 
o f 
T e e s - s i d
a i r p o r t 
i s 
s u c h t h a t 
i t 
c a n b e e x p e c t e d 
to 
have 
c o n t i n u i n g r o l e 
as 
a c a t e g o r y 
C a i r p o r t . 
(15) 
 
I n S o u t h W a l e s a n d S o u t h West E n g l a n d t h e 
c a t c h ' 
ment 
a r e a s 
o f 
t h e 
v a r i o u s 
a i r p o r t s 
a r e 
s m a l l -
G l a m o r g a n a i r p o r t , w i t h 
i t s 
m o d e r n b u t 
u n d e r 
u 
u t i l i s e d 
f a c i l i t i e s , 
s h o u l d d e v e l o p 
as 
t h e 
c &
B a i r p o r t i n t h i s 
a r e a . 
(16) 
 
A p a r t f r o m t h e 
a i r p o r t s 
c o n s i d e r e d 
i n 
c o n c l u s *
(12) 
t o 
(15), 
no o t h e r 
a i r p o r t i n E n g l a n d and 
e W a l e s i s e x p e c t e d t o f u l f i l a s i g n i f i c a n t r o l  
w i t h i n a n a t i o n a l s t r a t e g y , t h o u g h a number
 
0 * 
t **ifl**^e t h e s e o t h e r a i r p o r t s c a n b e e x p e c t e d t o confc J­
to cater f o r l o c a l needs as e i t h e r **category** C  
or D **a i r p o r t s .**  

## Scotland

1^3 
       The S c o t t i s h a i r p o r t s can 
                                   be considered separately, 
                                                               but their future cannot be divorced from d e c i s i o n s on devolution,  

^ae four p r i n c i p a l a i r p o r t s i n Scotland are owned by the **B r i t i s h**  
Airports A u t h o r i t y and over the l a s t f i v e years v i r t u a l l y **a new**  
a i r p o r t has been b u i l t at Edinburgh, extensive new **f a c i l i t i e s**  
have been provided at Aberdeen, while Glasgow and Prestwick **are**  
W
e H equipped t o meet the t r a f f i c demand. 

The Government **has**  
concluded that:  

( l ? ) 
there i s 
no requirement f o r 
a new a i r p o r t i n 
 
Central **Scotland;**  
(18) 
 
g e n e r a l l y any m o d i f i c a t i o n i n 
the r o l e s of 
the 
 
three lowland a i r p o r t s at Prestwick, Glasgow **and**  
Edinburgh should be a matter f o r 
the proposed 
 
S c o t t i s h **Assembly;**  
£(19) 
Sumburgh aerodrome should be acquired by the 
BAA 
from the CAA;J 
(19A) 
the future arrangements f o r 
the /remaining^ 
Highlands and Islands aerodromes should be decided 
by the S c o t t i s h 
Assembly; 
charging p o l i c i e s at the Highlands and **Islands**  
aerodromes should be developed to **provide that** o i l r e l a t e d t r a f f i c at these aerodromes **i s not**  
subsidised by the **taxpayer.**  
1(514. 

G e n e r a l a v i a t i o n , w h i c h i n c l u d e s a l l f l y i n g o t h e r t h e o p e r a t i o n s o f m a j o r a i r l i n e s , i s a n i m p o r t a n t u s e r of a i r p o r t f a c i l i t i e s . 

A d e q u a t e p r o v i s i o n f o r p r i v a t e a n d r e c r e a t i o n a l f l y i n g i s g e n e r a l l y a v a i l a b l e t h r o u g h o u t the c o u n t r y , b u t b u s i n e s s a v i a t i o n w h i c h s o m e t i m e s r e q u i r e s the a c e S
runway a n d n a v i g a t i o n a l f a c i l i t i e s o f a m a j o r a i r p o r t p l  
a n a d d i t i o n a l demand o n t h e c a p a c i t y o f a i r p o r t s i n t h e Sou e E a s t o f E n g l a n d . 

T h e Government b e l i e v e s t h a t t h e r e q u i r o f b u s i n e s s a v i a t i o n i n t h e S o u t h E a s t c a l l f o r s p e c i f i c r e c o g n i t i o n a n d i t has c o n c l u d e d t h a t : 

(21) 
 
t h e 
a i r p o r t s 
a t 
B i g g i n H i l l  
, 
L e a v e s d e n , 
L u t o n , 
N o r t h o l t , 
S o u t h e n d a n d S t a n s t e d 
s h o u l d meet 
the 
demand; 
(22) 
 
d i s c u s s i o n s 
s h o u l d 
t a k e 
p l a c e 
w i t h 
t h e 
L o n d o n 
a
B o r o u g h 
o f B r o m l e y a n d o t h e r s 
c o n c e r n e d 
w i t h
v i e w 
t o 
e s t a b l i s h i n g 
B i g g i n H i l l 
a s 
t h e 
m a j o r 
g e n e r a l 
a v i a t i o n 
a i r p o r t f o r 
t h e 
L o n d o n a r e a 
t o 
i t s 
p o s s i b l e 
a c q u i s i t i o n b y t h e 
B r i t i s h 
A i r p o r t s 
A u t h o r i t y ; 
v l 

(23) 
 
a d e q u a t e 
h e l i c o p t e r 
f a c i l i t i e s 
s h o u l d b e 
p r o
. , 
r 
to 
p o s s i b l y 
b y t h e 
B r i t i s h A i r p o r t s A u t h o r i t y , 
meet demand f o r h e l i c o p t e r s e r v i c e s t o ano­
c e n t r a l L o n d o n . 

I65 
The G o v e r n m e n t w i l l t a k e a c c o u n t o f a i r p o r t s p o l i c y i n i s s u i n g p e r m i t s f o r s c h e d u l e d a n d c h a r t e r s e r v i c e s h y o v e r s e a s o p e r a t o r s . 

W i t h r e g a r d t o B r i t i s h o p e r a t o r s , and s i m i l a r l y , the C i v i l A v i a t i o n A u t h o r i t y i n c o n s i d e r i n g a p p l i c a t i o n s f o r new s e r v i c e s and t h e r e n e w a l o f e x i s t i n g l i c e n c e s w i l l h e e x p e c t e d t o t a k e a c c o u n t o f a i r p o r t s s t r a t e g y i n a c c o r d a n c e w i t h t h e p o l i c y g u i d a n c e w h i c h h a s b e e n g i v e n t o t h e A u t h o r i t y . 

166 
L o s s e s a t l o c a l a u t h o r i t y a i r p o r t s i n E n g l a n d a n d V/ales e c u r r e n t l y r u n n i n g a t £5-6 m i l l i o n a y e a r . 

W h i l e t h e 
8 u h s i a " i e s f o r a i r t r a n s p o r t i n t h e H i g h l a n d s a n d I s l a n d s a r e P a r t i c u l a r e x c e p t i o n , t h e r e c a n b e no g e n e r a l j u s t i f i c a t i o n f o r s u b s i d i s i n g a i r p o r t s a n d a i r s e r v i c e s . 

A t t h e l o c a l 
1 r p o r t s w h i c h w i l l r e m a i n u n d e r l o c a l a u t h o r i t y c o n t r o l t h e r e Will D 
e a c o n t i n u i n g n e e d f o r e c o n o m i e s a n d t h e a p p l i c a t i o n o f 
0 l i c i e s a i m e d a t r e d u c i n g f i n a n c i a l l o s s e s as e f f e c t i v e l y as P
Q s s i b l
.

e w i l l c o n s i d e r a n y p r o p o s a l s p u t
 
f o r w a r d The G o v e r n m e n t by j 
0 
c a l a u t h o r i t i e s
 
and t h e BAA f o r t h e t r a n s f e r o f
 
t h e o w n e r ­
8
h i P 
o f 
-
U j  - 
a i r p o r t s i n t h e l i g h t o f t h e D o l i c y o u t l i n e d i n t h i s 
* a P e r . 

168 
A d e q u a t e a c c e s s t o a i r p o r t s i s a n e s s e n t i a l r e q u i r e m e n t and t h i s w i l  
l he among t h e f a c t o r s t a k e n i n t o a c c o u n t b y the D e p a r t m e n t s c o n c e r n e d w i t h r o a d b u i l d i n g p r o g r a m m e s . 

//here 
0 
i m p r o v e m e n t s t o l o c a l r o a d s may be t h o u g h t d e s i r a b l e t o accon^
d a t e i n c r e a s e d t r a f f i c due t o a i r p o r t e x p a n s i o n , i t must be 1 
t h e l o c a l a u t h o r i t i e s c o n c e r n e d t o a s s e s s t h e i r p r i o r i t i e s 
^ 
o r
 
t make a n y a p p r o p r i a t e p r o v i s i o n i n t h e i r a n n u a l l o c a l t r a n s p Drogram-nes, on the b a s i s o f whose a s s e s s m e n t T r a n s p o r t S u p p l e m e n t a r y G r a n t s i n E n g l a n d and 7/ales a r e d i s t r i b u t e d . 

u s e I n t h e G o v e r n m e n t s v i e w , i t i s d e s i r a b l e t o make t h e b e s t o f p u b l i c t r a n s p o r t , e s p e c i a l l y t h e i m p o r t a n t u n d e r g r o u n d and a l  
3 
r a i l c o n n e c t i o n s a v a i l a b l e a t H e a t h r o w , G a t w i c k a n d B i r m i n g h T h e r e w i l l be a c o n t i n u i n g n e e d f o r a i r p o r t a u t h o r i t i e s and t h o s e r e s p o n s i b l e f o r o p e r a t i n g p u b l i c t r a n s p o r t s e r v i c e s to w o r k c l o s e l y t o g e t h e r . 

AIRCRAFT 
N O I S E 
o a I69 
D i s t u r b a n c e c a u s e d b y a i r c r a f t n o d s e i s t h e m o s t s e r i p r o b l e m a s s o c i a t e d v / i t h a i r t r a n s p o r t o p e r a t i o n s . 

O v e r the n e x t 
15 
y e a r s t h e r e s h o u l d b e a m a r k e d d e c l i n e i n t h e numbe? 

p e o p l e a d v e r s e l y a f f e c t e d b y a i r c r a f t n o i s e . 

H o w e v e r , t h e G o v e r n m e n t w i l l c o n t i n u e t o d e v e l o p p o l i c i e s t o r e d u c e the on i m p a c t o f t h i s n u i s a n c e a n d t o s e e k i n t e r n a t i o n a l agreement 
 
o f n i t more s t r i n g e n t n o i s e s t a n d a r d s f o r a i r c r a f t . 

I n p u r s u i t h e s e o b j e c t i v e s t h e G o v e r n m e n t h a s d e c i d e d ; 
e 
(2U) 
t o c o n t i n u e i t s e f f o r t s t o f i n d a n a l t e r n a t i *

) 
t o f u n d a programme o f 
r e s e a r c h 
i n t o 
t h e 
r e l a t i o n ­
s h i p b e t w e e n a i r c r a f t n o i s e 
a n d s l e e p 
d i s t u r b a n c e ; 
) 
to r e a f f i r m and c l a r i f y t h e a d v i c e t o l o c a l a u t h o r i t i e s t h a t new h o u s i n g d e v e l o p m e n t s s h o u l d not b e p e r m i t t e d i n a r e a s c l o s e t o m a j o r a i r p o r t s s e r i o u s l y a f f e c t e d b y a i r c r a f t n o i s e . 

## Ihq

A 
a view o f t h e u n c e r t a i n t y r e l a t i n g t o t h e f o r e c a s t s c*i ^
 
C
o r i s t r a i n t s o n p u b l i c e x p e n d i t u r e , t h e G o v e r n m e n t S
V
e s t h a t a s t e p b y s t e p a p p r o a c h t o a i r p o r t d e v e l o p m e n t s 
" *
s i b l e . 

N e v e r t h e l e s s , i t r e c o g n i s e s t h e c o n c e r n t h a t was 
8
e d i n the c o u r s e o f t h e c o n s u l t a t i o n s t h a t t h e on o f e x i s t i n g m a j o r a i r p o r t s c o u l d c o n t i n u e a l m o s t t e l y  
, l e a d i n g t o a n e r o s i o n o f t h e e n v i r o n m e n t a n d t o r *
c u i t : 
f o r t h e l o c a l a u t h o r i t i e s r e s p o n s i b l e f o r 
0 
the a r e a s a f f e c t e d . 

A c c o r d i n g l y , t h e G o v e r n m e n t ha3 
t h a t l i m i t s s h o u l d b e p l a c e d o n t h e d e v e l o p m e n t o f some a i r p o r t s when c i r c u m s t a n c e s make t h i s a P p r o p r i a t e a n d t h a t t h e s e s h o u l d b e d e f i n e d i n terms o f t h e n u m b e r a n d s i z e o f t e r m i n a l s t o b e h u i l t ; 
^ 
to d i s e u 
3CU83 w i t h the 
3 A A , a n d t h e l o c a l a u t h o r i t y m e t h o d o f m e a s u r i n g n o i s e d i s t u r b a n c e , w h i c h c a n b e f u l l y e v a l u a t e d a n d w h i c h i s g e n e r a l l y a c c e p t a b l e ; 

(25) 
 
t o p r o h i b i t t h e 
u s e 
o f 
n o n - n o i s e 
c e r t i f i c a t e d 
s u b s o n i c 
j e t 
a i r c r a f t a c q u i r e d b y a n y 
U n i t e d 
K i n g d o m o p e r a t o r a f t e r 
30 
S e p t e m b e r 
1978 
a n d to 
p r o h i b i t 
f r o m 1 J a n u a r y 1986, 
t h e 
u s e 
o f 
a l l 
n o n - n o i s e 
c e r t i f i c a t e d 
s u b s o n i c 
j e t 
a i r c r a f t on 
t h e 
U n i t e d K i n g d o m 
r e g i s t e r ; 
(26) 
 
t o 
c o n t i n u e 
t o 
s e e k a g r e e m e n t 
w i t h i n 
t h e 
E u r o p e a n C i v i l 
A v i a t i o n C o n f e r e n c e 
o n 
f u r t h e r 
m e a s u r e s 
t o 
p r o m o t e 
t h e 
d e v e l o p m e n t 
a n d u s e 
o^ 
a i r c r a f t 
i n c o r p o r a t i n g t h e 
l a t e s t 
a d v a n c e s 
i n 
n o i s e a b a t e m e n t 
t e c h n o l o g y ^ 
(27) 
 
t o 
s e e k p o w e r s 
t o 
e n s u r e 
t h a t 
a i r p o r t a u t h o r !
c a n d i s c r i m i n a t e b e t w e e n n o i s y 
a n d q u i e t e r 
a i * *
i n 
t h e i r 
c h a r g i n g 
p o l i c i e s ; 
(23) 
 
t o 
c o n t i n u e 
t h e 
u s e 
o f 
runway a l t e r n a t i o n 
a t 
H e a t h r o w a n d t o m a i n t a i n and s t a b i l i s e 
t h e
g

p o l i c y 
o f 
minimum n o i s e 
r o u t e s ; 
(29) 
 
t o 
p h a s e 
o u t f l i g h t s 
b y t h e 
n o i s i e r 
a i r c r a j . " 
 
t 
0 

n i g h t 
a t 
H e a t h r o w , 
G a t w i c k a n d S t a n s t e d 
and
i n d i c a t e 
t o 
t h e 
L u t o n B o r o u g h C o u n c i l 
t h a t 
0 

G o v e r n m e n t w o u l d e x p e c t 
a s i m i l a r p o l i c y  *
a p p l i e d a t L u t o n a i r p o r t ; 
a s s o c i a t i o n s m o d i f i c a t i o n s o f t h e Town a n d C o u n t r y P l a n n i n g G e n e r a l D e v e l o p m e n t O r d e r 
1977 d e s i g n e d t o "bring u n d e r n o r m a l p l a n n i n g c o n t r o l t h e p r o v i s i o n b y t h e BAA o f m a j o r p a s s e n g e r a n d c a r g o t e r m i n a l b u i l d i n g s . 

CONSULTATION 
­
a n r x 
1
7
1 
The G o v e r n m e n t
* 
i n s i d e r s t h a t t h e c o n s u l t a t i o n s o n 
 
c o n s i d e r s a i r p o r t s
 
h a v e
, n v a l u a b l e v a l u a b !  
c o n t r i b u t i o n t o s t r a t e g y made a
 
t h e n * v a n d t h e d e c i s i o n s c o n t a i n e d i n development o f a i r p o r t s p o l i c y a n d t n t h i s W h i t e P a p e r . 

($k) 
The G o v e r n m e n t w i l l c o n t i n u e t o c o n s u l t t h o s e c o n c e r n e d w i t h a i r p o r t d e v e l o p m e n t i n c l u d i n g c o n s u m e r s o f a i r s e r v i c e s a n d a m e n i t y g r o u p s . 

I n v i e w o f t h e p a r t i c u l a r i n t e r e s t s o f the l o c a l p l a n n i n g a u t h o r i t i e s a n a p p r o p r i a t e f o r m a l s t r u c t u r e w i l l be d i s c u s s e d w i t h l o c a l a u t h o r i t y a s s o c i a t i o n s t o e n s u r e t h a t t h e i r i n t e r e s t s a r e t a k e n i n t o a c c o u n t i n t h e f o r m u l a t i o n o f a d v i c e on t h e l o n g e r t e r m a i r p o r t o p t i o n s . 

## F U T U R E P A Y P O L I C Y

M a m a r a n d t t i n by the G h a n c e l l o r of the E x c h e q u e r and the S e c r e t a r y of State for E m p l o y m e n t 
1-
W h - n Cabinet d i s c u s s e d on 22 D e c e m b e r the outlook f o r pay negotiations  i n the r e m a i n d e r of the c u r r e n t r o u n d we w e r e i n v i t e d to put forward a paper on possible a p p r o a c h e s to l o n g e r - t e r m p o l i c y , including institutional p o s s i b i l i t i e s (CM(77) 41st C o n c l u s i o n s ) . 

2 -
The p o l i c i e s  i n e a c h of the past three y e a r s w e r e p r e s e n t e d as t e m p o r a r y expedients to m e e t the p a r t i c u l a r c i r c u m s t a n c e s of the t i m e . 

T h e i r s u c c e s s  i n meeting their l i m i t e d objectives - a s s u m i n g the p r e s e n t round holds as w e l l as it has done so far - along with o u r other e c o n o m i c M e a s u r e s enables us now to r e c o n s i d e r our l o n g e r - t e r m a i m s with r e g a r d t o Pay, where we want to get to o v e r the next few y e a r s and how we m i g h t get there, although in the event we m a y have to settle f o r an a g r e e m e n t f o r one  y on w h i c h we c o u l d b u i l d l a t e r .

e a r l ' 
In this paper we e x a m i n e the options, starting f r o m the p r a c t i c a l Position we expect to be  i n at the end of the c u r r e n t r o u n d  i n J u l y of this Year. 

T H E C O N T E X T F O R T H E D E V E L O P M E N T  O F L O N G E R - T E R M P O L I C Y 
4. 

A s we a p p r o a c h the end of the c u r r e n t round the e c o n o m i c position is 
^kely y i  fa t j i  i i  
y different f r o m that of a y e a r e a r l i e r . 

With s t e r l i n g o b e r a c
 
c a
 
ire.

C U r e , c o m m o d i t y p r i c e s r e a s o n a b l y stable and the benefit of l a s t y e a r ' s Pay j j ^ ^ ^ r a i n t feeding through into p r i c e s , the y e a r - o n - y e a r R e t a i l P r i c e 
^ 
x should have f a l l e n d r a m a t i c a l l y , p e r h a p s showing signs of l e v e l l i n g out 
1Q 
o 8 per cent. 

A v e r a g e e a r n i n g s w i l l have edged up somewhat over e
^ 
C e r *t and, depending p a r t l y on the extent of self-financing p r o d u c t i v i t y e r
^
r n e r h a p s n e a r e r to 15 per cent. 

T a k i n g account of the B u d g e t a r y e
 
S '  P
 
a s u r e s of l a s t N o v e m b e r , those a l r e a d y p r o m i s e d f o r A p r i l and the l i k e l y s r u r t n be  
* 
0 
* 
e r action then, r e a l standards net of tax w i l l for m o s t people 
8 u b s t a n t i a l l y higher than a y e a r e a r l i e r . 

5. 

O n the other hand u n e m p l o y m e n t i s l i k e l y to be s t i l l a r o u n d H m i l l i o n . 

Some c o m m e n t a t o r s w i l l be p r e d i c t i n g , p a r t i c u l a r l y i f e a r n i n g s are at the higher end of the expected range, a r e s u r g e n c e of p r i c e inflation into double f i g u r e s within the following 12 m o n t h s . 

N e g o t i a t o r s , u n l e s s Persuaded o t h e r w i s e , m i g h t seek not only to i n s u r e against this but also to secure i n t h e i r settlements, i g n o r i n g tax benefits, a due s h a r e o . the r e a l i m p r o v e m e n t that the m o r e buoyant state of the e c o n o m y would a p p e a r to justify. 

M a n y e m p l o y e e s , m o r e o v e r , m a y be l e s s c o n s c i o u s of their r e a l gains i n absolute t e r m s than of t h s i r r e l a t i v e l o s s e s through c o m p r e s s i o n of differentials, outstanding a n o m a l i e s ana r e l a t i v i t y c l a i m s , f r u s t r a t e d plans for r e s t r u c t u r i n g etc about w h i c h nothing c o u l d be done f o r two y e a r s u n d e r 
* e £  
6 and 5 p e r cent p o l i c i e s and l e s s than we o r i g i n a l l y hoped i n the p r e s e n t W a d  
. 

M a n y m i g h t w e l l be unwilling to wait u n t i l n o r m a l annual settlement dates to r e c t i f y these. 

T H E B A S I C O B J E C T I V E S : 
I N C R E A S E D E M P L O Y M E N T A N D H I G H E R R E A L 
LIVING S T A N D A R D S . 

R E Q U I R I N G 
M O D E R A T E P A Y S E T T L E M E N T S 
6 - 
In this situation the G o v e r n m e n t m u s t c l e a r l y e m p h a s i s e as the objective o v e r the next two o r three y e a r s and beyond a significant i n c r e a s e to the l e v e l of e m p l o y m e n t as w e l l as i m p r o v e m e nt i n the r e a l l i v i n g standards of those i n w o r k , of p e n s i o n e r s and of the c o m m u n i t y g e n e r a l l y . 

7 - 
A sluggish r e c o v e r y i n w o r l d activity and u n d e r l y i n g s t r u c t u r a l G a n g e s i n the i n d u s t r i a l e c o n o m i e s would m a k e m o r e a m b i t i o u s m a n p o w e r Policies n e c e s s a r y and m a y also m a k e it n e c e s s a r y to continue s h o r t - t e r m employment m e a s u r e s l o n g e r than we b e l i e v e d . 

But on whatever hypothesis 
*
e have the n e c e s r l t y of i m p r o v i n g our r e l a t i v e l y low l e v e l s of p r o d u c t i v i t y i n many a r e a s and this in turn has m u c h to do with i m p r o v i n g investment as 
**th i m p r o v i n g w o r k i n g p r a c t i c e s and m a n a g e m e n t . 

But that takes t i m e . 

V-eanwkile it w i l l only make our competitive p o s i t i o n w o r s e if m o n e y C r e a s e  
s i n pay substantially exceed the i n c r e a s e i n p r o d u c t i o n actually a c h i e v e d ; 
and the effect of this on confidence w i l l tend to d i s c o u r a g e l n v e f i t m e n t , so c o m p o u n d i n g the p r o b l e m . 

Since the i n c r e a s e in p r o d u c t i v i t y is u n l i k e l y to be sustained at m o r e t h ' * * 2 o r 3 p e r cent p e r a n n u m o v e r the next few y e a r s , this points to a d e s i r a b l e l e v e l of settlements of a i o u n d 5 p e r cent. 

9. 

We have p r e s e n t e d our p o l i c i e s since J u l y 1975 as t e m p o r a r y 
 
r r u p t i o n s in the otherwise n a t u r a l o r d e r of things (though we made c j

r
o
r
 
n
r 
 the s t a r t it would be a m a t t e r of y e a r s before i t c o u l d be f u l l y 
e 
e
a
r  * 
0 v  
8 t o * e d ) . 
T h e T r a d e s U n i o n C o n g r e s s ( T U C ) l a s t S e p t e m b e r c a l l e d by an 
r w b e l m i n g m a j o r i t y f o r an o r d e r l y r e t u r n to free c o l l e c t i v e b a r g a i n i n g in 
*m ^ £ £ £ £ i . i o u n d , as e a c h group c a m e to its due date under the 12 month 
^ * 
T h e r e is a t h e o r e t i c a l a r g u m e n t that only free collective b a r g a i n i n g can determine the just l e v e l f o r pay i n a m a r k e t e c o n o m y . 

P e r h a p s m o r e C ogfcntly, m a n y of those with p r a c t i c a l experience of pay negotiations ­
whether trade unionists, e m p l o y e r s o r independent t h i r d p a r t i e s - argue that 0 n  l  
y free collective b a r g a i n i n g c a n sort out the e n o r m o u s v a r i e t y of p r a c t i c a l Problems of adjustment of pay s t r u c t u r e s that inevitably a r i s e f r o m time to t l r n e , quite a p a r t f r o m the effects of the rough justice of an inflexible pay Policy. 

Yet to leave pay d e t e r m i n a t i o n to the v a g a r i e s of the m a r k e t place 
^ t h no guidance whatever c a r r i e s great r i s k s i n our o c o n o m y . 

It is j C l u  t to see how one c a n - f o r cny length of time - have the advantages of e e collective b a r g a i n i n g i f one i s not p r e p a r e d to accept the m a r k e t C Qnsequences i n t e r m s of inflation and u n e m p l o y m e n t , when b a d b a r g a i n s a r e 
8 t*"Uck. 

T h e r e w i l l always be a r i s k of a high going rate of settlement getting 
^stablished by b a d b a r g a i n s , because of leapfrogging and ratchet effects. 

0  
r 1978-79 this r i s k c o u l d be high, given the l e v e l of expectations d e s c r i b e d Paragraph 5 abeve. 

M o r e o v e r there is a growing recognition inside the a e union m o v e m e n t itself that u n l e s s some f r a m e w o r k is e s t a b l i s h e d which e r m i n e s the scope for collective b a r g a i n i n g it w i l l be difficult to m e e t the n e e d s of s o c i a l justice o r the nation's e c o n o m y . 

## S P E C L A L P R O B L E M S O F T H E P U B L I C S E C T O R

r e
8e"  
^ 
e collective b a r g a i n i n g r a i s e s p a r t i c u l a r p r o b l e m s i n the public c
 
c t Q
r
 * 
T r a d i t i o n a l l y these p r o b l e m s have been m e t b y some f o r m of 
0 ^ i p a r i s o n with the l e v e l s of pay, o r amounts of i n c r e a s e , negotiated i n the 
8 
e c t o r a v a n d ^  
6
 (
e S
 
P 
 R e s e a r c h Unit, the W i l b e r f o r c e settlement f o r m i n e r s m o r e r e c e n t l y the f o r w a r d c o m m i t m e n t for f i r e m e n ) . 

y  
T h e r e a r e , however, a n u m b e r of difficulties in operating such a
8 
s t
 
e m a n within a g e n e r a l p o l i c y of totally free collective b a r g a i n i n g . 

F i r s t , 
2
a t c i e v e l  
y S
t e
 
*
h - u p " has a n element of delay. 

T h u s when the m
 
b a s e
( 
0
x
1  "
a Y i n c r e a s e i n the p r i v a t e sector i s e s c a l a t i n g , the public sector a r e o t " P
a r e n t inc l  
y c o n d e m n e d to t r a i l i n g behind; 
when it is d e - e s c a l a t i n g , 
 
a ^ 
a
8
e S
n n u i n c r  
* 
k l i  
c s e r v i c e s w i l l still be reflecting the e a r l i e r , higher e a 
8
e s n gro
 *  the private sector, w h i c h m a y then attempt to r e c o v e r the "lost" 
f Q  
r 
'  
* 
n 1978-79, i n p a r t i c u l a r , such an a p p r o a c h could m e a n settlements r o u to
 
1 l  
p  
s settling e a r l y i n the round, such as l o c a l authority m a n u a l s , of up c e n t
 
a a
*
0ok'
*  time when as indicated above the G o v e r n m e n t would be t o l n ^
e n
 
l r S e C Q  
 *he private sector f o r settlements w e l l within single f i g u r e s . 

 
n ( ^ y * no index linking o r other s y s t e m of c o m p a r i s o n s c a n e n t i r e l y a r
^atur g a i  n i n  
g i n the public s e r v i c e s to m e e t changes o v e r time i n the 
^
 
o t " *he w o r k o r a l o c a l situation. 

T h e private sector c o m p a r i s o n s 
0
top t 
! l  
r 
 
tend to set a f l o o r with additional i n c r e a s e s f o r some groups on r e
^
pay
 
n i r d l y  
, public sector p a y tends to be fixed by r e f e r e n c e to average s e w n aricj  
h e r e  
. 

B e c a u s e public s e r v i c e pay l e v e l s a r e nationwide, e
8
 e *
a u  s e they attract w i d e s p r e a d p u b l i c i t y , they appear to be setting the pace for a l l p r i v a t e s e c t o r groups p a i d below a v e r a g e . 

Y e t if these groups move up, those p a i d above the average a r e l i k e l y to seek c o r r e s p o n d i n g i n c r e a s e s to m a i n t a i n their differentials. 

A l  
l three of these f a c t o r s tend to create a situation i n w h i c h , even under a s y s t e m of factual c o m p a r i s o n s , public sector pay i s often seen to be setting the pace and fuelling inflation. 

14. 

The ideas r e c e n t l y put f o r w a r d by M  
r Basnett, G e n e r a l S e c r e t a r y , G e n e r a l and M u n i c i p a l W o r k e r s U n i o n , p r e s e n t e d as they a r e i n the context of free collective b a r g a i n i n g , a r c open to these objections. 

But his initiative i s an i n t e r e s t i n g one. 

It could be well worth p u r s u i n g on the b a s i s of some view as to the g e n e r a l l e v e l of settlements that should p r e v a i l i n each c u r r e n t round. 

But to avoid unfair d i s c r i m i n a t i o n against the public s e r v i c e s there would a l s o have to be an i n d i c a t i o n which applied to negotiations i n the p r i v a t e sector. 

T h i s f o r m s the b a s i s of the second m a i n option. 

T H E S E C O N D O P T I O N F O R P A Y : A N I N D I C A T I V E 
P O L I C Y 
15. 

The e s s e n t i a l c h a r a c t e r i s t i c of an indicative p o l i c y is some c e n t r a l guidance as to the g e n e r a l l y d e s i r a b l e l e v e l of pay settlements and the i n t e r ­
val between t h e m ; 
indications m i g h t also be g i v e n of any g e n e r a l grounds for higher i n c r e a s e s (eg p r o d u c t i v i t y or low pay); 
some a r r a n g e m e n t s would be needed for identifying groupa with wholly exceptional c l a i m s . 

It i s m effect 
'ree collective b a r g a i n i n g within v o l u n t a r i l y accepted c o n s t r a i n t s consistent with enlightened s e l f - i n t e r e s t . 

1
6 - 
The W e s t G e r m a n s y s t e m of "concerted action" i s , of c o u r s e , essentially of this k i n d . 

Its effectiveness i s e n o r m o u s l y dependent on the economic c i r c u m s t a n c e s i n w h i c h it is i n t r o d u c e d and o p e r a t e d , as illustrated by experience i n the United K i n g d o m with somewhat s i m i l a r a r * a n g e m - n t s . 

It is now advocated by the C o n f e d e r a t i o n of B r i t i s h 
^ d u s t r y ( C B I ) 
B u t it c l e a r l y could not w o r k without the positive support of the T U  
C (and at l e a s t the acquiescence of a l l the m a j o r unions). 

Ji this eould be a c h i e v e d - and we think it is possible i n the l o n g e r t e r m if not 
^ m e d i a t e l y - this would in our view p r o b a b l y be the m o s t attractive of a l l t n e options open to us. 

1
7
 - 
It m i g h t help to get such a p o l i c y e s t a b l i s h e d if the timing of some of t h e m a j o r negotiations c o u l d be s y n c h r o n i s e d n e a r to the beginning of the r o  * n d , so enabling an acceptable "going r a t e " to be e s t a b l i s h e d e a r l y on and M i n i m i s e the r i s k of l e a p f r o g g i n g . 

We u n d e r s t a n d that something of this k i n d operates through two m a j o r settlements i n W e s t G e r m a n y . 

T h e e s s e n t i a l point, however, is that negotiations should be s y n c h r o n i s e d ; 
M e r e l y to b r i n g settlement dates c l o s e r together i n b r e a c h of the 12 m o n t h r u  l e might be costly and insufficient. 

T h i s could be an idea worth e x p l o r i n g 
**th the T U  
C g e n e r a l l y , and perhaps p a r t i c u l a r l y with public sector representatives. 

18. 

Such a p o l i c y would p r o b a b l y r e q u i r e the evolution of v a r i o u s institutional changes. 

T h e indicative statement might conceivably take the f o r m of a joint G o v e r n m e n t / T U C initiative accepted by the C B I (as i n 1974- fS 
but in m o r e favourable c i r c u m s t a n c e s ) . 

O r it might be a G o v e r n m e n t p o l i c y endorsed by the T U  
C and the C B I . 

O r it m i g h t e m e r g e f r o m some tripartite body, p o s s i b l y the N a t i o n a l E c o n o m i c D e v e l o p m e n t C o u n c i l but m o r e l i k e l y a n a d hoc grouping i n i t i a l l y f r o m which some new institution might develop. 

1
Q
 . 

T h e r e is bound to be c o n s i d e r a b l e difficulty i n dealing with  
exceptional c a s e s . 

T h e r e i s a p r o b l e m of finding o r establishing an  
institution whose **judgmente an to the exceptional nature of such c l a i m s would**  
c o m m a n d **sufficient acceptance to persuade others to r e m a i n content with the**  
lower g e n e r a l l e v e l of i n c r e a s e . 

It m i g h t help i f the function were **split**  
between p u r e l y f a c t - f i n d i n g (by a body on the l i n e s of the C i v i l **S e r v i c e P a y**  
R e s e a r c h Unit or the Office of M a n p o w e r E c o n o m i c s which s e r v i c e s **the**  
existing R e v i e w E o d i e s ) and adjudication (which m i g h t be undertaken by a  
tripartite o r even whollv T U  
C body). 

T h e r e i s a l s o a p r o b l e m of case **l o a d**  
but there might be scope for some of the m i n o r c a s e s to be dealt with, along  
m o r e defined l i n e s , by the C e n t r a l A r b i t r a t i o n **C o m m i t t e e of the A d v i s o r y**  
Conciliation a n d A r b i t r a t i o n **S e r v i c e w h i c h a l r e a d y has somewhat s i m i l a r**  
functions under Schedule 11 of the E m p l o y m e n t P r o t e c t i o n A c t and its g e n e r a l  
arbitration r o l e . 

T h e chances of such a r r a n g e m e n t s p r o v i n g effective **a r e**  
again depe ndent on the extent to which the T U  
C would c o - o p e r a t e .  
2
0
 - 
The question inevitably a r i s e s , however, as to what to do if we  
cannot i m m e d i a t e l y get a sufficient degree of T U  
C support to m a k e a p u r e l y  
indicative p o l i c y a viable option, o r if, having e m b a r k e d upon s u c h a p o l i c y , it is openly flouted by some **significant group o r section of the c o m m u n i t y ,**  
f Q r **example when s a l a r i e s are i n d i v i d u a l l y negotiated o r i n s m a l l f i r m s .**  
F c  
r this r e a s o n we a l s o need to c o n s i d e r , as a t h i r d **option, now such a**  
Policy m i g h t be sustained - at l e a s t **to b e g i n with - by other m e a r s .**  

## T H E T H I R D O P T I O N F O R P A Y : A P O L I C Y B A C K E D B Y **D I S C R E T I O N A R Y** P O W E R S

2 1 - 
T h i s has m u c h in c o m m o n with the second option, but r e q u i r e s m e a n s to enforce the p o l i c y . 

It is h a r d to envisage the s u c c e s s f u l C o n t i n u a t i o n of s u c h a p o l i c y beyond the c u r r e n t r o u n d without at l e a s t the 
^ c i t acquiescence of the T U  
C (sufficient to effectively deny support to any 
^ d i v i d u a l u n i o n taking i n d u s t r i a l action against the p o l i c y ) , though such a c q u i e s c e n c e might have to e m e r g e as the p o l i c y p r o g r e s s e d r a t h e r than be 
8 t a t e d i n advance. 

A p a r t f r o m this obvious difficulty a p r o b l e m with this option is that the p r e s e n t k i n d of d i s c r e t i o n a r y p o w e r s c a n only be applied where the policy r e q u i r e m e n t s a r e r e a s o n a b l y c l e a r - c u t . 

T h i s m a k e s it difficult to provide adequate f l e x i b i l i t y with the g e n e r a l t e r m s of the p o l i c y , and would Put c o n s i d e r a b l y g r e a t e r p r e s s u r e on the m e c h a n i s m for dealing with exceptional c a s e s . 

T h i s option cannot be r e g a r d e d as a stable l o n g - t e r m a r r a n g e m e n t but m i g h t p r o v i d e a m e a n s of t r a n s i t i o n to option 2. 

## T H E N E X T S T E P S

23. 

T h e c o n c l u s i o n of this a n a l y s i s is that we should seek an indicative policy - the second option. 

But the p r o s p e c t s depend heavily on the extent and f c r m of T U C c o - o p e r a t i o n . 

T h e best chance of s e c u r i n g such c o - o p e r a t i o n is to include this subject in d i s c u s s i o n s with the T U  
C about the whole range of our e c o n o m i c and s o c i a l p o l i c i e s . 

T h e next steps m u s t be to explore these m a t t e r s with the T U C . 

T h e C B I c a n be brought i n l a t e r . 

The a g e n d a for this p a r t of the d i s c u s s i o n s with the T U  
C m i g h t p r o g r e s s along the following l i n e s : ­

a. 
A s s e s s m e n t of f o r w a r d e c o n o m i c position, and e x a m i n a t i o n of 
T U C ideas as set out in their f o r t h c o m i n g " E c o n o m i c Review". 
b. 
A s s e s s m e n t of i m p l i c a t i o n s of a f r e e - f o r - a l l . 
c 
Issues such as the 12 month r u l e , which m i g h t not p r o v e too 
difficult to negotiate. 
d. 

A p p r o a c h e s to the public sector p r o b l e m and to the p r o b l e m s of low pay and d i f f e r e n t i a l s . 

e. 

C a n we r e a c h any understanding on the handling of s p e c i a l c a s e s ? 

f. 

C a n we get a consensus on the g e n e r a l l e v e l of settlement and how do we set about it, p a r t i c u l a r l y as r e g a r d s t i m i n g ? 

24 
T i m e is short since some i n d i c a t i o n of the way things might go w i l l be e e d e d by the time of the Budget, and i n o^der to start influencing negotiators 
- 
 P o t a t i o n s before the c o m m e n c e m e n t of the union conference season which mediately follows and runs through to J u l y . 

## I N C L U S I O N

2
5 - 
ur 
. 

j t we invite our c o l l e a g u e s
1 views on these somewhat tentative i d e a s . 

 
^ S h t perhaps be helpful to o r d e r our d i s c u s s i o n r o u n d the suggested a

d
a 
 
f
o
 r talks with the T U C and C B I l i s t e d i n p a r a g r a p h 23 above. 
D 
 "
W H 
SUry
 
A 
B 
 
 C h a m b e r s January 
1973 
 
C P ( 7 8 ) 6 
C O P Y NO 
2 4 J a n u a r y 1978 
C A B I N E T 
S P E C I A L E M P L O Y M E N T M E A S U R E S 1978-79 
M e m o r a n d u m by the S e c r e t a r y of State for E m p l o y m e n t T h e employment p r o s p e c t this y e a r i s g l o o m y and the l a b o u r f o r c e 
1 8 growing - by 170, 000 a y e a r . 

1 hope t h e r e w i l l be scope for c o n s i d e r a b l e reflation this y e a r , but this takes t i m e to p r o d u c e jobs a n d would r o t m a k e a n y d r a m a t i c i m p a c t on u n e m p l o y m e n t this y e a r . 

I have t h e r e f o r e Proposed an expansion of o u r s p e c i a l e m p l o y m e n t m e a s u r e s which would e e p another 110, 000 people off the u n e m p l o y m e n t r e g i s t e r - r a i e i n g the tctal 
^npact to a r o u n d 360, 000. 

T h i s would be a c h i e v e d by continuing the ernporary E m p l o y m e n t Subsidy ( T E S ) and by expanding the S m a l l F i r m s E m P l o y n i e n t Subsidy ( S F E S ) a n d the J o b R e l e a s e S c h e m e (JRS). 

T h e s e f l e a s u j * e s would m a k e their full i m p a c t o v e r the c o m i n g y e a r and a r e about e n times m o r e cost effective i n r e d u c i n g u n e m p l o y m e n t than g e n e r a l r e f l a t i o n . 

I should have l i k e d to p r o p o s e a c t i o n wholly to offset the expected t 000 i n c r e a s e i n the labour f o r c e this y e a r , but other m e a s u r e s we have e d at to do this a r e not as cost effective. 

/p 
T h e M i n i s t e r i a l G r o u p on U n e m p l o y m e n t A m o n g Young P e o p l e 
N 27) a g r e e s b r o a d l y on the need for an i n c r e a s e d i m p a c t on the egister and on the s c a l e of a s s i s t a n c e , but has not yet d e c i d e d whether this A d be a c h i e v e a by the m e a s u r e s I p r o p o s e o r by other m e a n s . 

M e a s u r e s g^eed by the G r o u p to date would take only a f u r t h e r 33, 000 off the t o m P l Q y m e n t r e g i s t e r . 

T h i s i s too s m a l l , p a r t i c u l a r l y when we m a y have 
^  
e a cut i n T E S . 

T h e difference within G E  
N 27 boils down to the extent of the U ^ n s i o n p r o p o s e d i n the S F E S and the J R S . 

O n S F E S , we a r e a g r e e d Q £ j ^
 
8 h o u l d be open to f i r m s with up to 200 employees, but a m a j o r i t y of 
^ s h ^ 
wish to confine it to a s s i s t e d a r e a s and i n n e r city a r e a s whereas I 
t o  
s i 
.

e e it extended nationally, with a higher subsidy of £ 2  
5 being p a i d n elopment a r e a s and i n n e r city p a r t n e r s h i p s . 

5. 

On JRS, my colleagues **agree that it should be extended nationally,**  
but I wish also **to open it to workers within two years (instead of one year)**  
of retirement and to raise the tax free allowance from £26. **50 to £40,** which research has shown would be a cost effective **way of increasing the**  
impact. 

JRS is our only instrument acting on the labour supply and a  
means of avoiding unfavourable pressures for early retirement.  
6. 

The gross annual cost **of the package I propose would be**  
£496 million (assuming no cuts In TES) but the net annual cost and **effect**  
in **the Public Sector Borrowing Requirement (PSBR) would be only**  
£118 million. 

There would be net staff savings because **of reductions in**  
the unemployment benefit service.  
7. 

Even on this basis, it would be desirable to review the situation during the summer to see whether more could usefully be done, particularly on training for the unemployed. 

## Tes And T H E European Economic Community (Eec)

8. 

If we want to continue the TES after 31 March 1978, we have to notify the EEC Commission by 31 January J978 of the form in which we propose to operate the Scheme. 

The two months' notice is needed for the Commission to consult other Member States and to make up its own mind finally about our proposals. 

9. 

There are 180, 000 subsidies in payment under the TES of which 
105,000 are in textiles, clothing and footwear. 

(There are additionally some applications in the pipeline). 

The Commission have intimated to us formally that they want changes in the Scheme which would reduce the number of textile etc. subsidies in payment by around 85, 000. 

In informal discussion Commission officials have indicated that the Commission might be prepared at the end of the day to settle for a reduction of 50, 000 in the number of textile etc. subsidies. 

We have offered no more than basically procedural changes in the Scheme ie no reduction in numbers. 

10. 

When the matter was discussed by GEN 27 I was asked to make farther enquiries in Brussels and elsewhere and I will report orally to the Cabinet on the result of these. 

However, I do not expect any important change in the situation I have described. 

11. 

Other countries operate employment subsidies of various kinds and in Belgium and the Netherlands there are schemes specifically directed to the textiles/clothing sectors. 

The Commission claim to judge each scheme on its merits. 

In response to an enquiry from the Prime Minister there is to the best of our knowledge, no significant scheme of aid in France directed specifically to the textile industry. 

12. 

C  
l e a r l y It would be e a s i e r for u s to m a k e a c o n c e s s i o n on textiles etc if we c o u l d r e p l a c e the T E  
S for the three i n d u s t r i e s i n question by an alternative s c h e m e acceptable to the C o m m i s s i o n . 

W e have l o o k e d at the possibility i n conjunction with the D e p a r t m e n t of Industry a n d one p o s s i b i l i t y has e m e r g e d . 

I m i g h t be able to d e v i s e a s p e c i a l s c h e m e of support for short t i m e w o r k i n g i n these i n d u s t r i e s . 

Such a s c h e m e m i g h t r e p l a c e T E  
S 
wholly o r i n p a r t i n the three i n d u s t r i e s , though its effect would f a l l somewhat short of T E  
S i n t e r m s of jobs saved. 

I a m m a k i n g detailed Proposals to G E  
N 27. 

If they c o m m e n d e d t h e m s e l v e s they c o u l d be introduced f r o m , say, 1 J u l y 1978. 

1 3 - 
I p r o p o s e to the C a b i n e t that we should notify the C o m m i s s i o n as r e  
q u i  
r e
 
d by 31 J a n u a r y that we a r e l o o k i n g at a l t e r n a t i v e s c h e m e s to r e p l a c e the T E S wholly o r p a r t l y i n the textiles, clothing a n d footwear s e c t o r s ; 
that meanwhile we p r o p o s e to extend the T E  
S to 30 J u n e (subject to s o m e small changes, i n c l u d i n g p r i o r notification of i m p o r t a n t applications); 
and that we w i l l by 30 A p r i l p r e s e n t f r e s h p r o p o c a l s to them designed to m e e t their c o n c e r n by r e d u c i n g the dependence of textiles, clothing and footwear Q n the T E S . 

## T I M I N G O F A N N O U N C E M E N T

U - 
T h e r e i s m u c h to be s a i d for m a k i n g a g e n e r a l statement of our 
^tentions at the end of J a n u a r y b e f o r e we notify o u r p r o p o s a l s f o r T E  
S to the E E C  
. 

(We have a l s o to notify o u r intention of extending the BITES). 

This would r e m o v e u n c e r t a i n t y about the futare of the s c h e m e s , would Precede any leaks f r o m B r u s s e l s a n d c o u l d be u s e f u l when the National Economic D e v e l o p m e n t C o u n c i l d i s c u s s the e m p l o y m e n t i m p l i c a t i o n s of t h e i n d u s t r i a l strategy o n 1 F e b r u a r y . 

I attach a draft of such a statement. 

This would be followed with an announcement i n m i d - M a r c h of the detailed D a s i 8 on which these s c h e m e s would p r o c e e d . 

## ^ £ C O M M E N D A T I O N S

^' 
I r e c o m m e n d that:­
a. 

W e should a i m to b u i l d up the i m p a c t of the m e a s u r e s towards 
360, 000 i n 1978-79 by extending J R S a n d S F E S to the whole country, with J R S open to those within two y e a r s of p e n s i o n age and with a t a x - f r e e a l l o w a n c e of £ 4 0 a n d S F E S open to m a n u f a c t u r i n g f i r m s with up to 200 
e m p l o y e e s . 

b. 

W e should notify our intentions r e g a r d i n g T E  
S to the E E  
C 
as p r o p o s e d i n p a r a g r a p h 13. 

c. 
We should m a k e the attached statement of our intentions 
before the end of the month, followed by a m o r e detailed statement 
a r o u n d m i d - M a r c h . 
D e P a r t m e i x t of E m p l o y m e n t 
2 
3 January 1978 
A B 

## Draft Statement

W
e have a l r e a d y announced t h a t t h e new Youth O p p o r t u n i t i e s 
Programme t o 
           h e l p 16-18 y e a r o l d s and 
                                   t h e S p e c i a l Temporary 
Employment Programme f o r a d u l t s w i l l be 
                                     o p e r a t i n g t h r o u g h o u t 
1978-79 and 
          t h a t t h e r e w i l l be 
                            a f i n a l round o f s p e c i a l 
t r a i n i n g measures f o r t h i s y e a r b e f o r e t h e Manpower S e r v i c e s 
Commission's new t r a i n i n g i n 
                          s k i l l s programme comes 
                                                i n t o 
operation. 

The o t h e r s p e c i a l employment measures - 
                                              t h e Temporary 
Employment S u b s i d y , t h e Hmall Firms Employment S u b s i d y 
                                                               and 
the Job R e l e a s e Scheme - r e a c h t h e i r c l o s i n g date f o r 
a p p l i c a t i o n s on 31 March 1978. We have d e c i d e d t h a t t h e s e 
schemes w i l l be 
                  extended i n a b r o a d l y s i m i l a r form f o ra 
further y e a r from 1 A p r i l 1978 u n t i l 31 March 1979. We 
intend t o c o n t i n u e t h e Temporary Employment S u b s i d y and t o 
enlarge t h e coverage and impact o f 
                                        t h e S m a l l Firms 
Employment S u b s i d y and 
                          Job 
                              R e l e a s e Scheme. We s h a l l 
                                                            be 
d i s c u s s i n g o u r 
                p r o p o s a l s f o r 
                                 t h e Temporary Employment 
Subsidy and 
             the S m a l l Firms Employment S u b s i d y w i t h t h e 
EEC Commission and I w i l l make a f u r t h e r statement on t h e 
d e t a i l e d b a s i s on 
                    which t h e s e schemes w i l l o p e r a t e 
                                                          i n 

1978-79 i n 
           due c o u r s e . 

The s p e c i a l measures a r e c u r r e n t l y a s s i s t i n g some 330,000 
workers and 
             a r e e s t i m a t e d t o 
                                 be 
                                     r e d u c i n g t h e unemployment 
r e g i s t e r by 250,000. 
                         The 
                              e x t e n s i o n s o f 
                                              the measures I am 
announcing today a l o n g w i t h t h e 
                                     development, o f 
                                                        t h e o t h e r 
schemes a l r e a d y announced w i l l i n c r e a s e v e r y s u b s t a n t i a l l y 
over the coming y e a r t h e 
                            impact on 
                                         unemployment. 

C P ( 7 8 ) 7 
C O P Y **N O** 
8 0 
2 4 J a n u a r y 1978 
C A B I N E T 
B E N E F I T S O F N O R T H S E A O I L 
Note by the S e c r e t a r y of the Cabinet i . 

F o l l o w i n g the d i s c u s s i o n on 15 D e c e m b e r ( C M ( 7 7 ) 40th C o n c l u s i o n s , Minute 5) I was i n s t r u c t e d to p r e p a r e a draft White P a p e r for c o n s i d e r a t i o n b Y the Cabinet. 

2 - 
I attach this draft h e r e w i t h . 

It also i n c o r p o r a t e s a n u m b e r of amendments m a d e by the N o . 10 P o l i c y Unit. 

Signed J O H N 
H U N T 
C a b i n e t Office Z * Jan u a r y 
1978 

## The Challenge Of N O R T H Sea **Oil** I N T R O D U C T I O N

1. 

North Sea oil provides a unique opportunity for Britain to improve her economic performance, raise her living standards, move forward to full employment, and develop a socially just free and fair society, 
2. 

For too long Britain had a woak "balance of payments, slow productivity growth and low investment. 

As a result, our living standards, which wore among the highest in "western Europe, aro now among the lowest. 

Governments have tried repeatedly without success to alter these trends. 

Change will not be easy now, but w e shall never have a bettor chance. 

3. 

The prolonged world recession focussed attention very sharply on our problems. Following tho fivefold riso in oil prices, and the heavy additional cost of importing o i l , Britain borrowed hoavily abroad to finance the balance of paynents deficit. 

In addition we suffered disruptingly rapid inflation. The recession has highlightod tho uncompetitivonoss of some of our major industries, which have required substantial Government assistance. 

Plans for increased social oxpenditure had to be scaled down. 

4. 

Nevertheless in the past year the country's position has substantially inprovod. W
e are no longer borrowing abroad: and w o are beginning to repay debt. 

ThQ rate of inflation has been dramatically reduced - thanks largely to the co-operation of tho trades union movemont in a voluntary incomes policy. 

Unemployment is s t i l l unaccoptably high, but the Government has takon action to contain it, and is n o w in a position whore i t should bo able to take further neasures positively to reduce i t  
. 

5. 

The next task is to build on this stability to move back to growth in production and employment. 

6. 

Here i t is that North Soa oil gives us a great opportunity. Sonsibly used in line with tho policies laid out in this White Paper, i t can onable us to rebuild tho industrial strength of tho nation, to tho benefit not only of this generation, but of our children and our grandchildren. 

7* 
But i t also presents us with a challenge. 

North Sea o i l i s not a panacea; 
a s a nation we have to decide how best to uso the benefits i t b r i n g s . 

It W o u l d be a l l too easy f o r Governments to use the extra revonue s i n p l y to finance 
^ster growth i n l i v i n g standards through tax reductions and increased s o c i a l benefits to an extent which would loavo i n s u f f i c i e n t rocn f o r increased productive investment. 

But r a p i d l y expanding l i v i n g standards, with no d i r e c t o v i s i o n f o r stimulating investment, would e n t a i l balance o f paynonts r i s k s n ^ would be u n l i k e l y to bo sustainable i n the longer-torn; 
we would havo dono  
i t t l e to dovolop now sources of enorgy to replace d e c l i n i n g output of **North**  
0 11; 
and wo could w e l l f i n d , as the o i l s t a r t s to run out, that nothing had Ppened to improve our general oconomic performance The Government believes i t would be wrong to f r i t t e r away the benefits of North Sea o i l i n this way. 

North Sea o i l i s one clement i n what must be a continuing and long-term 
^ogrannc- f o r national recovery. 

A Labour Government of the 1980s w i l l place n^Ustrial regeneration, and tho r a p i d roturn to f u l l employment, at the heart k a programmo. 

Part o f the revenues flowing from North Sea o i l w i l l bo 
-ruioliea d i r e c t l y i n t o i n d u s t r i a l development by way o f d i r e c t help and through the jjai.. 

^
 
a t i o n a l Enterprise Board, and the S c o t t i s h and 7/olsh Development Agencies, 

p r i o r i t y w i l l be given to investment i n now energy sources, and i n enorgy 
v & t i o n . 
The Government w i l l introduce a more e f f e c t i v e , 
and more generous, 
^ o of privato sector invostmcnt i n c e n t i v e s , both national and r e g i o n a l . 
Sustained economic oxpansion w i l l not bo possible i f the Government
1s i n v e s t ­
a Q n t t a ratogy f a i l s . 

E q u a l l y , however, we recogniso that no programme designed to a t i i ^  t 
.

a to - 
^vestment can succeed unless the macro-economic background i s conducive l n ^ 
u s t r i a l expansion. 

Tho Government w i l l therefore uso part of the benefits oea o i l to reduce taxation on the p r i v a t e sector, and to undertake a Pro^r n

9
 
0 ^ s e l e c t i v e improvements i n the p u b l i c servicos. 
Such an integrated 
^ e 
should allow tho economy to expand s u f f i c i e n t l y r a p i d l y i n the 1980s 
a r e t u r n to f u l l 
employment. 
this "iThito Paper, tho Government sets before the B r i t i s h people i t s view l i k e l y size and duration of tho o i l revenues, and i t s p r i o r i t i e s f o r making 
0 *
 
th l(^se
( 
 rovenues. 

Tho VThite Paper presents the Governments plan to use our j$rit [
 
r eGonerate and r e i n v i g o r a t e our economy, and to l a y tho foundations f o r a 

a t onco prosperous and s o c i a l l y j u s t . 
The Government, thrcoign i t s 
general 
economic policies, can sot the "broad framework for such a strategy; 
and some of the major invostnont decisions - such as the development of alternative sources 
1 s. 

But what the Government can cf energy - must, in tho end, bo the Government do by itself is strictly limited. If tho strategy is to succeed, i t will require the co-operation and effort of management, workers, and tho British people as a whole. W
e seek tho support of the whole nation in that task. 

## N O H T H Sea Oil: A Neff Dimension?

11. In 1977* North Sea oil production was already equal to about half the United Kingdom
1 s total consumption; and the balance of paynents gained by some £2 billion. 

7/ithout it 
, the **turn-round** of 1977 would have been moro difficult, and would have taken longer. 

12.

 
W
e are thus already enjoying the first benofits of North Sea o i l . 

By 1980, expoct to be producing as much as wo can consume; and w o can expect to bo a net exportor of oi l at least for some **part of tho** 1980s. 

By the **late** 1980s production on present forecasts may begin to decline, and while production should continuo at a substantial level for at least another 10 years, w e may 
*ell **becono net oil importers again in the** 1990s. 

13. The bonofits which North Soa oil will bring to tho economy can be lookod at in three ways. 

If tho real prico of oil remains unchanged, i t can be expected: 
a. 

to increaso Gross National Product (GNP) by around £ 3 i **billion in**  
1980, and by £5 **billion in** 1985 **(at** 1976 prices): 
this is a temporary  
boost to national resources equivalent to botwoon 3 and 5 **per cent of** prosont **GNP;**  
b. 

to provido a substantial n o w sourco of Govornment revonuo: rccoipts will **be small in** 1978; but they will **reach** £ 1 ^ **billion in** 1979, and by tho **mid**-1980s they should rise to at **least** £ 3 ^ **billion (at** 1976 prices): 
this is equivalont to about 7 per cont of present total Government revenue; 
c. 

to improve tho balance of payments by about £5 **billion in** 1980, rising to £7-8 **billion in** 1985: **this is equivalent to about** /T5 **per** cent7 of present visiblo and invisible imports. 

14. Thus, North Sea oil can bo expected to provide a relatively snail addition to total national resources, a sizeable adriition to Government revenue, and a najer improvement in tho balance of payments over the next decade. 

Thereafter, the benefits are likely to decline. 

N^t only are the benefits of North Sea oil likely to bo temporary. 

Their direct offocts are largely to savo foreign exchange and to increase Govornmont revenue. 

Of thenselves, they will do nothing to inprovc our economic and industrial performance. 

## G E N E R A L Policies

15. The Governments general policies will be designed to create the conditions in which its plans for tho sensible use of North Sea rovenuos can bost be achieved. 

16. First, the Government needs to promoto tho oxpansion of economic demand and activity, and got tho oconcmy moving forward to full employment. 

This will bo n u c h easier to do i f other major industrial countries take similar expansionary action; and tho Govornmont will continuo - as i t did in 1977 - to urge on other najor countrios tho nood for offectivo action to bring tho r/orld economy out of the present recession. 

But, even i f tho world economy does not recover rapidly, the United Kingdm can take advantage of its improving economic position to start expanding tho oconomy through ajopropriate fiscal and monotary policies. 17. Second, it is important that, in the procoss of oxpansion, we maintain and inprovo the international competitiveness of our industries. Otherwise w e shall lose export markets and suffor increasing import penetration. An absolute requirement for such an improvement in our competitiveness is to win tho battle against inflation. 

Substantial progress has been made in this endeavour over the past 2 years, but tho battle against price increases must be fought to victory. 

T
h e gains from controlling inflation, and the threat which renewed inflation would pose for tho rost of our objoctivos, aro both so great that this must be an essential part of the Government's strategy. 

18. Thirdly, industrial efficiency goes beyond price competitiveness. 

Therefore tho Government intonds - as i t indicated in the '.foito Paper on Industrial Strategy - to give industry first priority in tho whole range of its policies. 

Tho wider implications of tho industrial strategy for other p^licios are being examined, and the nood for changes in direction or emphasis are being identified. 

M
a n y of those will need time to take effect, but tho Government proposos to implement thorn progressively and to persist with thorn. 

19. *
,
"
e will need more and hotter investment (3ee below paragraphs 21 to 25), but investment, by itself, will not bo enough: industrial relations in its widest sonso will need to improve. 

The potential benefits of new machinery and moro efficient techniques can only too easily be squandered i  
f tho whole-hearted co-operation of these involved is lacking. Continuity of production, realistic manning levels, prompt delivery and quality control - these aro crucial in winning markets and improving production; unless w o strengthen our manufacturing performance in these areas, no amount of investment will succeed. 

A now approach to industrial relations i  
B thoreforo requirod; one which replaces attitudos of confrontation with democratic participation. In contemporary society, workers need to understand tho problons which faco tho firm thoy work for and hov; they can sharo in decisions to inprovo its perfomanco: 
for it is tho progrossivo and competitive firm which offers its omployoos tho best prospoct of job security and rising roal wages in tho longor-tom. 

For this roason, tho Government w i l  
l continue with its of forts to promote industrial democracy in both tho privato and Public sectors. 

## T H E U S E Of N O R T H Sea Revenues To .*Ssist National Recovery

20, ".,'ithin tho franowork of general policy objectives set out above, tho Government proposos to utiliso tho rovenues fron tho North Sea in giving spocific cijphasis to a solection of policy areas which i t believes aro crucial to tho recovery of tho United Kingdom economy. 

Particular emphasis will bo givon to: 

i  
. 
investment in industry; 
i i  
. 
promotion of energy supply and conservation; 
i i i  
. reducing the burden of taxation; 
iv. 
increasing public investment on social and economic infrastructure. 
After full consideration, tho Govornnunt baa docidod that i t is not in tho national interost to uso North Sea revenues on a programme of major dobt repayment - dosigncd, for oxamplo, to clear dubt by any arbitrary da to such as 1990. This would almost certainly entail running tho economy at a level of d e m a n d which would be incompatible with either a return to full employment, or a major restructuring of British industry. 

The Government therefore intends to roll forward a portion of tho united Kingdom
1 s international indebtedness for evontual repayment in tho 1990s or booynd. 

It is n o w proposod to look at tho four specific uses of North Soa revonuos in noro detail. 

## Bvesthent In Industry

21, Substantial increases in investment will bo ossontial i  
f the strategy is to succeedc Modernisation and much higher levels of productivity aro ncodod in nany firms and industrios i  
f thoy aro to retain and improve their competitiveness. 

S
o m e firms will bo ablo to cako on moro labour; others will be producing more, but with a smaller work force. 

To raise productivity, and to create new jobs to absorb both tho increaso in the labour force and tho workors moving out of declining sectors will require a quite different scale of industrial investment and expansion of industrial output than wo have soon in tho past 10 years. 

22. Most investmont decisions have to be taken by industry itself. 

At prosont, o n e reason why investment is low is bocause demand is low. 

Industry is uncertain whether n e w investmont would earn an adequate return. If industry is to flourish it needs a stable environment. 

It also needs confidence in a steadily growing aarkot for its products both at homo and abroad. And i t neods the prospect of a satisfactory return on its investment. 

The gonoral economic climato is crucial. 

To scmo extent, this depends on international factors outside our control, but whatevor other countries do, a general stimulus of tho United Kingdom ecraony is a precondition for recovery. 

North Sea oil will ease tho balanco of p a y m e n t s constraints on oxpansion. \
.

"
o must use this greater frcodom to pursuo d o n a n d management pclicios which offer the prospect of steadier growth of demand, at higher levels than would otherwise have boon possible. 

In the first stage of tho recovery, such a stimulus will contribute directly to creating a stable and favourable climate for industrial expansion. 

As the recovery proceeds, the 
^cveranent will need to ensure that resources which, on a longer-term view, should bo devoted to industrial investment and infrastructure, are not pre-empted ty unsustainable increases in consumption - privato or public. 

23. Tho experience of the past shows, however, that expanding domand alone is net enough to bring about a sufficient incroaso in investment. 

So in addition to helping to create this climate of confidence, the Government will need to bo inv lvod more diroctly. Tho North Soa revonues will enable i t to provide an tffoctivo framework of general investment incentives, both national and regional. 

&t over and above this there is tho nood for solective assistance and intor­
fflntion which, properly-' used, will bo more cost-effective than general 
^sistance. 

2
4
, T
h e tripartite industrial strategy points tho way forward by steadily Gilding up, sector by sector, a dotailod picture of tho opportunities ahead a n d the action needed to seize them. There are many areas where United Kingdom industry has strengths on which w o can build. 

Thero aro now products and frocesaes to bo developed and exploited. 

Industrial activities diroctly related 
*
0 North Soa oi l present one example with obvious attractions. 

Tho Govornmont 
*m d o cvorything possible to further tho industrial strategy through tho Sector "forking parties and to encourage the firms and unions concerned to 3
0
0 
the conclusions of the "Jerking parties aro translated into positivo action the board room and on tho shop floor. 

Planning Agreements, liko the 
^-ustrial strategy at sectoral level, will provide a moans of concerting 
^Uon by Government and individual firms. 

25. 

La on i n t e g r a l p a r t o f t h i s s t m t o g y , tho Government i t s e l f intends to invest i n B r i t a i n - s manufacturing future through the National E n t e r p r i s e Board, boti! d i r e c t l y and i n partnership w i t h tho p r i v a t o sector, and through tho S c o t t i s h and Welsh Development Agencies. 

Thoy w i l l have an important part to play i n expanding investoent: 
p a r t i c u l a r l y i n projects 
"hich aim to modernise and expand industry i n d e c l i n i n g areas, t o provide alternative job opportunities, and to improve tho i n d u s t r i a l i n f r a s t r u c t u r e . 

In a l l t h i s , tho r e g i o n a l dimension w i l l bo taken f u l l y i n t o account. 

I t 
" i  
U bo a major aim of tho Government to ensure that Scotland, - a l e s and the 
^gions of England b e n e f i t f u l l y from the proposals f o r modernisation and oxpansion which the i n d u s t r i a l strategy i s developing. 

## Ehergy

26. 

Two f u r t h e r areas whoro the Government intends t o use the o i  
l revenues to enable more to be done than would otherwise have been the case concerns the production and conservation o f onorgy i t s o l f . 

2 7 . 

Tho f i r s t i s investment i n now energy s c r e e s to moot tho needs of 
*  
* economy i n tho medium-term and thon to assure our supplios when North Sea o i  
l and gas begin to ran out. 

On current forecasts, United Kingdom P**ary energy demand i s expected to rise from a t o t a l o f 2
0
0
m tonnes o f o i  
l b i v a l e n t i n 1975 t o perhaps 2V)m tonnes i n 1985, to some 3
3
0
m tonnes by the o n
 * of the century, and to go on rising thereafter. 

During t h i s p e r i o d , Sea o i l production i s l i k e l y to rise to a peak of 100-150m tonnes i n tho m i a  
^ 1980s, and then t o decline t o rather l e s s than 1
0
0
m tonnes by the O n o of the century and progressively to decline thereafter. 

V e r y substantial 
^ o s t u o n t , i n conventional energy sources - c o o l , gas, o i l and nuclear power ­
T
, i l l bo noodod i  
f our supply objoctivos arc t o bo not. 

2
8
 - 
In a d d i t i o n to those investments i n conventional energy, the next two 
^ o  
s w i l l require a growing expenditure both on now and unconventional 
8
o
 ^ o  
s o f f u e l supply and p o s s i b l y on the conversion of primary fuels (og eoal) 
i R t o more usable foros o f energy (eg gas). 

A t present, work on renewable 

f
o
i
t
 * of energy - s o l a r , wind, wave, t i d a l and goothomal power - i s i n tho 
0
a r l  
y f e a s i b i l i t y stage and expenditure of funds i s comparatively small. 

The Government w i l l give greater p r i o r i t y t o these developments. 

In duo course a high l e v e l o f oxponditurc w i l l be needed i n theso areas so that the economy can continue to grow i n the p o s t - o i l e r a . 

The Government baa already published / w i l  
l s h o r t l y be p u b l i s h i n g a Green Paper on Energy P o l i c y vhich outlines / w i l l outlinp7 important p o s s i b i l i t i e s i n tho f i e l d of energy research and development. 

2 9 . 

D i r e c t l y l i n k e d with t h i s i s the need f o r more energy conservation. 

Previous conservation p o l i c i e s saved us approximately £2,000m over the last four years: 
and now p o l i c i e s announced at the end of l a s t year aim at a n annual saving of 1
0
m tons of o i l equivalent worth some £700m. 

Resorves of sources such as o i l , n a t u r a l gas and coal are f i n i t e , and world domand i s increasing. 

By the end of the century energy could cost two or three times 
"-hat i t costs today. 

Further developments of onorgy conservation measures 
" i l  
l therefore bo an i n t e g r a l part of energy p o l i c y , both to reduce costs a n d to provide mere time to develop and introduco tho technologies that must ultimately replace oxisting f u e l s . 

A f u r t h e r advantage of investment i n 
^ e r g y conservation i s that i t has short load times, tends to bo labour­
intensive, and i n some instances offors very h i £  
i returns. 

The Governments aim w i l l be to achievo tho maximum savings i n energy use which can be economically j u s t i f i e d . 

30. 

Invostaont of tho o i l revenues i n replacement onorgy and conservation l " a way o f spreading tho benefits of North Soa o i  
l forward so that future d e r a t i o n s nay enjoy the s e c u r i t y of energy supplies which we have today: 
aae i t nay be one o f the nost productive ways i n whioh they oan be invested. 

l * i s l i k e l y to enjoy a high rate of return i n i t s own right. 

And by reducing postponing the need t o i n p o r t energy, i t w i l l both improve tho balance o f Paynonts and increase tho s e c u r i t y of our energy supplies. 

## Reductions

*  
- 
A programme o f major tax reductions, with no d i r e c t p r o v i s i o n f o r any M a n s i o n i n the econccy's productive base, would be l i k e l y to increase 
"ational l i v i n g standards only temporarily. 

We have seen nany t i n e s i n tho that a general r e f l a t i o n o f donestie denand r a p i d l y r e s u l t s i n increased 
^ P o r t s and a balance of payments d e f i c i t . 

I n the 1980s, with North Sea o i l helping tho balance e f payments by up to £ o b n a y e a r , i t i s p o s s i b l e that we night to sustain a consumer-led boon f o r longer than wo havo b
0
 a b l o managed i n the p a s t . 

However, we would, i n e f f e c t , be using our North Sea o i l resources to finance a temporary increase i n consumption - an increase which would have to be reversed as soon as tho o i l revenues s t a r t to run out, and which would benefit f o r e i g n , rather than domestic, s u p p l i e r s . 

32. 

Tho Government unequivocally rejects t h i s course. 

However, there w i l l bo scope f o r tax reductions i n tho years ahead. 

Wo have explained that incroasos i n investment, and i n l i v i n g standards, must come together. 

Each onkos p o s s i b l e tho other. 

Provided that the investment strategy 
*oixs, the Government therefore sees scope f o r continuing to reduce tho hurten of personal taxation. 

T h i s w i l l not only r e s u l t i n h i g h e r economic 
6^wth, caking possible a return to f u l l employment. 

I t w i l l a l s o ensure that the r e a l take-home pay of working people can bo increased without inflationary r i s e s i n money wngos. 

## ^Blic Investiffint /Jjd Public Services

33. 

Tho above measures f o r greater i n d u s t r i a l investment, f o r more energy P^duction and conservation, and f o r further tax cuts, w i l l s u b s t a n t i a l l y 
"onofit p r i v a t e industry and personal consumption. 

There aro those who argue that only tho private sector and personal consumption should benefit from the North Soa. 

The Government r e j e c t s that viow. 

In a complex modom i n d u s t r i a l s o c i e t y , both p u b l i c and private spending havo a part to p l a y , 
0 a e h supplementing the c o n t r i b u t i o n o f tho other i n our mixed economy. 

I t i a f o r Government to s t r i k e a proper balance between the two, allowing f o r a S ^ t h i n public investment and services commensurate with what tho economy 
0
0
,
1 afford. 

*  
- 
The Government intends t o r e t a i n a firm c o n t r o l over p u b l i c expenditure 
3 
0 that i t remains w i t h i n the l i m i t s set out i n the annual P u b l i c Expenditure 
^ t o ^ 5 0 ^ and does not absorb too high a proportion o f tto nation's 
^ o ^ o s  
. 

However, c e r t a i n areas of the p u b l i c sectcr can be i d e n t i f i o d 
''
h o r  e i t W O u l d bo i n tho n a t i o n a l i n t e r e s t t o devote some o f the North Soa V e n u e s , 
35. 

The investment plans of tho nationalised industries will need to natch tho expansion of tho economy: 
expenditure on essential communications, docks, harbours, etc, must keep paco. 

36. 

The problem of our inner citios is also urgent. 

The Government has already given priority to its plans for rcinvigorating the innor areas of certain specified connurbations. 

North Sea revenue will onable this p r o g r a m m e to bo pursuod with continuing vigour in tho years ahead. 

In theso areas what s t i l  
l remains of tho social fabric of Victorian England - the ran-down houses in which many of our immigrant communities live, the hospitals and schools which a l l sections of tho community dso - is collapsing and nust be renewed. 

37. ffo shall also need more ambitious training and retraining programmes, both in schools and in further education, to dovolop industrial and commercial sxills in our working population. 

Our manpower is our most valuable enduring national resource and during much of the period whon tho o i  
l rovonuos are flowing, the supply of young people to employment will bo falling. 

Two things follow. 

Tho preparation of young people for tho world of work must b e the best w e can give them, developing fully their potential talents. 

Secondly, there will bo tho neod and tho opportunity to make it possible for core m e n and w o m e n to continue their education and training throughout their working life. 

In all this tho emphasis must bo on quality and rolcvanco since North Sea oil creatos both tho need and the rosourcos in our pcoplo and in tho skills to safoguard our future. 

38. 

Finally, as Britain grows more wealthy, it is crucial that our society docs not forget its disadvantaged - tho old, tho sick, mentally as well as physically, one-parent families - thoso must not bo neglected. 

It is a fundamental part of tho philosophy of tho Labour movement that the undor­
privilcgod and disadvantagod have an equal claim on the resources of our society. 

Tho good fortune of our natural energy inheritance must bo sharod onong all our citizons. 

## M O N I T O R I N G Hiouress

39. 

This is an ambitious programme but it is fully capable of achiovomcnt. 

It will, however, take years of determined effort as the Government revenue from **North Sea oil builds up from** 
£1**-^bn** in 1979 to at least £3^-bn in tho m.d-1980s and is channelled towards transforming our economic raid industrial performance, securing our energy position in tho longer-term and improving our economic and social infrastructure. 

Prccisoly because it is a long­
tern programme that has to bo set in a wider context, it will need to be implemented flexibly. 

This makes it the noro necessary to sot objectives and regularly to monitor progress towards them. 

Only in this, way can w o contain tho risk of dissipating tho advantages which North Sea oil can give us. 

40. 

Tho Government have considered whether this need to monitor and account for tho uso boing made of tho North Sea revenues can best bo done by ajans of a special North Soa Oil Fund. 

## /"Alternative Paragraphs

41A. 

It is truo that the establishment of such a Fund would involve a noasuro of artificiality. 

It would be difficult precisely to define the dividing line between these activities which wore additional as a result of North Soa oil, and those which would have been financed in any case through tho medium of the Government
1 s ordinary public expenditure programme. 

42A. 

However, the Govornmont believe that other considerations outweigh this. 

?rom a psychological point of view, a Fund would help to concentrate tho public mind on the onco-and-for-all nature of our North Sea wealth, and tho need to uso it in tho interests of the whole nation. 

In particular, w o need to ensure that to the maximum extent posaiblo the use of the oil revenues will be visible and accountable. 

W
e have therefore docidod to sot up an Oil ]
?

u n d which will focus public attention on this *now* source of rovenuo and vtiiich will holp to onsuro that tho revenues are not dissipated unwisely. 

The Govornmcnt boliofve that both Parliament and the public will welcome tho opportunity which tho fUnd will provide for continuing informed discussion about the distribution of a precious national asset. 

## (R

iflB, The main argument put forward for a Fund is that i t would avoid tho revenues being dissipatod unwisely and would provide the medium for continuod informed discussion about tho distribution of a provious national asset. 

A Fund in the technical sense would, however, only be practicable if the o i l revenues were being devoted to a fow major projects or activities 
'..'hich would not otherwise have boon undertaken and which were financed 

3olely or mainly in this way. 
                                    Tho Government's intention i s , however, to 
use the benefits of North Sea o i  
                                     l as one olement i 
                                                          n a much wider strategy 

fcr national recovery. 
                                    This means that there weald bo no way of showing 
'..'ith any conviction what expenditure on, eg industrial invostmcnt, energy 
resources or infrastructure, was part of tho Government's ordinary programme 
and which was additional as a result of North Soa o i l  
                                                                               . 

42B. The Government do not therefore propose to ostablish an O i l Fund as 
such. 
         But i t is essential that progress towards the objectives sot cut 

in this White Paper should be properly and publicly monitored. 
                                                                                          Tho Govornmont 
intend to mako an annual report to Parliament on tho progress made towards 
its objoctivos for tho uso of tho North Sea revenues. 
                                                                             This would also allow 
account to bo taken of tho widor benefits which the North Sea w i l  
                                                                                          l provide 

in the running of the economy which could not in any cose form part of an 

Oil FundJ? 

## C O N C L U S I O N

43. 
       For tho next decades we shall have tho considerable revenues of 
North Sea o i l and fewer balance of payments problems than wo have had since 
tho war. 
             This must not be seen as a temporary breathing space in which to 
enjoy a standard of living we havo not earnod, but as an opportunioy to secure 
lasting national economic rocovery. 
                                                   This moans setting clear priorities 

for the use of North Sea bonofits. 

44. 

The Govornmont are confident that the strategy described in this 

V/hito Paper is tho right ono. 
                          Tho Government w i l l set the framework and 
play its own part: 
               wc aro committed to increasing economic activity and 
employment. 
          Better living standards should follow from that and from tho 

A c t i o n  
s which can ho genuinely afforded. 

lavement in hoth tho 
^vato and puhlio sectors is an essential part of tho strategy But 
^ostnont, whether in nanufneturing industry, in the energy industry 
^ontial seeial infrastructure - is not enough. 

There is a need to and harness tho energies and taients of the British poopic **i f** 
J 
^ 
to grater productivity and tho dovolopnont o f a socially a e o u r e b o t h
**" ftoo ^
i o t y . 

It is in that spirit that we shouid use the f a i r s o c  
0?Portunity presented by North Sea oil 
. 

^ January  i 9
7
 
8 
C O P Y N O 
CP(78) 8 
24 J a n u a r y 1978  
C A B I N E T  
C O M M O N F I S H E R I E S 
P O L I C Y 
Note by the M i n i s t e r of A g r i c u l t u r e , F i s h e r i e s and F o o d and the S e c r e t a r y of State for Scotland T h e attached note by the M i n i s t e r of A g r i c u l t u r e , F i s h e r i e s and F o o d a n d the S e c r e t a r y of State for Scotland w i l l be c o n s i d e r e d by the M i n i s t e r i a l 
^nrnittee on E u r o p e a n Questions on W e d n e s d a y 25 J a n u a r y . 

It i s C l *
C u * a t e d to m e m b e r s of the Cabinet as b a c k g r o u n d for d i s c u s s i o n of this 
^ 
Ject under Item 3 of their agenda for T h u r s d a y 26 J a n u a r y . 

M e m b e r s C r f ^
6 Cabinet m a y find it useful to have i n m i n d the m a i n objectives i n 
^(78) 2 to which the p r e s e n t ncte r e f e r s . 

T h e s e a r e a * 
Quotas - an a l l o c a t i o n of fish that reflects our distant water l o s s e s and our contribution to r e s o u r c e s . 

b' 
C o n s e r v a t i o n - satisfactory C o m m u n i t y c o n s e r v a t i o n M e a s u r e s and a right In c e r t a i n c i r c u m s t a n c e s to take our own national m e a s u r e s . 

c * 
C o a s t a l belts - e x c l u s i v e a c c e s s to fishing grounds within 
12 m i l e s of o u r coast subject to the p h a s i n g out of existing h i s t o r i c r i g h t s . 

- p r e f e r e n t i a l a c c e s s for United K i n g d o m v e s s e l s to fishing grounds between 12 and 50 m i l e s . 

J S 
B M 
^ n i s t r v 
. 

. 

 
y oi A g r i c u l t u r e , F i s h e r i e s and F o o d  
2 *  J ;
a n u a *y 1978 

# Common Fisheries Policy Negotiations Note By The Minister Or Agriculture, Fisheries And Pood And Secretary Of State For Scotland

1. CQM(78)2 was diseusaed by the Committee on 12 January and 
described the position following the Fisheries Council i n December 
and the prospects for the Council of 16 January. 
                                                                    This note brings 
the position up to date and seeks guidance for further nestings of 
the Council which w i l  
                          l begin on 27 January. 

2. The most Important general point about the last Council was that, 
despite d i f f i c u l t i e s , i t did not break down. 
                                                                        The Belgian 
Presidency made a somewhat alarmist public statement but there was 

la fact no atmosphere of c r i s i s . 
                                                    On the other hand there was l i t t l e 
olear progress but the Council meeting was probably a stage which had 
to be gone through on the way towards an ultimate settlement. 
                                                                                                   The 
Preaeure upon us to settle quickly remains very heavy and w i l  
                                                                                               l 
undoubtedly be renewed at the next meeting, which i s being put about 

a* the meeting at which f i n a l decisions w i l l have to be taken. 

   -
'  Quotas - turning to the main individual issues Commission 
Proposals on quotas are 
                                                                                                            (as we told the Committee on 12 January) 

a genuine advance on any previous quota proposals and Indeed go 
tother in our direction than we would have expected even i  
                                                                                                                                                                                                        f they 

^tlll fall somewhat short of our objective. 
                                                                   They were not discussed 

*t length during the Council but were received with so l i t t l  
                                                                                          e 

consent that i t appears l i k e l y that they oould be agreed. 
                                                                              Denmark 1  
  8 the main sufferer from the Commission^ efforts to meet our to*ition but there i s nevertheless some indication that the Danish 

*iniater might accept the proposals despite strong opposition from 

o
w
 n industry. 
               The Presidency pressed us to agree to the quota 

Proposals but we have always refused to allow individual issues 

to be s e t t l e d u n t i l we can see the CFP package as a whole and w
                                                                      e did so again on t h i s occasion. 
                                   Nevertheless we must recognise  

that i t may become very d i f f i c u l t to make a major issue out of  

securing f u r t h e r improvements on quotas - which would inevitably  

be modest - i  
               f everyone else accepted them and we were able to  

secure our main objective on other parts of the package. 
                                                           We would  

therefore recommend our colleagues to allow us authority to accept  

the Commission quota proposals, subject to such minor improvements  

as we can get, i  
                 f at the same time we could secure a satisfactory  

settlement on the other issues. The figures have already been  

rejected by the industry and there would therefore be some present­

a t i o n a l advantage i n seeking some increases, even i n the less  

important species.  

4. 
      Conservation - t h i s was a disappointing Council as regards  

conservation. 
               At the s t a r t of the meeting the Commission produced  

revised proposals which were weaker than t h e i r e a r l i e r proposals & e 
3 important items: 
                                                                    the size of the Norway pout box; increasing ^  

minimum mesh s i z e f o r the main and v i t a l l y important white fish  

species; and the carriage of large and small mesh nets on the s
                                                                a
                                                                 n
                                                                  t
                                                                  f  

voyage. 
         We know that most other Member States d i s l i k e strong con­

servation measures and that the Commission are lukewarm - as they  

have again proved i n t h e i r revised proposals. 
                                               For the moment our  

p o s i t i o n i s covered by our general reserve on any single aspect  

oT  

u n t i l we can see the whole package. 
                                                                     We s h a l l continue to press i

firm measures. 
                 Obviously however we s h a l l have to accept some compromise i f agreement i s to be achieved. 
                                            The highly sensitive issue of n a t i o n a l r i g h t s to take conservation measures was not di$'  

cussed, but we w i l l c l e a r l y be under heavy pressure at the next  

Council to accept a very much circumscribed procedure which would  

s u b s t a n t i a l l y reduce our present freedom of action.  

5. 
        Coastal b e l t s - t h i s was the f i r s t Council meeting at which 

the issue of coastal b e l t s began to be seriously discussed. O
                                                            n 

the 12 mile b e l t our aim of exclusive control a f t e r allowing time 

f o r e x i s t i n g h i s t o r i c r i g h t s to be brought to an end i s not only of r e a l economic importance but i n the eyes of the industry is 
                                                                    a 

touchstone of the Government's determination and success. 

At present, t h e C o m m i s s i o n p r o p o s a l s m e r e l y p r o v i d e f o r t h e r i g h t s o f other members i n s i d e 
12 m i l e s t o be d e f i n e d a n d l i m i t e d . 

We argued t h a t t h e y must be t e r m i n a b l e . 

6. 

On t h e 12 t o 
50 m i l e b e l t t h e C o m m i s s i o n have so f a r made no proposals b u t C o m m i s s i o n e r G u n d e l a c h d i d u n d e r t a k e t o s t a t e how the concept o f f i s h i n g p l a n s 
( t h a t i s a r r a n g e m e n t s f o r l i m i t i n g fishing e f f o r t i n d e f i n e d a r e a s ) 
"might be a v e h i c l e f o r o v e r c o m i n g the p o l i t i c a l d i f f i c u l t i e s w i t h w h i c h we a r e c o n c e r n e d " . 

M o s t Member States, and up t i l  
l now t h e C o m m i s s i o n t h e m s e l v e s , r e m a i n f i r m l y opposed t o o u r o b j e c t i v e o f p r e f e r e n t i a l a c c e s s between 12 a n d 50 
miles a l t h o u g h I r e l a n d i s o f c o u r s e on o u r s i d e and we may be a b l e to get s y m p a t h e t i c n e u t r a l i t y from I t a l y p r o v i d e d we g i v e h e r a measure o f s u p p o r t o v e r h e r w o r r i e s a b o u t f i s h i n g o f f West A f r i c a . 

In any case w h i l e we c a n be r e a s o n a b l y f l e x i b l e a b o u t how we achieve a c c e s s p r e f e r e n c e i t i s a v i t a l o b j e c t i v e and i s t h e b e s t means o f a c h i e v i n g some permanence a n d r e a l i t y i n t h e q u o t a p r e f e r ­ ence we now seem l i k e l y t o o b t a i n . 

We have t h e r e f o r e a r r a n g e d informal c o n s u l t a t i o n s w i t h t h e C o m m i s s i o n and w i l l be a b l e t o report on t h e s e a t t h e m e e t i n g o f t h e C o m m i t t e e . 

We u n d e r s t a n d however t h a t t h e C o m m i s s i o n a r e r e l u c t a n t t o t a k e t h e i n i t i a t i v e in t a b l i n g p r o p o s a l s a t t h i s s t a g e w i t h o u t a f i r m mandate t o do s o . 

## Conclusion

7. 

The CFP n e g o t i a t i o n c o n t i n u e s t o be o f t h e u t m o s t d i f f i c u l t y . 

The p r e s s u r e t o s e t t l e d u r i n g t h e week b e g i n n i n g 30 J a n u a r y i s l i k e l y to be v e r y h e a v y and we s h o u l d n o t r u l e o u t t h e p o s s i b i l i t y or the need t o make a n agreement t h e n . 

To some e x t e n t t h e e v i d e n t anxiety o f t h e o t h e r s and e s p e c i a l l y o f Germany t o g e t t h i s i s s u e out of the way may a c t t o o u r a d v a n t a g e . 

We t h e r e f o r e i n v i t e t h e Committee t o a g r e e t h e f o l l o w i n g 

( i ) 
 
our r e s e r v e 
on a l  
l p a r t s o f t h e p a c k a g e s h o u l d be 
m a i n t a i n e d u n t i l 
t h e whole o f i t 
i s 
c l e a r . 
The 
f o l l o w ­
i n g p o i n t s 
a r e s u b j e c t 
t o 
t h a t . 
( i i ) 
 
We may have d i s c r e t i o n t o a c c e p t 
t h e C o m m i s s i o n s 
q u o t a 
p r o p o s a l s , 
s u b j e c t 
t o some p o s s i b l e 
i m p r o v e m e n t . 
( i i i ) 
 
We s h o u l d c o n t i n u e t o 
s t r i v e 
f o r a b e t t e r 
c o n s e r v a t i o n 
p r o p o s a l t h a n i s now b e i n g made b u t s h o u l d e x e r c i s e 
j u d g e ­
ment on how f a r t o p r e s s 
t h i s 
i  
f 
o t h e r i t e m s 
a r e 
s a t i s f a c t o r y . 
( i v ) 
We s h o u l d c o n t i n u e t o 
a i m a t r e t a i n i n g t h e 
n a t i o n a l 
r i g h t t o 
i n t r o d u c e c o n s e r v a t i o n m e a s u r e s 
b u t s h o u l d 
a g a i n 
h a v e d i s c r e t i o n t o 
a c c e p t 
l i m i t a t i o n s u p o n i t 
i n t h e 
l i g h t 
o f 
t h e 
r e s t 
o f t h e p r o s p e c t i v e 
p a c k a g e . 
( v ) 
 
We s h o u l d i n s i s t 
o n u l t i m a t e 
e x c l u s i v e 
a c c e s s w i t h i n 12 
m i l e s 
a n d o n a n a c c e s s p r e f e r e n c e 
b e t w e e n 12 a n d 50 
m i l e s 
r e f l e c t i n g 
a p r e f e r e n t i a l q u o t a p o s i t i o n . 
W h i l e 
we 
s h o u l d a i m t o 
a v o i d any f i n a l 
b r e a k d o w n s o f 
n e g o t i a t i o n s 
we s h o u l d n o t 
a l l o w o u r s e l v e s 
t o be h u r r i e d i n t o 
a 
s e t t l e m e n t a n d we s h o u l d n o t make a g r e e m e n t 
a t t h e 
n e x t 
C o u n c i l u n l e s s t h e s e p o i n t s 
on a c c e s s c a n be 
a c h i e v e d . 
J 
S 
B M 
M i n i s t r y o f A g r i c u l t u r e , F i s h e r i e s a n d F o o d 
23 J a n u a r y 
1978 
C A B I N E T 

## S P E C I A L E M P L O Y M E N T M E A S U R E S

M e m o r a n d u m **by the S e c r e t a r y of State f o r E d u c a t i o n**  
and Science and P a y m a s t e r **G e n e r a l**  
T h e r e a r e now o v e r 1. 5 m i l l i o n r e g i s t e r e d u n e m p l o y e d . 

But for the 
1 I r*pact of s p e c i a l e m p l o y m e n t and t r a i n i n g m e a s u r e s this figure could be up 
4 m i l l i o n h i g h e r . 

O v e r the next y e a r l a b o u r supply i s l i k e l y to i n c r e a s e b V 170,000. 

A g a i n s t this b a c k g r o u n d the M i n i s t e r i a l G r o u p on U n e m p l o y m e n t rnong Young P e o p l e ( G E N 27) has been c o n s i d e r i n g the need for continuing special e m p l o y m e n t m e a s u r e s when the existing T e m p o r a r y **E m p l o y m e n t**  
u b s i d y ( T E S ) , die Job R e l e a s e S c h e m e (JRS) and the S m a l l **F i r m s**  
m P l o y m e n t Subsidy Scheme ( S F E S ) run out at the end of A p r i l . 

T h e **G r o u p**  

R a i d e  
r that s p e c i a l e m p l o y m e n t m e a s u r e s w i l l continue to be needed and 
t the right c o u r s e at p r e s e n t is to b u i l d on existing m e a s u r e s though we 
proposing to c o n s i d e r i n addition any suggestions that m a y be f o r t h c o m i n g . 
r views and r e c o m m e n d a t i o n s o n continuation of tha existing m e a s u r e s a r e 
e
*  'ollowe. 

T E M P O R A R Y E M P L O Y M E N T S U B S I D Y 
3. 

TI2S gives e m p l o y e r s a subsidy of £ 2  
0 a week f o r up to a y e a r for r e   
a t  ^
d u n d a n t job they r e t a i n , with the p o s s i b i l i t y of a six month supplement a D
k  
* 
T h i s is by f a r the l a r g e s t of the s p e c i a l m e a s u r e s (at m i d ­
e w e e
^
It .

C e r r i b e r 1977 it c o v e r e d 186, 000 jobs with a r e g i s t e r effect of 133, 000). 

S o t h the cheapest, with negligible net costs. 

W e a g r e e d that it, and e S f *
m o n r n 0 c r i *
t  
h supplement, should continue f o r another y e a r , subject to any c a t i o n obi  
. 

8 to take account of E u r o p e a n **E c o n o m i c C o m m u n i t y ( E E C )**  
A c t i o n s **(see p a r a g r a p h 7 below).**  
^ L  
L 
F I R M E M P L O Y M E N T S U B S I D Y 
4. 

n  S F E S c u r r e n t l y p r o v i d e s a subsidy of £ 2 0 a week for each e x t r a e j 0 k  
^ 
r o v S p
*
d e d i n m a n u f a c t u r i n g establishments of l e s s than 50 e m p l o y e e s within e 
^ .

D
e v e l o m e n t
^ ^ c h
1
P 
 A r e a s ( S D A s ) . 

About 8, 250 jobs should be supported by C t e a t e A b o u t one t h i r d of the jobs would not otherwise have been fifj^ 
* 
a g r e e d that the scheme should be extended to m a n u f a c t u r i n g 
 
to kirie^
 ^00 i n D e v e l o p m e n t A r e a s ( D A s ) as w e l l as S D A s **and also i n**  
U P
l t y P a r t n e r s h i p A r e a s . 

T h i s would create a m a x i m u m effect **on the**  
unemployment r e g i s t e r i n 1979 of 4. 750 at a g r o s s annual cost of 
£ 2 1 J ^  
0 
0 " 
M r L o t  
h would l i k e the s u b s i d y to be a v a i l a b l e c o u n t r y - w i d e w h i c h would push up the r e g i s t e r effect to 23,000 a n d the g r o s s c o s t to £ 1 0  
. m i l l i o n , he would a l s o l i k e to p a y a h i g h e r rate i n the D e v e l o p m e n t A r e a s a n I n n e C i t  
y A r e a s . 

T h e C r o u p thought that M  
r B o o t h ' s r e c o n ^ s n d a t i o n s should be accepted o m y i f there w e r e a significant r e d u c t i o n i n the i m p a c t of T E  
S 
resulting f i o m E E  
C C o m m i s s i o n r e s t r i c t i o n s . 

## J O B R E L E A S E S C H E M E

5. 

J R S p r o v i d e s a tax f r e e allowance of £ 2 6 . 50 f o r up to a. y e a r for employees within one y e a r of the state p e n s i o n age who l e a v e A e i  
r jobs and the e m p l o y e , a g r e e s to r e c r u i t a r e p l a c e m e n t f r o m the u n e m p l o y m e n t register. 

It i s l i m i t e d to A s s i s t e d A r e a s a n d c u r r e n t l y r e d u c e s the unemployment r e g i s t e r b y about 9, 000 at a n annual g r o s s c o s t of 
£ 1 1 . 5 m i l l i o n . 

T h e G r o u p a g r e e d that the s c h e m e should apply c o u n t r y - w i d e that the allowance should be u p - r a t e d to about £ 2 8 - £ 3 0  
. b r o a d l y i n l i n e 
* i t h p a r a l l e l s o c i a l s e c u r i t y benefits. 

T h i s should have a m a x i m u m effect on the r e g i s t e r i r 1979 of u p w a r d s of £ 1 7 . 500 at an annual g r o s s c a s t of 
£ 2 5 m i l l i o n olus M r B o o t h would l i k e to i n c r e a s e the p e r i o d of e l i g i b i l i t y 
^ two y e a r s a n d m e allowance to £ 4 0 . tax f r e e . 

T h i s would 
£ " " - e t b  
e impact on the r e g i s t e r to 78. 000 and the annual g r o s s c o s t to £ 1 7 0 .  
0 
f^ion. 

The m a ^ r i t y of fhe G r o u p thought £ 4 0 too h i g h and noted also m a t l e g i s l a t i o n would be n e c e s s a r y to keep it tax free i f p a i d f o r a second y e a r T h e y bought it would inevitably i n c r e a s e the p r e s s u r e f o r other benefits to be 
*ntaxed and that m a n y of the b s n e f i c i a r i e s m i g h t also have occupational Pensions. 

T h e y a l s o thought that it could b u i l d up p r e s s u r e for a l o w e r i n g 
* 
the r e t i r e m e n t age g e n e r a l l y and would be r e s e n t e d b y l o w - p a i d w o r k e r s and by others on s o c i a l p e n s i o n and benefits. 

O V E R A L L E F F E C  
T A N D C O S T O F M E A S U R E S (See a l s o A n n e x ) 
J - 
M  
r B o o t h ' s p r o p o s a l s would i n c r e a s e the e m p l o y m e n t effects by about l Q 0 . 000. giving a a o v e r a l l effect on the r e g i s t e r of a l l m e a s u r e s of 360, 000 
b V M a r c h 1979. 

T h i s d o e s not m c l u d e any offset i n T E S to m e e t the * . E C 
C o m m i s s i o n . 

G E  
N 27's r e c o m m e n d a t i o n s would give a figure i n excess of 
2 8 3 . 0 0 0 b y the s a n e date, a n i n c r e a s e of o v e r 23,000 on p r e s e n t l e v e l s , 
^ b j e c t to a n y offsetting savings M  
r B o c t h c a n find, the g r o s s c o s t s would 

b 
e a charge o n the C o n t i n g e n c y R e s e r v e , amounting, under h i s p r o p o s a l s to 
£
2
?
 7 m i l l i o n i n 1978-79. a n d u n d e r G E  
N 27 p r o p o s a l s to u p w a r d s ef 
" 4 4 m i l l i o n (the £ 2 7 7 m i l l i o n does not a l l o w f o r the cost of g i v i n g m o r e u n d e r 
f 
E S to f i r m s i n D A s a n d Inner C i t y F a r m e r ship A r e a s a n d the £ 1 4 4 m i l l i o n 
t
0 e  s not a l l o w f o r any i n c r e a s e c o s t i f the J R S allowance i s i n c r e a s e s to 
*
2 * - £ 3 0 )  
. 

If the p r e s e n t s c h e m e s w e r e continued u n a l t e r e d the c o m p a r a b l e C o a t would be £ 1 2 7 m i l l i o n . 

O n M r B o o t h
1 s p r o p o s a l s h i s D e p a r t m e n t 
* * *  
U r e q u i r e a n e x t r a 240 staff i n addition to 270 a l r e a d y engaged on these 
8 c h e m e s . 

## E E C C O M M I S S I O N

, 
7 \ 
F o l l o w i n g c o m p l a i n t s f r o m s o m e m e m b e r states, the C o m m i s s i o n to i m p o s e s e v e r e r e s t r i c t i o n s o n the continuation o f T E S i n the textiles. 

c l o t h i n g a n d footwear i n d u s t r i e s , w h i c h they r e g a r d a s d i s t o r t i n g 
competition and exporting u n e m p l o y m e n t . 

Without E E  
C a p p r o v a l b y 
1 A p r i l , p a y m e n t s i n r e s p e c t of applications r e c e i v e d after 1 A p r i l would be i l l e g a l . 

We ought to put i n our detailed p r o p o s a l s by the end oi this month as the C o m m i s s i o n i s entitled to take two months to c o n s i d e r t h e m . 

V i e w s in G E N 27 w e r e d i v i d e d o n whether to take a tough l i n e with the C o m m i s s i o n , Yielding no m a t e r i a l c o n c e s s i o n s and accepting that this would p r o b a b l y l e a d to an a d v e r s e d e c i s i o n i n the E u r o p e a n C o u r t , o r whether to attempt to achieve a negotiated settlement. 

U n d e r the f i r s t a p p r o a c h the conditions 
*e m i g h t be f o r c e d eventually to a c c e p t c o u l d be stiffer than those we m i g h t b e able to negotiate but they would be c l e a r l y seen as i m p o s e d upon u s . 

The m a j o r i t y of the G r o u p thought that a w i l l i n g n e s s to negotiate, at l e a s t , initially was the right c o u r s e ; 
and that it was only r e a l i s t i c to l o o k s e r i o u s l y at options which would enable us to phase T E  
S down, such as a s h o r t time f o r k i n g c o m p e n s a t i o n s c h e m e . 

T h e r e m a y be some p o s s i b i l i t y that negotiations with the C o m m i s s i o n on T E S would be e a s e d if it was c l e a r that it would be r e p l a c e d by a m o r e acceptable s c h e m e . 

## R E C O M M E N D A T I O N S

8 * 
T h e m a j o r i t y of the G r o u p r e c o m m e n d s 
­

a. 
Continuation of T E  
S and Supplement f o r a f u r t h e r y e a r 
(subject to m o d i f i c a t i o n s to m e e t E E  
C r e q u i r e m e n t s ) . 
b. 
E x t e n s i o n of J R S to the whole country, on a o n e - y e a r 
b a s i s , 
with an i n c r e a s e i n the weekly allowance f r o m £ 2 6 . 50 to 
£ 2 8 - £ 3 0 
at M  
r Booth's d i s c r e t i o n . 
c. 
Increase i n the size of m a n u f a c t u r i n g f i r m eligible for S F E S 
to 200 e m p l o y e e s and extension of e l i g i b i l i t y to D e v e l o p m e n t A r e a s 
and Inner C i t y P a r t n e r s h i p A r e a s , but that i f m a t e r i a l r e a u c t i o n s 
i n T E S have to be m a d e , 
S F E S should be a v a i l a b l e nationally, with 
h i g h e r payments i n r e s p e c t of f i r m s i n D A s and Inner C i t y 
P a r t n e r s h i p A r e a s . 
d . 

A  
n attempt to r e a c h a negotiated settlement with the C o m m i s s i o n on T E S . 

e * 
G E  
N 2? should c o n s i d e r p r o p o s a l s f o r a short time w o r k i n g compensation scheme (and any other p r o p o s a l s M i n i s t e r s m a y put f o r w a r d ) as a p o s s i b l e substitute f o r reductions i n T E S  
. 

S W 
e P a r t m e n t of E d u c a t i o n and Science 
2 
4 January I978 

ON UNWZ.O*HB*TT 
MCXVT^ 
AMD COSTS 
OK 12 MOJWt 
^TMSXOKS 
MOM 1 AimXX, 
Ac ttlal 
grcss 
cost 
in financial 
y^ars
Till 2 GffOOt on 
Gross 
itmzunl 
Net 
annual 
/f 
cost (.On) 
cost (£ni) 
197&/9 
I 
1979/80 
T " 
1980/81
xuiomployment  
register 
in 
 
1979 
// 
/ i TES 
on 
present 
 
115,000 
223 
0 
115 
105  
! 
b a s i s 
2 S F C S **extended**  
to 
c o m p a n i e s 
 
w i t h **up t o 200**  
1  
employees
- lor 
w h o l e 
, 
c o u n t r y 
23,000 
103-0 
32.0 
60 
19 
0 
! - l o r A s s i s t e d 
1 
Areas 
9,550 
43.0 
12.6 
26 
8 
0 
- f o r D o v e l o p ­
6.1 
14 
4 
0
me:it 
A r e a s 
4,750 
21.0 
3 J 
b **R e l e a s e**  
ScY*&uia* on a  
m' t i o n a l 
b a s i s 
 
o p e n t o **t h o s e**  
w i t h i n 1 y e a r **o f**  
r e t i r e m e n t 
w i t h 
 
- £ 4  
0 a l l o w a n c e 
39,000 
85.0 
43.0 
51 
34 
0 
- £35 a l l o w a n c e 
30,000 
57.0 
21.0 
34 
23 
0 
- 
£ 2 6 . 3 0 a l l o w a n c e 
17,500 
25.0 
8.0 
15 
10 
0 
4 J o b r e l e a s e 
scheme o n 
n a t i o n a l 
b a s i s 
o p e n t o t h o s e 
v i . t l . i n 2 y e a r s o f 
r e t i r e m e n t 
w i t h 
- 
£ 4 0 a l l o w a n c e 
- 78,000 
170.0 
86.0 
102 
119 
34 

## C A B I N E T

E C O N O M I C O U T L O O K : 
C A S E F O R R E F L A T I O N 
A N D I N C R E A S E IN P U B L I C 
E X P E N D I T U R E 
M e m o r a n d u m by the S e c r e t a r y of State for S o c i a l S e r v i c e s aDd the M i n i s t e r for S o c i a l S e c u r i t y 

## I N T R O D U C T I O N

1. 

W e a r e convinced that there i s an * v e T O h e l m i n g case, on e c o n o m i c a n d p o l i t i c a l g r o u n d s , f o r a substantial r e f l a t i o n . 

A m a j o r boost to public expenditure i s needed as well as significant tax cuts. 

E C O N O M I C 
B A C K G R O U N D 
2 * 
Industrial p r o d u c t i o n is stagnant, u n e m p l o y m e n t i s at an unacceptable 
(and costly) l e v e l . 

T h e deflation f o r c e d on us b y the 1976 s t e r l i n g c r i s i s h a 8 been compounded by f u r t h e r unplanned deflation due to m a s s i v e shortfall to public spending, a n d although tax r e l i e f s have to some extent c o m p e n s a t e d this the offset has c o m e too late to a v o i d a f a l l i n aggregate d e m a n d and a  
r*8e i n the n u m b e r of j o b l e s s . 

The T r a d e s U n i o n C o n g r e s s ( T U C ) c a l l f o r a £ 3 b i l l i o n budget boost C o m p o s e d of tax cuts and i n c r e a s e d public spending, s e e m s to us to be on 
^ g e t . 

C A S E F O R E X T R A B I L L I O N P O U N D S O F P U B L I C 
E X P E N D I T U R E 
4 
* 
L a s t y e a r we d r e w C a b i n e t ' s attention to the p r o s p e c t of a substantial P
u & l i  expenditure shortfall and it now a p p e a r s l i k e l y that there w i l l be c p o t h e r l a r g e shortfall this y e a r . 

A  
n e x t r a b i l l i o n of spending next ancial y e a r can be p r e s e n t e d , at l e a s t i n p a r t , as designed to offset further X c e s s i v e s h o r t f a l l . 

It cannot c o n v i n c i n g l y be a r g u e d that it would damage n t e r n a t i o n a l confidence. 

^ 
Some f o r m s of p u b l i c expenditure, f o r e x a m p l e c h i l d benefits, have g .

e 
8 a  m e p o l i t i c a l attractions and b r o a d e c o n o m i c effect as tax cuts. 

T h e y e k  *  People e x t r a m o n e y which they can spend t h e m s e l v e s . 

A n d child i n f ?

6 ^  S
0 e s d i r e c t l y to seven m i l l i o n w o m e n who a r e p a r t i c u l a r l y p r e s s e d by ation. 

. p  
i t e w i l l be c r i t i c a l at the next election as it has n e
 
w o m a n s v o  
p 
*t e a r l i e r e l e c t i o n s . 

C h i l d benefit i s also both p r e s e n t a t i o n a l l y and a n
*ai H  
y effective way of t a c k l i n g the p r o b l e m of incentives to w o r k : 
it 
0 
8
e
"
w o r n l  
8
e
 
^ 
* 
n k i n c o m e s of f a m i l i e s who might otherwise be better off (or y M a r g i n a l l y w o r s e off) u n e m p l o y e d . 

6* 
E x p e n d i t u r e * n i m p r o v e d p u b l i c s e r v i c e s i s not only what people expect of a L a b o u r G o v e r n m e n t but would be, at the p r e e e n t time, a d i r e c t f o r m of job c r e a t i o n . 

T h e net cost after a l l o w i n g for savings i n u n e m p l o y ­
nient benefits and e x t r a revenue would be substantially l e s s than the g r o s s cost. 

A n d wo can m a k e s u r e that the jobs which a r e c r e a t e d a r e useful jobs which w i l l benefit the c o m m u n i t y . 

7. 

F o r a l l these r e a s o n s we should r a i s e p u b l i c expenditure p r o g r a m m e s by the full amount d e m a n d e d by the T U C  
. 

W h e n we c o m e to spend the m o n e y we w i l l need to identify those a r e a s where we a r e l i k e l y to be u n d e r the m o s t damaging p o l i t i c a l attack at the time of the election: ­

a. 
T h e l e v e l of u n e m p l o y m e n t w i l l undoubtedly be a sensitive 
i s s u e , 
and we w i l l need a whole range of m e a s u r e s to i m p r o v e 
o u r r e c o r d . b . 
O u r r e c o r d on c h i l d support, where we have still to r e a c h 
the l e v e l of p r o v i s i o n made under tne H e a t h G o v e r n m e n t , i s 
bound to be under strong attack. 
c. 
T h e huge i n c r e a s e i n school m e a l p r i c e s budgeted f o r 
S e p t e m b e r 1978 w i l l involve an e x t r a b u r d e n of about £ 1 . 3  
0 f o r 
a f a m i l y with two c h i l d r e n at s c h o o l . 
T o go ahead with this 
knowing that a n autumn e l e c t i o n m a y be f o r c e d upon us, 
would 
be s h e e r f o l l y . 
d . 

O f a l l the constraints we have put on p u b l i c expenditure those on the health s e r v i c e have i n our view l e d to the m o s t d a m a g i n g and continuing c r i t i c i s m . 

## C O N C L U S I O N

p 
' 
We therefore invite o u i colleagues to a g r e e that:­

a. 
a substantial reflation i s needed i n the next f i n a n c i a l y e a r ­
of the o r d e r of £  
3 b i l l i o n i n g r o s s t e r m s ; 
b . 
although tax r e l i e f s should be a m a i n component, 
there 
m u s t a l s o be a package of spending m e a s u r e s for 1978-79 
amounting to pezhaps £  
1 b i l l i o n g r o s s ; 
c. 

this package should c o m p r i s e p o l i t i c a l l y attractive m e a s u r e s such as c a n c e l l a t i o n of the school m e a l p r i c e r i s e , e m p l o y m e n t m e a s u r e s , a f u r t h e r c o n t r i b u t i o n to r e l i e v e National H e a l t h S e r v i c e p r e s s u r e s , and a N o v e m b e r u p r a t m g of c h i l d benefit; 
and 

d . 
the cost of the m e a s u r e s should be c o v e r e d f r o m the 
C o n t i n g e n c y R e s e r v e p l u s , as n e c e s s a r y , an allowance 
for 
shortfall a n d / o r such i n c r e a s e i n the p u b l i c sector b o r r o w i n g 
r e q u i r e m e n t as i s n e c e s s a r y to e n s u r e that the C h a n c e l l o r of 
the E x c h e q u e r has adequate h e a d r o o m f o r his B u d g e t . 
d e p a r t m e n t of H e a l t h and S o c i a l Security 
3 
0 J a n u a r y 1978 
D E 
S O 
C O P Y N O 
CP(78) 11 
30 J a n u a r y 1978 
C A B I N E T 
S T A T E l v I E N T O N T H E D E F E N C E E S T I M A T E S 1978 
Note by the S e c r e t a r y of State for Defence I- 
A t t a c h e d is m y d r a i t statement on the Defence E s t i m a t e s ; 
the statement has been a g r e e d by the Defence and O v e r s e a P o l i c y C o m m i t t e e subject to some m i n o r r e v i s i o n which is now i n c o r p o r a t e d i n the text. 

l - 
I invite m y colleagues to approve the text so that I m a y publish the statement on Wednesday 15 F e b r u a r y . 

F 
M 
M i * i s t r y of Defence 
3 
0 Janu a r y 
19*/8 

## Draft **Statement**

# On The Defence Estimates **1978**

## Contents

C b a p t e r 
1: 
DEFENCE 
P O L I C Y 
D e t e n t e 
a n d D i s a r m a m e n t
D e t e r r e n c e 
a n d D e f e n c e 
. .  
.
Warsaw P a c t 
C a p a b i l i t y
NATO D e f e n c e E f f o r t
U n i t e d K i n g d o m C o n t r i b u t i o n t o U n i t e d K i n g d o m D e f e n c e B u d g e t
Commitments 
O u t s i d e 
NATO
 
DEPLOYMENTS, 
OPERATIONS, 
C h a  P t e r 
2: 
COMBAT F O R C E S ,
AND 
E X E R C I S E S 
NATO 
R o y 8 l N a v y G e n e r a l P u r p o s e 
Combat F o r c e s .
T h e 
N u c l e a r 
S t r a t e g i c 
F o r c e
A r m y Combat F o r c e s R o y a l A i r F o r c e Combat F o r c e s
E x e r c i s e s 
i n 
s u p p o r t 
o f 
NATO
 
10 
15 
U N I T E D 
KINGDOM 
O p e r a t i o n s HM T h e Q u e e n ' s 
S i l v e r 
J u b i l e e R e v i e w s 
. .  
.
n ,
R E S T OF T H E WORLD 
D e p l o y m e n t s 
a n d O p e r a t i o n s
S e r v i c e 
A s s i s t a n c e 
O v e r s e a s
 
E x e r c 
1S6S 
. . . 
. . . 
. . . 
. . . 
. . .
apter 
3: 
EQUIPMENT 
I n d u s t r i a l 
a n d E m p l o y m e n t 
i m p l i c a t i o n s 
o f 
t h e 
E q u i p m e n t programme
I n t e r n a t i o n a l 
C o l l a b o r a t i o n
P r o d u c t i o n a n d D e v e l o p m e n t
R e s e a r c h
R o y a l 
O r d n a n c e F a c t o r i e s
D e f e n c e S a l e s
C h a  P t e r 
4: 
MANPOWER 
R e c r u i t m e n t , 
R e - e n g a g e m e n t a n d 
W a s t a g e , 
and 
R e d u n d a n c y
Women's 
S e r v i c e s
R e s e r v e s 
a n d C a d e t F o r c e s
P a y 
a n d o t h e r 
C o n d i t i o n s 
o f 
S e r v i c e 
. .  
.
D e f e n c e 
S t u d i e s , 
E d u c a t i o n a n d T r a i n i n g . .
 
SUPPORT 
P t e r 5:
 
2 
5 
7 
9 
10 
12 
13 
 
14 
 
14 
NATO C o - o p e r a t i o n 
i n L o g i s t i c s
I n t e r - S e r v i c e 
C o - o r d i n a t i o n o f 
S u p p o r t . . .
R o y a l N a v y S u p p o r t O r g a n i s a t i o n A r m y S u p p o r t O r g a n i s a t i o n R o y a l A i  
r F o r c e 
S u p p o r t O r g a n i s a t i o n 
. .  
.
L a n d s
L i v i n g A c c o m m o d a t i o n
Works 
. .  
.
E n e r g y C o n s e r v a t i o n
Movements M e t e o r o l o g y
 
15 
 
16 
O t h e r 
S u p p o r t
Fap;e 
 
. .  
.
 
. .  
.
 
NATO
 
. .  
.
 
1 
6 
8 
10 
 
14 
17 
20 
 
1 
2 
2 
5 
7 
 
17 
20 
22 
 
2 
3 
5 
24-
25 
27 
1 
3 
4-
6 
8 
17 

## Defence P O L I C Y

101. 

U n i t e d K i n g d o m d e f e n c e p o l i c y i s b a s e d o n t h e N o r t h A t l a n t i c A l l i a n c e , w h i c h h a s w o r k e d w e l l f o r more t h a n a q u a r t e r o f a century. 

T h e k e y p r i n c i p l e o f t h e N o r t h A t l a n t i c T r e a t y , t h a t a n attack on one member i s a n a t t a c k o n a l l , h a s p r o v i d e d f a r g r e a t e r s e c u r i t y t h a n a n y member c o u l d have a c h i e v e d a l o n e . 

T h e U n i t e d Kingdom s h a r e s t h e b e n e f i t s a n d t h e o b l i g a t i o n s o f m e m b e r s h i p . 

T h e Government' s p o l i c y c o n t i n u e s t o b e t o c o n c e n t r a t e o u r d e f e n c e effort on t h e A l l i a n c e i n t h e ways t h a t c a n b e s t c o n t r i b u t e t o the s t r e n g t h o f t h e A l l i a n c e a n d t h u s t o o u r own s e c u r i t y . 

102. 

D e f e n c e p o l i c y n e e d s t o b e s e e n i n t h e w i d e r c o n t e x t o f o u r i n t e r n a t i o n a l s e c u r i t y a i m s , i n t h e s e r v i c e o f w h i c h d e f e n c e i s a partner w i t h o t h e r a s p e c t s o f p o l i c y . 

T h e s e i n c l u d e a c t i o n t o remove or a l l e v i a t e t h e c a u s e s o f i n t e r n a t i o n a l t e n s i o n , a n d t h e continuing s e a r c h t o w i d e n a n d s t r e n g t h e n m u l t i l a t e r a l arms control and d i s a r m a m e n t w h e r e v e r p o s s i b l e . 

T h e v a r i o u s a s p e c t s o f detente and d e t e r r e n c e c o m p l e m e n t one a n o t h e r i n r e i n f o r c i n g security. 

T h e G o v e r n m e n t i s a c t i v e i n e a c h o f t h e m , i n c l o s e accord w i t h our N o r t h A t l a n t i c T r e a t y O r g a n i s a t i o n (NATO) 
A l l i e s . 

## D E T E N T E And Disarmament

103. 

D u r i n g t h e l a s t t w e l v e months t h e r e h a v e b e e n some e n c o u r a g i n g advances i n arms c o n t r o l p r o s p e c t s , n o t a b l y i n n e g o t i a t i o n s o n a comprehensive n u c l e a r t e s t b a n a n d , as a r e s u l t o f n e g o t i a t i o n s between the U n i t e d S t a t e s a n d t h e S o v i e t U n i o n , o n s t r a t e g i c arms l i m i t a t i o n . 

C o m p r e h e n s i v e T e s t B a n 
104. 

S i n c e J u l y 1977 
t h e U n i t e d K i n g d o m h a s b e e n n e g o t i a t i n g w i t h t h e U n i t e d S t a t e s a n d t h e S o v i e t U n i o n t o w a r d s a C o m p r e h e n s i v e T e s t B a n T r e a t y . 

O u r o b j e c t i v e i s a m u l t i l a t e r a l t r e a t y b a n n i n g a l l n u c l e a r e x p l o s i o n s , w i t h e f f e c t i v e v e r i f i c a t i o n a n d t h e a d h e r e n c e o f a s many s t a t e s as p o s s i b l e , n u c l e a r a n d n o n - n u c l e a r . 

T h e n e g o t i a t i o n s h a v e made g o o d p r o g r e s s . 

We a r e now w o r k i n g t o n a r r o w t h e d i f f e r e n c e s o n t h e o u t s t a n d i n g i s s u e s . 

We b e l i e v e a g r e e m e n t c a n b e a c h i e v e d . 

S t r a t e g i c A r m s L i m i t a t i o n T a l k s 
( S A L T ) 
105. 

T h e i n t e r i m a g r e e m e n t b e t w e e n t h e U n i t e d S t a t e s a n d t h e S o v i e t U n i o n o n t h e l i m i t a t i o n o f s t r a t e g i c n u c l e a r arms e x p i r e d o n 3 O c t o b e r 1977* b u t b o t h g o v e r n m e n t s h a v e s a i d t h e y w i l l c o n t i n u e t o a c t a s t h o u g h i t were i n f o r c e . 

N e g o t i a t i o n s c o n t i n u e b e t w e e n them t o w a r d s a new a g r e e m e n t a n d t h e U n i t e d K i n g d o m G o v e r n m e n t a t t a c h e s g r e a t i m p o r t a n c e t o a s u c c e s s f u l o u t c o m e . 

M u t u a l a n d B a l a n c e d F o r c e R e d u c t i o n s 
(MBFR) 
1 0 6 . 

D e s p i t e c o n s t a n t e f f o r t s b y t h e W e s t , p r o g r e s s i n t h e V i e n n a n e g o t i a t i o n s o n t h e m u t u a l a n d b a l a n c e d r e d u c t i o n o f f o r c e s i n c e n t r a l E u r o p e i s d i s a p p o i n t i n g . 

T h e a g r e e d a i m o f p r o v i d i n g g r e a t e r s t a b i l i t y a t a l o w e r l e v e l o f f o r c e s w i t h o u t i m p a i r i n g t h e s e c u r i t y o f e i t h e r s i d e seems s t i l l a l o n g way o f f . 

107* 
W e s t e r n p r o p o s a l s r e m a i n f i r m l y b a s e d on t h e p r i n c i p l e t h a t f o r c e r e d u c t i o n s s h o u l d a c h i e v e a p p r o x i m a t e p a r i t y b e t w e e n t h e forces o f t h e two s i d e s i n t h e a r e a b y e s t a b l i s h i n g a common c o l l e c t i v e c e i l i n g on E a s t e r n a n d W e s t e r n manpower. 

The A l l i a n c e proposes s p e c i f i c r e d u c t i o n s o n e a c h s i d e i n f o r m s d e s i g n e d t o c o n t r i b u t e as much a s p o s s i b l e t o s t a b i l i t y i n t h e a r e a . 

T h e W e s t estimates t h a t i n g r o u n d f o r c e s E a s t e r n manpower e x c e e d s W e s t e r n manpower b y more t h a n 150*000* a l t h o u g h t h e E a s t c l a i m s t h a t approximate p a r i t y a l r e a d y e x i s t s . 

T o i d e n t i f y t h e r e a s o n s f o r this d i s c r e p a n c y t h e West h a s b e e n p r e s s i n g f o r a d i s c u s s i o n o f f i g u r e s , a n d i n **J u l y** 
1977 
p u t f o r w a r d p r o p o s a l s f o r a d e t a i l e d exchange o f d a t a . 

C e r t a i n p r o b l e m s h a v e s t i l l t o b e r e s o l v e d , but i t i s h o p e d t h a t a n e x c h a n g e c a n t a k e p l a c e s o o n . 

108. 

The MBFR n e g o t i a t i o n s a r e o f g r e a t i m p o r t a n c e , a n d t h e Government w i l l c o n t i n u e w i t h i t s A l l i e s t o s t r i v e f o r a n outcome that w i l l g e n u i n e l y e n h a n c e s t a b i l i t y i n E u r o p e . 

T h e G o v e r n m e n t has no i n t e n t i o n h o w e v e r , i n a d v a n c e o f an a g r e e m e n t , o f r e d u c i n g the f o r c e s we m a i n t a i n on t h e m a i n l a n d o f E u r o p e i n f u l f i l m e n t of our B r u s s e l s T r e a t y o b l i g a t i o n s . 

Conference on S e c u r i t y a n d C o - o p e r a t i o n i n E u r o p e 
( C S C E ) 
109. 

The CSCE f o l l o w - u p m e e t i n g o p e n e d i n B e l g r a d e i n O c t o b e r 1977* 
f o l l o w i n g a p r e p a r a t o r y m e e t i n g i n t h e summer. 

T h e c o n f e r e n c e i s c o n s i d e r i n g t h e p r o v i s i o n s o f t h e 
1975 
F i n a l A c t . 

T h e o n e s o f d i r e c t m i l i t a r y r e l e v a n c e a r e t h e c o n f i d e n c e - b u i l d i n g m e a s u r e s , d e s i g n e d t o r e d u c e t h e r i s k s o f m i l i t a r y m i s c a l c u l a t i o n o r m i s u n d e r s t a n d i n g . 

110. 

S i n c e t h e s i g n i n g o f t h e F i n a l A c t , NATO c o u n t r i e s , a n d f o r t h e most p a r t t h e n e u t r a l a n d n o n - a l i g n e d c o u n t r i e s a l s o , h a v e i m p l e m e n t e d t h e s e m e a s u r e s i n a l i b e r a l a n d f o r t h c o m i n g way-
T h e y have n o t i f i e d n o t o n l y a l l m a j o r m a n o e u v r e s i n v o l v i n g o v e r 
25,000 t r o o p s b u t a l a r g e number o f s m a l l e r - s c a l e m a n o e u v r e s 
(whose n o t i f i c a t i o n i s d i s c r e t i o n a r y ) . 

T h e y h a v e i n v i t e d o b s e r v e r f r o m C S C E p a r t i c i p a t i n g s t a t e s , i n c l u d i n g t h e Warsaw P a c t c o u n t r i e S ' 
t o many o f t h e i r m a n o e u v r e s . 

U n t i l j u s t b e f o r e t h e B e l g r a d e m e e t i n g , t h e Warsaw P a c t c o u n t r i e s t o o k a more r e s t r i c t i v e l i n e ; 
f o r e x a m p l e , t h e y r e f u s e d a l l i n v i t a t i o n s t o m a n o e u v r e s i n NATO 
c o u n t r i e s . 

More r e c e n t l y , h o w e v e r , t h e y h a v e b e g u n t o a c c e p t sue i n v i t a t i o n s , a n d i n J a n u a r y t h e U n i t e d K i n g d o m was, f o r t h e f i r s t t i m e , i n v i t e d t o s e n d o b s e r v e r s t o a S o v i e t e x e r c i s e . 

I n B e l g r a d e B r i t i s h and o t h e r NATO r e p r e s e n t a t i v e s h a v e drawn a t t e n t i o n t o t h e d i s c r e p a n c i e s i n t h e i m p l e m e n t a t i o n o f t h i s a s p e c t o f t h e F i n a l A c t . 

T h e y h a v e s o u g h t t o d e v e l o p c o n f i d e n c e - b u i l d i n g m e a s u r e s f u r t h e r , i n p a r t i c u l a r b y s t r e n g t h e n i n g t h e commitment t n e t o n o t i f y s m a l l e r m a n o e u v r e s a n d movements, a n d b y i m p r o v i n g c o n d i t i o n s u n d e r w h i c h i n v i t e d o b s e r v e r s c a n o p e r a t e . 

## E - J N I T E D N A T I O N S S P E C I A L S E S S I O N On D I S A R M A M E N T

^ 
The G o v e r n m e n t l o o k s f o r w a r d t o t h e U n i t e d N a t i o n s S p e c i a l s s i o n on D i s a r m a m e n t t o be h e l d i n May a n d J u n e , a n d h o p e s i t i m p r o v e t h e p r o s p e c t s f o r f u r t h e r m e a s u r e s . 

T h e U n i t e d kingdom has t a k e n a n a c t i v e p a r t i n t h e p r e p a r a t o r y w o r k , a n d i s 
^
u t t i n g f o r w a r d some new p r o p o s a l s f o r a c t i o n . 

Oth n A
G
- ^ L ^ r m s C o n t r o l a n d D i s a r m a m e n t M e a s u r e s 
* 
The U n i t e d K i n g d o m c o n t i n u e s t o a t t a c h g r e a t v a l u e t o t h e 
 
^ 
T r e a t y on t h e N o n - P r o l i f e r a t i o n o f N u c l e a r W e a p o n s , anci h a s 
 
^ t i n u e d i t s e f f o r t s t o p e r s u a d e f u r t h e r s t a t e s t o a c c e d e t o i t , and to u o p r o m o t e o t h e r a r r a n g e m e n t s t o r e d u c e t h e r i s k o f t h e s p r e a d n u c l e a r w e a p o n s . 

T h e G o v e r n m e n t i s p l a y i n g a n i n c r e a s i n g l y c - t i v e p a r t i n e f f o r t s t o a c h i e v e p r o g r e s s on arms c o n t r o l i n t h e n i t e d N a t i o n s , t h e C o n f e r e n c e o f t h e C o m m i t t e e on D i s a r m a m e n t (CCD) 
and e ^ s e w h e r e . 

Many o f t h e s e n e g o t i a t i o n s a r e e n t e r i n g i m p o r t a n t 

## N E W P H A S E S .

The B r i t i s h d r a f t c o n v e n t i o n on b a n n i n g t h e d e v e l o p m e n t , t i o n a n d s t o c k p i l i n g o f c h e m i c a l weapons a n d d e s t r o y i n g t h e m , u i n t h e CCD i n 
1976, h a s b e e n f u r t h e r d e b a t e d . 

F a s t e r S 
s may b e p o s s i b l e when c u r r e n t c o n s u l t a t i o n s b e t w e e n t h e s t a t e s a n d t h e S o v i e t U n i o n a r e c o m p l e t e d . 

L a s t May t h e U n i t e d T
T * 
k i n g d o m s i g n e d t h e C o n v e n t i o n on t h e p r o h i b i t i o n o f m i l i t a r y v o t h e r h o s t i l e u s e o f e n v i r o n m e n t a l m o d i f i c a t i o n t e c h n i q u e s , V ; l l i c h n had b e e n n e g o t i a t e d b y t h e CCD a n d e n d o r s e d b y t h e UN G e n e r a l 
"977 
a l s o saw t h e f i r s t R e v i e w C o n f e r e n c e o f t h e T r e a t y b a n n i n g t l l e P l a -
C
l n c o f n u c l e a r weapons a n d o t h e r weapons o f mass d e s t r u c t i o n 
0 1 1 
the s e a b e d . 

T h e U n i t e d K i n g d o m w e l c o m e d t h e C o n f e r e n c e ^ 
- ^ m a t i o n o f t h e p a r t i e s
1 
s u p p o r t f o r t h e T r e a t y . 

1 1 5 . 

T h e U n i t e d K i n g d o m a n d t h e S o v i e t U n i o n s i g n e d i n O c t o b e r a t r e a t y on t h e P r e v e n t i o n o f A c c i d e n t a l N u c l e a r W a r . 

E a c h p a r t y u n d e r t a k e s t o m a i n t a i n a n d where n e c e s s a r y i m p r o v e i t s s a f e g u a r d s a g a i n s t t h e u n a u t h o r i s e d or a c c i d e n t a l u s e o f n u c l e a r w e a p o n s , and t o n o t i f y e a c h o t h e r i m m e d i a t e l y o f a n y i n c i d e n t . 

T h e T r e a t y came i n t o f o r c e on 10 
O c t o b e r 
19771 
a n d i s s i m i l a r i n p u r p o s e t o e x i s t a g r e e m e n t s b e t w e e n t h e U n i t e d S t a t e s s n d t h e S o v i e t U n i o n , a n d F r a n c e a n d t h e S o v i e t U n i o n . 

1 1 6 . 

The U n i t e d K i n g d o m h a s a l s o , w i t h a p u b l i c e x p l a n a t i o n o f i t s p o s i t i o n o n t h e m , s i g n e d two P r o t o c o l s t o t h e 
194-9 
G e n e v a C o n v e n t i o n s . 

T h e s e P r o t o c o l s e x t e n d a n d b r i n g up t o d a t e t h e p r o v i s i o n s o f t h e G e n e v a C o n v e n t i o n s a n d t h e 
1907 
H a g u e R u l e s o f W a r f a r e . 

T h e y s i g n i f i c a n t l y i m p r o v e t h e p r o t e c t i o n g i v e n t o t h e v i c t i m s o f w a r . 

## Deterrence And Defence

1 1 7 . 

T h e r e a l i t i e s o f t o d a y ' s w o r l d mean t h a t , however h i g h our h o p e s a n d d e s i r e s , we c a n n o t r e s p o n s i b l y assume t h a t our e f f o r t s f o r d e t e n t e a n d d i s a r m a m e n t w i l l b e e n o u g h o n t h e i r own t o e n s u r e s a d e q u a t e s e c u r i t y . 

A m a j o r d e f e n c e e f f o r t i s a l s o n e e d e d , a n d  i i n d e e d a p r e c o n d i t i o n o f s u c c e s s f u l p o l i t i c a l a c t i o n . 

We must t h e r e f o r e c o n t i n u e t o make a p r o p e r c o n t r i b u t i o n t o N A T 0 ' s s t r a t e g y o f d e t e r r e n c e . 

1 1 8 . 

F o r e f f e c t i v e d e t e r r e n c e t h e A l l i a n c e n e e d s t o c o n v i n c e any a g g r e s s o r t h a t t h e use o f f o r c e , o r t h e t h r e a t o f i t s use f o r p o l i t i c a l e n d s , c a r r i e s r i s k s f a r o u t w e i g h i n g a n y l i k e l y a d v a n t a g e * 
N A T 0 * s d e t e r r e n t s t r a t e g y i s b a s e d o n f o r w a r d d e f e n c e a n d t h e c a p a b i l i t y o f f l e x i b l e r e s p o n s e . 

F o r w a r d d e f e n c e means t h a t NATO 
i s committed to defend the f u l l t e r r i t o r i a l i n t e g r i t y of i t s 
 
members and to h a l t any attack at the e a r l i e s t **p o s s i b l e p o i n t .**  
Flexible response means that NATO must have a range of **m i l i t a r y**  
options wide enough to ensure that whatever form aggression **took**  
NATO would have the a b i l i t y to meet i t e f f e c t i v e l y without having  
to face an i n t o l e r a b l e choice between **conceding defeat and using**  
dangerously excessive force from the s t a r t . 

For t h i s purpose **NATO**  
deploys three main l e v e l s **of forces - conventional, theatre nuclear**  

*hd s t r a t e g i c nuclear. 
                             The three l e v e l s are inter-dependent, 
                                                                              and 
                                                                                     

successful deterrence r e q u i r e s a balanced combination of them.  

119. 
                           The A l l i a n c e must have a s t r a t e g i c nuclear c a p a b i l i t y 

^ o a d l y equivalent to that of the Soviet Union. 
                                                      Theatre nuclear 

Papons are needed to deter the use of s i m i l a r weapons by the Soviet 

U " i o n and, through t h e i r l i n k s with the conventional defence on the 

Qae hand and the s t r a t e g i c forces on the other, to complete the 

P ehge of deterrence by showing NATO's r e s o l v e to respond at whatever 

X
  e
      
     * e l might be necessary. 
                                                                                                                 The use of nuclear weapons would be a 

0 a t t e r for the c l o s e s t p o l i t i c a l c o n t r o l , but the knowledge that 

t Q e y w i l l be used i f necessary to stop aggression i s an e s s e n t i a l 

dement i n deterrence. 
                      F i n a l l y , without a strong conventional 

l a b i l i t  
             y the A l l i a n c e would be bound to r e l y h e a v i l y on nuclear ^ P o n s , so r e v e r t i n g to the " t r i p w i r e " strategy abandoned i n the 

1 9 6 0 s . 
                     such r e l i a n c e would lower the "nuclear threshold", and 

P i o u s l y weaken the o v e r a l l c r e d i b i l i t y of deterrence. 

1.20. 

T h e f o r c e s w h i c h NATO n e e d s t o i m p l e m e n t t h i s d e t e r r e n t s t r a t e g y must d e p e n d i n l a r g e m e a s u r e u p o n t h e s c a l e a n d c h a r a c t e r o f t h e p o t e n t i a l m i l i t a r y t h r e a t p o s e d b y t h e f o r c e s o f t h e S o v i e t U n i o n i t s Warsaw P a c t a l l i e s . 

T h e c a p a b i l i t y o f t h e s e f o r c e s i s f o r m i d a b l e a n d g r o w i n g . 

1 2 1 . 

T h e a s s e s s m e n t o f m i l i t a r y b a l a n c e i s c o m p l e x a n d m a n y - s i d e d , a n d c a n n o t b e r e d u c e d t o a s i n g l e n e a t r a t i o . 

On a n y v i e w , however * 
S o v i e t f o r c e s h a v e i n many a r e a s b e e n s t r e n g t h e n e d i n s i z e a n d q u  
0 ^ ^ 
v  
e on a s c a l e w h i c h g o e s w e l l b e y o n d t h e n e e d s o f a n y p u r e l y d e f e n s i p o s t u r e . 

F i g u r e s 
1-4 
i l l u s t r a t e t h e s u b s t a n t i a l g r o w t h o f S o v i e t f o r c e s s i n c e 
1968 
a n d t h e c u r r e n t b a l a n c e o f NA^O 
( e x c l u d i n g F r e n c h f o r c e s ) 
a n d Warsaw P a c t f o r c e s i n t h e e a s t e r n A t l a n t i c a n d c e n t r a l E u r o p e , two a r e a s c r u c i a l t o NATO a n d t o the U n i t e d K i n g d o m . 

T h e c o m p a r i s o n s i n F i g u r e s 3 & 4- c a n 
0
1
 
, i l l u s t r a t e o n l y a b r o a d t r e n d . 

T h e y do n o t r e f l e c t two p a r t i c u l
0 
c t f a c t o r s o f c o n c e r n t o N A T O , t h e s t a t e o f r e a d i n e s s o f Warsaw  P 
f o r c e s i n E u r o p e , w h i c h h a s a l w a y s e x c e e d e d t h a t o f NATO 
f o r c e s e h a s r e c e n t l y b e e n i m p r o v e d , a n d t h e c o n t i n u e d i n t r o d u c t i o n o f new e q u i p m e n t . 

N o r do t h e y t a k e i n t o a c c o u n t g e o g r a p h y , d e p l o y l o g i s t i c s u p p o r t , s t r a t e g y a n d t a c t i c s , t r a i n i n g a n d m o r a l e . 

e i *
W
E u r o p e r e c e n t d e v e l o p m e n t s i n A f r i c a , f o r e x a m p l e , shown t h a t t h e S o v i e t U n i o n i s r e a d y a n d a b l e t o d e p l o y m i l i  
t
0
r
 ^ 
r e s o u r c e s r a p i d l y i n s u p p o r t o f i t s p o l i t i c a l i n t e r e s t s i n the 
^ 
W o r l d ; 
t h i s d e m o n s t r a t i o n o f c o n v e n t i o n a l c a p a b i l i t y i s a f u r w h i c h must be t a k e n i n t o a c c o u n t . 

. 

d ne* 
-122* 
I n t h e l a s t f i v e y e a r s S o v i e t n a v a l f o r c e s h a v e r e c e i v e c l a s s e s o f s u b m a r i n e s , s u r f a c e s h i p s a n d a i r c r a f t . 

T h e s e i u  
c INCREASES in the STRENGTH of  
SOVIET FORCES in the EASTERN ATLANTIC  
(the SOVIET NORTHERN FLEET)  

## Increases In The Strength Of Soviet Forces In Central Europe The Current Balance Of Ready Forces In The Eastern Atlantic The Current Balance Of Ready Forces In Central Europe

Delta I and I I 
n u c l e a r - p o w e r e d b a l l i s t i  
c m i s s i l e s u b m a r i n e s , Charlie I I n u c l e a r - p o w e r e d c r u i s e m i s s i l e s u b m a r i n e s , V i c t o r I I 
nuclear-powered t o r p e d o a t t a c k s u b m a r i n e s , T a n g o d i e s e l s u b m a r i n e s , Backfire bombers f o r t h e N a v a l A i r F o r c e , a n d t h e K i e v c l a s s o f aircraft c a r r i e r s . 

123. 

S o v i e t g r o u n d f o r c e s h a v e b e e n s t r e n g t h e n e d b y l a r g e n u m b e r s W
t s e l f - p r o p e l l e d a r t i l l e r y , new t a n k s , i n f a n t r y c o m b a t v e h i c l e s , 
-slicopters 
(some o f them v e r y h e a v i l y a r m e d ) 
a n d m i s s i l e s o f 
2*vanced d e s i g n . 

124. 

Major r e - e q u i p m e n t p r o g r a m m e s h a v e m a r k e d l y i n c r e a s e d t h e 
?3nge and w e a p o n - l o a d o f S o v i e t a i r c r a f t . 

M o d e r n s w i n g - w i n g aircraft s u c h a s F e n c e r a n d F l o g g e r h a v e e n t e r e d s e r v i c e , a n d 
: 8ckfire has j o i n e d t h e L o n g - R a n g e A i r F o r c e . 

New armaments a n d 
-fitter a v i o n i c s f o r r e c o n n a i s s a n c e , t a r g e t a c q u i s i t i o n a n d weapon sitting have b e e n i n t r o d u c e d . 

C5. 

The E a s t G e r m a n , P o l i s h a n d C z e c h a r m i e s a r e b e i n g s t r e n g t h e n e d 
 
^ more and b e t t e r e q u i p m e n t , m a i n l y o f S o v i e t o r i g i n , s u c h as 
 
3 l r*defence m i s s i l e s , a r m o u r e d p e r s o n n e l c a r r i e r s , a r t i l l e r y a n d  
obstacle - c r o s s i n g e q u i p m e n t . 

I n a d d i t i o n , E a s t G e r m a n y h a s r e c e i v e d 
 
v 0dern a s s a u l t h e l i c o p t e r s a n d a i r - d e f e n c e a i r c r a f t . 

P o l a n d a n d  
^ g a r i a have new swing-wing t a c t i c a l a i r c r a f t , a n d H u n g a r y more  
*^ern a i r - d e f e n c e a i r c r a f t . 

 
We do n o t know t h e e x a c t amount o f S o v i e t m i l i t a r y e x p e n d i t u r e . 

^
e Soviet U n i o n d o e s n o t r e v e a l f i g u r e s w h i c h c o u l d b e a c c e p t e d a s p a r a b l e w i t h W e s t e r n d e f e n c e b u d g e t i n f o r m a t i o n , a n d h a s n o t been w i H ^ 
0 take p a r t i n t h e UN S e c r e t a r y - G e n e r a l
1 s p r o p o s a l s f o r a p i l o t 
"^y on s t a n d a r d i s e d r e p o r t i n g o f m i l i t a r y e x p e n d i t u r e . 

C a r e f u l 
'**tern a s s e s s m e n t s s u g g e s t however t h a t , o n t h e d e f i n i t i o n s 
'
a$totnary i n NATO o f what c o n s t i t u t e s m i l i t a r y e x p e n d i t u r e , t h e s c a l e o f S o v i e t m i l i t a r y e f f o r t c o u l d n o t b e s u s t a i n e d w i t h o u t a c o n t i n u i n g r e s o u r c e a l l o c a t i o n o f t h e o r d e r o f 11-13% o f S o v i e t g r o s s n a t i o n a l p r o d u c t . 

I t i s c l e a r t h a t a v e r y l a r g e p r o p o r t i o n o f t h e t o t a l g o e s o n new weapons s y s t e m s i n c l u d i n g a n immense h i g h - t e c h n o l o g y r e s e a r c h a n d d e v e l o p m e n t programme o v e r t h e e n t i r e r a n g e o f m i l i t a r y e q u i p m e n t . 

The S o v i e t U n i o n a l s o h a s v e r y l a r g e r e s o u r c e s o f t r a i n e d m i l i t a r y manpower, b a s e d o n u n i v e r s a l c o n s c r i p t i o n w i t h a minimum p e r i o d o f two y e a r s
1 
f u l l - t i m e s e r v i c e . 

12.7. 

Much o f t h e S o v i e t e q u i p m e n t now r e a c h i n g t h e f r o n t l i n e i n s u c h l a r g e n u m b e r s no d o u b t d e r i v e s f r o m d e c i s i o n s t a k e n s e v e r a l y e a r s a g o . 

T h e r e i s however no s i g n t h a t more r e c e n t d e v e l o p m e n t s i n t h e f i e l d o f d e t e n t e a r e l e a d i n g t h e S o v i e t G o v e r n m e n t t o s l a c k e n t h e p a c e o f i t s m i l i t a r y e f f o r t . 

## Nato Defence E F F O R T

1 2 8 . 

T h e r e h8s b e e n a c l e a r a n d c o l l e c t i v e r e c o g n i t i o n b y NATO 
member G o v e r n m e n t s , a t t h e h i g h e s t l e v e l , o f t h e n e e d f o r a n a p p r o p r i a t e NATO r e s p o n s e t o t h e c o n t i n u i n g g r o w t h o f t h e m i l i t a r y c a p a b i l i t y o f t h e Warsaw P a c t . 

T h e A l l i a n c e ' s commitment t o t h e d e t e r r e n t - s t r a t e g y o f f o r w a r d d e f e n c e a n d f l e x i b l e r e s p o n s e , b a s e d on t h e t r i a d o f f o r c e e l e m e n t s , h a s b e e n s t r o n g l y r e - a f f i r m e d , n o t a b l y b y P r e s i d e n t C a r t e r . 

129* 
T h e p a s t y e a r h a s b e e n an e x t r e m e l y b u s y a n d p r o d u c t i v e one f o r N A T O * s d e f e n c e p l a n n i n g w o r k . 

T h e M i n i s t e r i a l m e e t i n g o f t h e D e f e n c e P l a n n i n g C o m m i t t e e 
( D P C ) i n December 
1976 
a c c e p t e d t h a t f u r t h e r m e a s u r e s w o u l d be n e e d e d t o r e v e r s e t h e u n f a v o u r a b l e t r e n d s in the m i l i t a r y b a l a n c e . 

A l  
l member c o u n t r i e s h a v e a c c o r d i n g l y reviewed t h e i r d e f e n c e c o n t r i b u t i o n s f o r s p e c i f i c f o r c e i m p r o v e ­
ments and c o m m i t m e n t s t o s t r e n g t h e n N A T O ' s c o n v e n t i o n a l d e f e n c e , p a r t i c u l a r l y i n t h e f i e l d s o f a n t i - a r m o u r a n d a n t i - s u b m a r i n e warfare and s i r d e f e n c e . 

I m p r o v e m e n t s a r e i n h a n d i n a l l t h r e e fields, and n a t i o n a l p l a n s w i l l b r i n g f u r t h e r i m p r o v e m e n t s . 

1
5
0
. 

I n May 1977 
NATO D e f e n c e M i n i s t e r s t o o k t h r e e i m p o r t a n t steps. 

F i r s t , t h e y a g r e e d t o t h e t e r m s o f t h e 
1977 
E P C M i n i s t e r i a l Guidance f o r 
1979 
t o 
1984, t h e k e y document f o r n a t i o n a l a n d NATO 
planning. 

Member n a t i o n s were a s k e d t o a i m a t a n a n n u a l i n c r e a s e in r e a l terms o f d e f e n c e e x p e n d i t u r e i n t h e r e g i o n o f
 
3
% f r o m 
1979, although i t wss r e c o g n i s e d t h a t f o r some c o u n t r i e s e c o n o m i c circumstances w o u l d a f f e c t what c o u l d b e a c h i e v e d w h i l e p r e s e n t levels o f f o r c e c o n t r i b u t i o n m i g h t s o m e t i m e s s u g g e s t b i g g e r i n c r e a s e s . 

^
3
1
. 

S e c o n d l y , a s a g r e e d a t t h e N o r t h A t l a n t i c C o u n c i l m e e t i n g o f Eeads o f S t a t e a n d G o v e r n m e n t i n L o n d o n i n May, t h e A l l i a n c e w i l l 
^dertake a l o n g - t e r m d e f e n c e programme t o make NATO f o r c e s b e t t e r aMe to meet t h e n e e d s o f t h e 1980s. 

S t u d i e s a r e b e i n g c a r r i e d 
0 u t i n t e n p r i o r i t y a r e a s : 
r e a d i n e s s ; 
r e i n f o r c e m e n t s ; 
m o b i l i s a t i o n 
^ r e s e r v e s ; 
m a r i t i m e s t r a t e g y ; 
a i r d e f e n c e ; 
c o m m u n i c a t i o n s ; 
Command and c o n t r o l ; e l e c t r o n i c w a r f a r e ; r a t i o n a l i s a t i o n 
( i n c l u d i n g 
^ t e r - o p e r a b i l i t y a n d s t a n d a r d i s a t i o n ) ; 
c o n s u m e r l o g i s t i c s 
( i n c l u d i n g V 8 r r e s e r v e s t o c k s ) ; a n d t h e m o d e r n i s a t i o n o f t h e a t r e n u c l e a r f o r c e s . 

* 
 C o n s o l i d a t e d r e p o r t i s t o be c o n s i d e r e d b y t h e NATO Summit m e e t i n g the s p r i n g o f 
1978. 

t h i s e f f o r t , NATO D e f e n c e M i n i s t e r s h a v e a g r e e d o n a n i m m e d i a t e programme o f s h o r t - t e r m m e a s u r e s , t o b e i m p l e m e n t e d b y t h e e n d o f 
1978, i n a n t i - a r m o u r d e f e n c e , war r e s e r v e m u n i t i o n s a n d r e a d i n e s s a n d r e i n f o r c e m e n t . 

A t t h e i r m e e t i n g i n December 
1977 
t h e y e n d o r s e d s i g n i f i c a n t i m p r o v e m e n t s t o b e made i n a l l t h r e e a r e a s . 

T h e A l l i a n c e w i l l f o r e x a m p l e i n c r e a s e i t s h o l d i n g s o f a n t i - a r m o u r m i s s i l e s b y a b o u t one t h i r d b y t h e end o f 
1978, a n d s i m i l a r i m p r o v e m e n t s i n s t o c k s o f o t h e r c r i t i c a l m u n i t i o n s a r e p l a n n e d . 

T h e U n i t e d K i n g d o m i s m a k i n g i m p r o v e m e n t s i n e a c h o f t h e a r e a s . 

A s e c o n d R o y a l M a r i n e Commando g r o u p w i l l b e t r a i n e d f o r m o u n t a i n a n d A r c t i c w a r f a r e b y **A p r i l** 
1978, a y e a r e a r l i e r t h a n p r e v i o u s l y p l a n n e d , a n d 41 
Commando, R o y a l M a r i n e s has b e e n r e t a i n e d a n d a s s i g n e d t o N A T O . 

I t h a s r e c e n t l y b e e n d e c i d e d t o r e s t o r e HMS B u l w a r k t o f u l  
l o p e r a t i o n a l s t a t u s . 

A number o f r e s e r v e h e l i c o p t e r s h a v e b e e n e a r m a r k e d t o NATO f o r a n t i - s u b m s r i n e w a r f a r e a n d c e r t a i n N a v a l c o m m u n i c a t i o n s a n d t r a i n i n g a i r c r a f t have b e e n e a r m a r k e d f o r g e n e r a l m a r i t i m e s u p p o r t a n d u t i l i t  
y d u t i e s . 

T h e A r m y i s i n c r e a s i n g t h e number o f M i l a n a n t i - t a n k m i s s i l e s b e i n g d e p l o y e d t o f r o n t - l i n e u n i t s i n 1978 
a n d r a i s i n g s t o c k l e v e l s o f o t h e r a n t i - a r m o u r e q u i p m e n t . 

The d e c i s i o n t o b u y TOW, t h e h e l i c o p t e r ­
b o r n e m i s s i l e , w i l l a d v a n c e b y two y e a r s a m a j o r i m p r o v e m e n t i n a n t i - *
8 ^ ' 
c a p a b i l i t y . 

A d d i t i o n a l a r m o u r e d , a r t i l l e r y a n d i n f a n t r y u n i t s a r e t o be made a v a i l a b l e a s r e i n f o r c e m e n t s , a n d i m p r o v e m e n t s a r e b e i n g p l a n n e d f o r r e s e r v e m o b i l i s a t i o n a n d t h e r e i n f o r c e m e n t o f t h e B r i t i s h Army o f t h e R h i n e 
( B A O R ) . 

I n a d d i t i o n t h e r u n d o w n i n Army manpower has b e e n r e d u c e d b y 1900 
men t o c o m p e n s a t e f o r t h e e f f e c t s o f c o n t i n u i n g e m e r g e n c y c o m m i t m e n t s , e s p e c i a l l y i n N o r t h e r n I r e l a n d ; 
3 
t h i s w i l l make i t p o s s i b l e t o i m p r o v e r e a d i n e s s a n d t o r a i s e s t a n d a r d o f t r a i n i n g i n N A T O - a s s i g n e d u n i t s . 

T h e R o y a l A i r F o r c e w i l l be b u i l d i n g up i t s m e d i u m - r a n g e a i r - t o - a i r m i s s i l e s a n d war r e s e r v e stocks o f s o n o b u o y s , i n c r e a s i n g t h e w a r t i m e s t r e n g t h o f R A F 
Regiment f i e l d s q u a d r o n s i n c e n t r a l E u r o p e , m a r k e d l y i m p r o v i n g the r a t e s o f u t i l i s a t i o n o f t h e H a r r i e r , a n d p r e - s t o c k i n g e q u i p m e n t for s e l e c t e d r e i n f o r c e m e n t s q u a d r o n s . 

S e v e r a l o f t h e s e m e a s u r e s a r e improvements or a d d i t i o n s t o N A T O ' s p r o p o s a l s . 

I n a d d i t i o n t h e United K i n g d o m c o n t i n u e s t o p l a y a s u b s t a n t i a l p a r t i n t h e programme of j o i n t NATO 
e x e r c i s e s . 

A l l i a n c e C o - o p e r a t i o n 
133. 

The 1977 
BPC M i n i s t e r i a l G u i d a n c e s t r e s s e s t h a t N A T O ' s resources w i l l b e e m p l o y e d t o t h e b e s t e f f e c t i f , i n t h e d e v e l o p ­
ment o f n a t i o n a l p l a n s and p r o g r a m m e s , f u l l a c c o u n t i s t a k e n o f the c o l l e c t i v e n e e d s o f t h e A l l i a n c e . 

T h e U n i t e d K i n g d o m s h a r e s this v i e w , p a r t i c i p a t e s f u l l y i n A l l i a n c e c o l l a b o r a t i v e a c t i v i t i e s , and a t t a c h e s t h e h i g h e s t i m p o r t a n c e t o t h e e f f o r t s t h e A l l i a n c e i s making t o i n c r e a s e s t a n d a r d i s a t i o n a n d i n t e r o p e r a b i l i t y o f e q u i p m e n t . 

134. 

W o r k i n g w i t h i n t h e f r a m e w o r k o f t h e A l l i a n c e , t h e E u r o g r o u p continues t o p r o v i d e a n i m p o r t a n t f o r u m f o r s t r e n g t h e n i n g t h e European c o n t r i b u t i o n . 

E u r o g r o u p s u b - g r o u p s a r e m a k i n g s t e a d y progress i n c o - o p e r a t i o n on l o g i s t i c s u p p o r t , b a t t l e f i e l d c o m m u n i c a ­
tions, h a r m o n i s a t i o n o f t a c t i c a l c o n c e p t s , t r a i n i n g a n d m e d i c a l services. 

T h e i n d e p e n d e n t E u r o p e a n P r o g r a m m e G r o u p 
( E P G ) , w h i c h i s recognised b y a l l i t s members a s t h e m a i n f o r u m f o r e q u i p m e n t c o l l a b o r a t i o n i n E u r o p e , i s a l s o m a k i n g s t e a d y p r o g r e s s . 

I t maintains a s c h e d u l e o f member c o u n t r i e s ' 
r e q u i r e m e n t s f o r e q u i p m e n t over the n e x t 
15 
y e a r s t o h e l p i d e n t i f y p o s s i b i l i t i e s f o r c o l l a b o r a t i o n , a n d h a s s e t up e l e v e n p r o j e c t g r o u p s t o s t u d y p o s s i b l e f u t u r e p r o j e c t s i n c l u d i n g t a c t i c a l c o m b a t a i r c r a f t , h e l i c o p t e r s a n d a n t i - t a n k w e a p o n s . 

135. 

A n o t h e r e x a m p l e o f A l l i a n c e - w i d e c o - o p e r a t i o n i s t h e NATO 
i n f r a s t r u c t u r e p r o g r a m m e , w h i c h c o v e r s f i x e d i n s t a l l a t i o n s n e e d e d f o r t h e d e p l o y m e n t a n d o p e r a t i o n o f t h e a r m e d f o r c e s . 

NATO 
D e f e n c e M i n i s t e r s a g r e e d i n May 1977 t o a d d i t i o n a l f u n d i n g f o r t h e 1975-79 
p e r i o d so t h a t a b i g g e r programme w i l l b e f i n a n c e d o n a NATO 
b a s i s a c c o r d i n g t o t h e a g r e e d c o s t - s h a r i n g f o r m u l a . 

T h e m a i n e l e m e n t s o f t h e NATO programme a r e a i r f i e l d s , i n c l u d i n g h a r d e n e d s h e l t e r s f o r p r o t e c t i n g a i r c r a f t ; c o m m u n i c a t i o n s , i n c l u d i n g t h e d e v e l o p m e n t o f t h e NATO i n t e g r a t e d s y s t e m t o f a c i l i t a t e p o l i t i c a l c o n s u l t a t i o n a n d i m p r o v e command a n d c o n t r o l b y t h e NATO m i l i t a r y a u t h o r i t i e s ; 
t h e NATO A i r D e f e n c e G r o u n d E n v i r o n m e n t , c o v e r i n g t h e w h o l e o f NATO 
E u r o p e , f o r e a r l y w a r n i n g o f a n d r e s p o n s e t o h o s t i l e a i r c r a f t and m i s s i l e s ; 
a n d a n o i l p i p e l i n e s y s t e m f r o m A t l a n t i c a n d M e d i t e r r a n e a n p o r t s t o a i r f i e l d s a n d o t h e r i n s t a l l a t i o n s . 

## U N I T E D Kingdom Contribution To Nato

13 6 . 

T h e U n i t e d K i n g d o m c o n t r i b u t e s t o e a c h o f t h e e l e m e n t s o f N A T O ' s t r i a d o f f o r c e s a n d t o e a c h m a j o r NATO Commander. 

Our m i l i t a r y e f f o r t i s m a i n l y d i r e c t e d t o t h e f o u r a r e a s where we c a n 
8 
b e s t h e l p A l l i a n c e d e f e n c e 
- 
t h e d e f e n c e o f t h e U n i t e d K i n g d o m  &
a n d i t s i m m e d i a t e a p p r o a c h e s ; 
t h e e a s t e r n A t l a n t i c a n d C h a n n e l ; 
C e n t r a l R e g i o n o f E u r o p e ; 
a n d N A T O ' s n u c l e a r c a p a b i l i t y : 
a.. 

T h e U n i t e d K i n g d o m b a s e p r o v i d e s v i t a l s u p p o r t f o r B r i t i s h f o r c e s a s s i g n e d t o N A T O , i n c l u d i n g r e i n f o r c e ­
ments f o r A l l i e d Command E u r o p e ( A C E ) a n d a i r c r a f t o f RAF S t r i k e Command a v a i l a b l e t o s u p p o r t o p e r a t i o n s b y a l l t h r e e M a j o r NATO C o m m a n d e r s . 

I t a l s o p r o v i d e s b a s e f a c i l i t i e s f o r U n i t e d S t a t e s f o r c e s s t a t i o n e d i n t h i s c o u n t r y or b r o u g h t i n as r e i n f o r c e m e n t s . 

T h e U n i t e d K i n g d o m c o n t r i b u t e s b y f a r t h e l a r g e s t p a r t o f N A T O ' s r e a d i l y a v a i l a b l e m a r i t i m e f o r c e s i n t h e e a s t e r n A t l a n t i c a n d C h a n n e l . 

I n a d d i t i o n t o N i m r o d 
"Maritime p a t r o l , B u c c a n e e r s t r i k e / a t t a c k , P h a n t o m a i r ­
d e f e n c e a n d V u l c a n a n d C a n b e r r a r e c o n n a i s s a n c e a i r c r a f t , v i r t u a l l y t h e w h o l e o f t h e R o y a l N a v y - 
t h e t h i r d l a r g e s t i n t h e w o r l d - 
i s a s s i g n e d t o N A T O . 

£.* 
I n t h e C e n t r a l R e g i o n o f E u r o p e t h e U n i t e d K i n g d o m P r o v i d e s t h e 
5 5 , 0 0 0 men o f BAOR, w h i c h c a n be more t h a n d o u b l e d i n a n e m e r g e n c y . 

BAOR 
i s e q u i p p e d w i t h o v e r 
600 C h i e f t a i n t a n k s a n d o v e r 
2 , 0 0 0 o t h e r a r m o u r e d f i g h t i n g v e h i c l e s . 

I n a d d i t i o n , t w e l v e s q u a d r o n s o f R A F a i r c r a f t a r e b a s e d i n G e r m a n y i n t h e s t r i k e / a t t a c k , t a c t i c a l R e c o n n a i s s a n c e , a i r - d e f e n c e a n d s u p p o r t r o l e s . 

T h e s e f o r c e s p l a y a v i t a l r o l e i n N A T 0 ' s f o r w a r d d e f e n c e . 

T h e U n i t e d K i n g d o m p r o v i d e s t h e a t r e n u c l e a r f o r c e s d e p l o y e d b y a l  
l t h r e e S e r v i c e s a n d a l s o c o n t r i b u t e s w i t h 
"the P o l a r i s f o r c e to N A T 0 ' s s t r a t e g i c n u c l e a r c a p a b i l i t y . 

137. 

B r i t i s h f o r c e s a l s o make a n i m p o r t a n t c o n t r i b u t i o n t o t h e S t r a t e g i c R e s e r v e o f t h e Supreme A l l i e d Commander E u r o p e 
(SACEUR) 
i n c l u d i n g t h e U n i t e d K i n g d o m M o b i l e F o r c e 
( U K M F ) , l a n d a n d a i r c o n t r i b u t i o n s t o t h e A C E M o b i l e F o r c e 
( A M P ) , a n d t h r e e r e g u l a r s q u a d r o n s o f t h e S p e c i a l A i r S e r v i c e . 

R o y a l M a r i n e s Commando f o r c e s p r o v i d e r e i n f o r c e m e n t s p r i m a r i l y f o r N A T O ' s N o r t h e r n R e g i o n ­
138. 

T h e e q u i p m e n t o f a l l t h e s e f o r c e s i s b e i n g c o n s t a n t l y i m p r o v e d . 

T h e f i r s t o f a new c l a s s o f a n t i - s u b m a r i n e c r u i s e r s 
 
a n
 
d f o r t h e R o y a l N a v y , HMS I n v i n c i b l e , was l a u n c h e d i n May 1977*
a s e c o n d i s b e i n g b u i l t . 

T h e r e i s a c o n t i n u i n g c o n s t r u c t i o n programme o f n u c l e a r - p o w e r e d f l e e t s u b m a r i n e s , w i t h n i n e now i n s e r v i c e , a t e n t h due t o e n t e r s e r v i c e s h o r t l y , t h r e e more b e i n g b u i l t , i n c l u d i n g t h e f i r s t o f t h e new T r a f a l g a r c l a s s , a n d t h e s e c o n d o f t h i s c l a s s due t o b e o r d e r e d t h i s y e a r . 

T h e R o y s l N 8 v y i s t h e o n l y E u r o p e a n NATO n a v y t o o p e r a t e n u c l e a r - p o w e r e d f l e e t s u b m a r i n e s . 

T h e N a v y ' s o l d e r f r i g a t e s a n d d e s t r o y e r s a r e b e i n g r e p l a c e d b y t h r e e new c l a s s e s , t h e T y p e 
21 
a n d T y p e 22 
f r i g a n d t h e T y p e 42 
d e s t r o y e r , a n d o l d e r m i n e s w e e p e r s a n d m i n e h u n t e r s  ^ 
a d v a n c e d H u n t c l a s s mine c o u n t e r m e a s u r e v e s s e l s . 

C o m p l e m e n t i n g t h e s e new s h i p c l a s s e s a r e new weapons a n d e q u i p m e n t s i n c l u d i n g t h e S e a D a r t a n d S e a W o l f g u i d e d - m i s s i l e s y s t e m s , a n d Sea H a r r i e r a i r c r a f t . 

139. 

F o r t h e A r m y , a new 155mm f i e l d h o w i t z e r , t h e FH70, i s b e i n g 
0 l l ( *
p r o d u c e d i n c o l l a b o r a t i o n w i t h t h e F e d e r a l R e p u b l i c o f G e r m a n y I t a l y , a n d a s e l f - p r o p e l l e d v e r s i o n , t h e SP70, i s i n j o i n t d e v e l o p m e n t . 

T h e F r a n c o - G e r m a n M i l a n a n t i - t a n k m i s s i l e i s b e i n g 

**
0cured, together w i t h the American TOW f o r the h e l i c o p t e r - b o r n e 
^--tank r o l e . The B r i t i s h a n t i - a i r c r a f t m i s s i l e systems, Rapier 
me man-portable Blowpipe, are i n s e r v i c e i n BAOR. F u r t h e r Movements are b e i n g made t o C h i e f t a i n main b a t t l e tank. 

The main f e a t u r e o f the RAF equipment programme i s the c ^
u i s i t i o n of **385** Tornado m u l t i - r o l e combat a i r c r a f t . 

I n March 
^ the d e c i s i o n was taken t o develop the Nimrod a i r b o r n e e a r l y 
8 t n i^8 (AEW) a i r c r a f t , which are planned t o be i n t e r o p e r a b l e w i t h , and Elementary t o , whatever AEW system the r e s t o f the A l l i a n c e 
8* The maritime p a t r o l Nimrods w i l l be e x t e n s i v e l y re-equipped by e  e a r l y **1980s** and the R o y a l A i r Force w i l l a l s o get improved 
-range a i r - t o - a i r m i s s i l e s (Sidewinder AIM **9L)** and a new a n t i ­
snip missile.New medium-range a i r - t o - a i r m i s s i l e s ( S k y f l a s h ) 
a*
e al* 

-^eady
        
       i  
          p r o d u c t i o n . 
                       
         n 

-further d e t a i l s of 
                      equipment programmes are 
                                                     g i v e n 
                                                           i n 
                                                               

^

      8
 3. On the 
                                             l a t e s t NATO f i g u r e s the U n i t e d Kingdom spent  
        higher p r o p o r t i o n 
                                                                             of 
                                                                                       her 
                                                                                                      defence budget (21.8%) on major 

q u ipment i n 1977 than any other of 
                                                                                                                         the 
                                                                                                                                       eleven A l l i e s covered 

b  
  y the 

survey. We a l s o m a i n t a i n a wide-ranging r e s e a r c h 
                                                     and 

0Pment programme, accounting f o r 
                                                                                                         13% 
                                                                                                                             o f 
                                                                                                                                      the 
                                                                                                                                                  defence budget. 

## United Kingdom Defence Budget

A t  the end of **1976** the Government decided t h a t defence must towards the r e d u c t i o n s i n p u b l i c expenditure r e q u i r e d t o 
 
e n l Q r s the U n i t e d Kingdom economy. The defence budget f o r  

W
  a s reduced by 
                                                    £230 m i l l i o n , e q u i v a l e n t 
                                                                                                                                             t o 
                                                                                                                                                       £267 m i l l i o n a t 
                                                                                                                                                                                                                 

1977 Survey p r i c e s . The 
                               Government undertook to consult NATO 

about how to 
             make the 
                      savings with the 
                                        minimum adverse 
                                                         e f f e c t 

on our f r o n t - l i n e c o n t r i b u t i o n to 
                                        the 
                                             A l l i a n c e and i t s e s s e n t i a l support. 
          D e t a i l e d proposals were put 
                                        to 
                                           NATO i n 
                                                   June, and i n 
                                                                   

August there were s t a f f discussions between the M i n i s t r y of Defend 
 
and NATO. In September A l l i a n c e views were conveyed **to the**  
Government by the NATO Secretary-General. The A l l i a n c e **expressed**  
concern at the cumulative e f f e c t of successive reductions **i n the**  

defence budget, but 
                     acknowledged the 
                                       Governments success 
                                                              i n 
                                                                  

keeping to 
           a minimum the e f f e c t of 
                                     the 
                                         £267 m i l l i o n r e d u c t i o n 
                                                                 on 
                                                                     

our c o n t r i b u t i o n to f r o n t - l i n e forces. 

14-3* 
         In 
            r e p l y , the 
                           Government welcomed the 
                                                          A l l i a n c e ' s agreemen 

to the 
        method of 
                    making the 
                                saving, and emphasised the 
                                                                large 

                                                                                                                                                                                                                                                                                                                       a
                                                                                                                                                                                                                                                                                                                          n
                                                                                                                                                                                                                                                                                                                              c
                                                                                                                                                                                                                                                                                                                                  e 
continuing c o n t r i b u t i o n made by the 
                                                                                                                                                                                 United Kingdom to 
                                                                                                                                                                                                                                                                           the A l l i  

As Figure 5 shows, United Kingdom defence expenditure **i n** 1977 

                                                                                                                                                                                                                                                                                        c
                                                                                                                                                                                                                                                                                           e 
                                                                                                                                                                                                                                                                                                
accounted for 4.9% of gross domestic product (GDP) 
                                                                                                                                                                                                                              at 
                                                                                                                                                                                                                                           market p r i

compared with 5-1% the 
                       previous year. 
                                       Figure 5 also shows NATO 

c
   
  S 

c o u n t r i e s

1 defence expenditure i n 
                                                                                           d o l l a r terms. 
                                                                                                                                                 These 
                                                                                                                                                                         s t a t i s t i

use market exchange r a t e s , which do not 
                                              n e c e s s a r i l y r e f l e c t the true r e l a t i v e purchasing powers of i n d i v i d u a l currencies and 
                                                                 so 

are not 
        a complete guide to comparative resource a l l o c a t i o n to 

144. 
       The proposals put 
                           to 
                               the 
                                   A l l i a n c e for 
                                                  achieving the 
                                                                 ^  
                                                                       ^ ) 

(reduced to 
            £261M as 
                      a r e s u l t of 
                                  the 1977 P u b l i c Expenditure Sur 
                                                                      ^ 

were r e f i n e d during the 
                        course of s c r u t i n y of 1978/79 Estimates-Q^e 

0 0 

h 8 l f of 
               the 
                       saving w i l l come from the 
                                                                         equipment programme, 
                                                                                                                a"

f i f t h from works and 
                                          accommodation stores, and 
                                                                                              the balance 

n 

miscellaneous changes i n c l u d i n g o f f s e t r e c e i p t s (see paragr8P

F o r t h e y e a r s 
                              a f t e r 
                                           1 9 7 8 / 7 9 t h e G o v e r n m e n t p r o p o s e s t o r e s p o n d 

^
0 s i t i v e l y t o N A T O ' s c a l l f o r i n c r e a s e d r e s o u r c e s f o r d e f e n c e a n d t o meet t l l e t a r g e t s e t f o r i n c r e a s e d e x p e n d i t u r e i n 1979/80. 

P l a n s f o r f u t u r e 
6 V e l s o f d e f e n c e e x p e n d i t u r e a g r e e d i n t h e 1977 P u b l i c E x p e n d i t u r e V
e y and p u b l i s h e d i n Cmnd 
704-9 
p r o v i d e f o r i n c r e a s e s i n d e f e n c e b u d g e t o f 3
% i n 1979/80 c o m p a r e d w i t h t h e p r e v i o u s y e a r , J u r t h e r
 
3
% i n 1 9 8 0 / 8 1 . 

T h e p r o v i s i o n f o r 1 9 8 0 / 8 1 i s s u b j e c t to p
.

e v
 
V
l e w i n t h e 1978 P u b l i c E x p e n d i t u r e S u r v e y i n t h e l i g h t o f 
0 [ Q i c c i r c u m s t a n c e s . 

T h e 1 9 8 1 / 8 2 f i g u r e i s f o r t h e t i m e b e i n g  
a r e p e a t o f t h a t f o r 1 9 8 0 / 8 1 ; n o d e c i s i o n s h a v e b e e n t a k e n , 
 
A ^ w i l l b e n e c e s s a r y b e f o r e r e a c h i n g c o n c l u s i o n s t o **t s k e**  
o f d e v e l o p m e n t s i n arms c o n t r o l a n d d e f e n c e a s w e l l **a s i n**  
e c **o n o m y .**  
T n e D e f e n c e B u d g e t E s t i m a t e s f o r 1 9 7 8 / 7 9 t o t a l £ 6919 
n a n d a r e t h e e q u i v a l e n t i n r e a l t e r m s 
 
0  
f **the**  
t a r g e t o f £ 6 , 2 8 6 
m i l l i o n a t 1977 S u r v e y p r i c e s . 

T h e l a t t e r i n c o r p o r a t e s t h e £ 8 m i l l i o n d e f e n c e s h a r e o f t h e **e x t r a**  
^ ^ i t u r  e t o h e l p t h e c o n s t r u c t i o n i n d u s t r y a n n o u n c e d o n 26 O c t o b e r 
1  
a & d a l l o w s f o r r e c e i p t s u n d e r t h e o f f s e t a g r e e m e n t c o n c l u d e d 
 
th  

e
.
 F e d e r a l R e p u b l i c o f G e r m a n y i n O c t o b e r 1977 a n d **d e s c r i b e d**  
6970.  p y
£ p p i   
i n c r e a s e s 
a c c o u n t f o r £ **633**  
Q 
a
n 
c
e
^c-n (  
vsee T a b l e 1 o f A n n e x A ) . 

T h e d e f e n c e b u d g e t i s **a b o u t 4-J%**  
^
l m a t e d GDP a t m a r k e t p r i c e s f o r **1978/79.**  
e 
0 j, P r o p o r t i o n a t e s h a r e s i n t h e E s t i m a t e s o f m a j o r c a t e g o r i e s 
 
&trw 
^ t u r e - manpower, e q u i p m e n t , a n d b u i l d i n g s a n d **m i s c e l l a n e o u s**  
s e r v i c e s 
- a r e shown i n F i g u r e **6 .**  

## Comparisons: Nato Countries 1977

                                                                                                                Notee 1 These figures which ere provleionel heve been compiled ty NATO. 
ITALY 
                                                                                                                         The expenditure end per capita figures ere beeed on average 
                                                                                                                         eachange ratee for the first o months of 1977. 

2 Up to datera form at on Is not avellable for Sreece end Turkey. 

## Commitments Outside Nato

^
Aa e Armed F o r c e s a l s o meet t h e c o m m i t m e n t s o f t h e U n i t e d 
^ 
0
l n G o v e r n m e n t o u t s i d e N A T O , i n c l u d i n g t h o s e w h i c h i n v o l v e the c U r i t y o f d e p e n d e n t t e r r i t o r i e s . 

U n i t s o f t h e A r m y a n d t h e A ­
l r F o r c e p r o v i d e a g a r r i s o n f o r t h e e x t e r n a l d e f e n c e o f t ana a R o y a l M a r i n e s d e t a c h m e n t r e m a i n s i n t h e F a l k l a n d J-n t h e F a r E a s t u n i t s o f a l  
l t h r e e S e r v i c e s p r o v i d e a n
 
f o r t h e s e c u r i t y o f H o n g K o n g a n d a G u r k h a b a t t a l i o n i s n e d i n B r u n e i . I n t h e M e d i t e r r a n e a n , B r i t i s h f o r c e s a r e 
8tati 0 
n e d i n G i b r a l t a r , i n M a l t a u n t i l 
1979, a n d i n C y p r u s t o meet o u r commitment t o t h e U n i t e d N a t i o n s F o r c e a n d t o p r o v i d e f o r t h e s e c u r i t y o f t h e S o v e r e i g n B a s e A r e a s . 

S h i p s a n d a i r c r a f t o f t h e R o y a l N a v y a n d t h e R o y a l A i  
r F o r c e d e p l o y o u t s i d e t h e NA' 
a r e a f r o m t i m e t o t i m e a n d t a k e p a r t i n e x e r c i s e s w i t h o t h e r 
 
t o b e d e p l o y e d c o u n t r i e s . 

I n 1977, i  
t was n e c e s s a r y f o r f o r c e s r a p i d l y t o B e l i z e a n d t o B e r m u d a . 

## Bat **Forces, Deployments,** Operations And **Exercises** Nato Royal Navy General Purpose Combat **Forces**

201. 
        Freedom of the 
                             A t l a n t i c i s 
                                              v i t a l to the s e c u r i t y of 
                                                                                NATO 

and the 
         United Kingdom. A l l the 
                                         United Kingdom's major ships and amphibious forces are therefore assigned to 
                                              NATO and would, 
                                                               i n 

time of tension or 
                    war, 
                          be concentrated i n 
                                                the eastern A t l a n t i c 

and Channel areas. 
                        In a d d i t i o n to important air-defence and 

anti-surface ship r o l e s , t h e i r task would he to 
                                                  meet the t h r e a t from the l a r g e Soviet submarine f l e e t , an i n c r e a s i n g p r o p o r t i on 

Q f which i s 
                               nuclear-powered, to ensure that important supply routes 

kept open and that A l l i e d reinforcements get 
                                                  through. 
                                                             Their 
                                                                       

task also includes meeting the threat of 
                                         mines i n 
                                                   c o a s t a l waters  

and keeping open the 
                                                                         submarine deployment routes. 
                                                                                                                                                                                  United Kingdom "aval forces are 
                  under the 
                              command of 
                                          Commander-in-Chief F l e e t , who  

i
  s  also a major NATO Commander as the 
                                                                                                                                    Commander-in-Chief Channel,  

a n o 
       a subordinate NATO Commander ( t o 
                                                                                                                                   the 
                                                                                                                                                 Supreme A l l i e d Commander  

A t l a n t i c ) as the 
                                                           Commander-in-Chief Eastern A t l a n t i c .  

2 02­ 
                       The a c t i v i t i e s of Soviet naval and a i r forces operating a round the 
                                     United Kingdom, i n 
                                                                                                           the 
                                                                                                                         A t l a n t i c and i n 
                                                                                                                                                                                    the Mediterranean C
   o  n t i  
                                         be monitored by ships and a i r c r a f t of 
                                                                                                                                                                                                                      the 
                                                                                                                                                                                                                                       Royal Navy  
                      n
                         u
                            e
                                 
                                  t
                                      0 

9
  n
     d  the 
                          Royal A i r Force. 
                                                                                          In spring 1977 t h i s task included 
                                                                                                                                                                                                                 the 

s * v e i n a n c e , i n 
conjunction with our 
NATO A l l i e s , of 
the large 
S
o
v i e t exercise i n 
the 
northern A t l a n t i c and the 
Norwegian and 
 
B
a  l t i c **Seas.**  
203. 

S h i p s o f t h e H y d r o g r a p h i c S u r v e y F l e e t h a v e c a r r i e d o u t s u r v e y s t o meet s p e c i f i c d e f e n c e r e q u i r e m e n t s , t o i m p r o v e b o t h our own a n d N A T O ' s m a r i t i m e o p e r a t i o n a l c a p a b i l i t y a n d t o enhance t h e s a f e t y o f i n t e r n a t i o n a l n a v i g a t i o n . 

2 0 4 . 

T h e R o y a l M a r i n e s Commando f o r c e s , a s a r e s u l t o f t h e d e c i s i o n n o t t o d i s b a n d 4-1 Commando, now c o n s i s t o f a b r i g a d e h e a d q u a r t e r s a n d f o u r Commandos w i t h c o m b a t , h e l i c o p t e r a n d l o g i s t i c s u p p o r t . 

## T H E Nuclear S T R A T E G I C Force

205. 

T h e U n i t e d K i n g d o m
1 s P o l a r i s s u b m a r i n e s , HM3 R e n o w n , R e p u i R e s o l u t i o n a n d R e v e n u e , b e t w e e n them m a i n t a i n a c o n t i n u o u s p a t r o l and c o n s t i t u t e a n i n t e g r a l p a r t o f N A T 0 * s s t r a t e g i c n u c l e a r force. 

## Army Combat Forces

2 0 6 . 

T h e A r m y combat f o r c e s c o n s i s t o f t h e R e g u l a r A r m y a n d , y a f t e r m o b i l i s a t i o n , t h e R e g u l a r R e s e r v e s a n d T e r r i t o r i a l and Artn V o l u n t e e r R e s e r v e 
( T A V R ) . 

T h e R e g u l a r R e s e r v e s c o m p r i s e e x - S e r V i p e r s o n n e l who a r e , f o r a s p e c i f i e d p e r i o d a f t e r t h e i r r e t u r n to 
1 
c i v i l i a n l i f e , l i a b l e f o r r e c a l l i n a n e m e r g e n c y . 

T h e TAVR 
c o n s o f men a n d women, n o t n e c e s s a r i l y w i t h p r e v i o u s R e g u l a r Army s e r v i c e , who h a v e a c c e p t e d l i a b i l i t y f o r m o b i l i s a t i o n i n an e m e r g e n c y . 

2
0
 7
  . 
      Some 70% o f the Regular and Reserve army w i l l , i n time of  

*ar, be deployed to the European mainland, and most **of the**  
remainder w i l l remain t o defend the United Kingdom. Not **only**  
is the p r o t e c t i o n of the United Kingdom of the greatest **importance**  
^ 
i t s e l f , but i t i s v i t a l **f o r the reinforcement and support of**  
forces **deployed on the mainland of Europe and as a base from which**  
t o  conduct maritime and a i r **operations.**  
208. Improved arrangements f o r the r e c a l l of Army **Regular**  
^ s e r v i s t s are under examination which would s i g n i f i c a n t l y **reduce**  
the time r e q u i r e d for t h e i r **m o b i l i s a t i o n .**  

## Feitish Army **Of The Rhine**

2
0
 9
  . 
      F i r s t ( B r i t i s h ) Corps (1 (BS) Corps) i s the main combat  

^ m e n t of BAOR and forms p a r t of the Northern Army Group (NORTHAG)  

**ich, as part of A l l i e d Forces C e n t r a l Europe (AFCENT), i s P eeponsible for a v i t a l sector of the C e n t r a l Region. 
                                                                                                                                                                                                                The 
                                                                                                                                                                                                                                     

^ o r g a n i s a t i o n of 1 (BR) Corps r e f e r r e d to i n d e t a i l i n 
                                                                                                         previous 
                                                                                                                           

S t*tements on the Defence Estimates w i l l have, f o r the most p a r t ,  

t 8*en place by 1 A p r i l 1978 
                                                                                                     and w i l l be complete by 1 A p r i l 
                                                                                                                                                                                                                                  1979. 
                                                                                                                                                                                                                                                            

1  (BR) corps w i l l then c o n s i s t i n peace-time of four armoured 

V i s i o n s , an a r t i l l e r y d i v i s i o n and the 5th F i e l d Force ( l e s s 

c e r t a i n elements), 

## ^£Jin F I E L D Force

2 1 0 ­ 
                The B e r l i n F i e l d Force, some 
                                                                                                           3
                                                                                                               ,
                                                                                                                  0
                                                                                                                     0
                                                                                                                        0 strong, i s not assigned  

t
  0  NATO but f u l f i l s the United Kingdom commitment to the s e c u r i t y 0
  f  the Western sectors of B e r l i n .  

U n i t e d K i n g d o m L a n d F o r c e s 
211. 

T h e r e o r g a n i s a t i o n o f t h e U n i t e d K i n g d o m L a n d F o r c e s 
(UKLF) 
m e n t i o n e d i n l a s t y e 8 r ' s S t a t e m e n t on t h e D e f e n c e E s t i m a t e s w i l l be v i r t u a l l y c o m p l e t e b y 1 A p r i l 
1978. 

T h e 8th F i e l d F o r c e became o p e r a t i o n a l on 1 A p r i l 
1977 
a n d t h e 
6th a n d 7th F i e l d F o r c e s assume t h e i r o p e r a t i o n a l r o l e s on 1 A p r i l 
1978. 

The **e l e m e n t s** of t h e R e g u l a r A r m y b a s e d i n t h e U n i t e d K i n g d o m , t h e R e g u l a r Reserves a n d t h e TAVR w i l l t h e n f u l f i l t h e f o l l o w i n g r o l e s : 
£  
. 

R e i n f o r c e m e n t o f BAOR t o i t s war e s t a b l i s h m e n t . 

T h e r e i n f o r c e m e n t s i n c l u d e t h e 
7th F i e l d F o r c e ; 
o t h e r u n i t s s t a t i o n e d i n t h e U n i t e d K i n g d o m i n 
5 
p e a c e - t i m e i n c l u d i n g c e r t a i n TAVR u n i t s ; 
i n d i v i d u a l

f r o m t h e 
t r a i n i n g a n d s u p p o r t 
o r g a n i s a t i o n ; 
a n d 
a p a r t 
o f 
t h e R e g u l a r 
R e s e r v e s , 
b . 
 
C o n t r i b u t i o n t o 
S A C E U R
f s S t r a t e g i c 
R e s e r v e 
a n d 
t o 
S A C L A N T . 
The A r m y ' s c o n t r i b u t i o n t o 
S A C E U H
1 s 
S t r a t e g i c 
R e s e r v e 
i s 
a v a i l a b l e 
f o r 
d e p l o y m e n t 
t h r o u g h o u t 
A C E a n d c o n s i s t s 
o f : 
some 1,800 
men 
a s 
t h e 
U n i t e d K i n g d o m c o n t r i b u t i o n 
t o 
t h e 
l a n d 
c o m p o n e n t 
o f 
t h e 
A M F ; t h e 
l a n d c o m p o n e n t 
o f 
t h e 
UKMF, c o m p r i s i n g t h e 
6th F i e l d F o r c e a n d t h e L o g i s t i c S u p p o r t G r o u p ; 
a n d t h e 
22 
S p e c i a l A i r S e r v i c e R e g i m e n t . 

I n a d d i t i o n t h e A r m y p r o v i d e s s u p p o r t a n d l o g i s t i c t r o o p s f o r t h e R o y a l M a r i n e Commando f o r c e s a s s i g n e d t o S A C L A N T . 

£ . 
D e f e n c e 
o f 
t h e 
U n i t e d K i n g d o m . 
E a c h 
D i s t r i c t  
w i t h i n 
t h e 
U n i t e d K i n g d o m c o n t a i n s 
f o r c e s , 
 
d r a w n 
f r o m t h e 
R e g u l a r 
A r m y a n d t h e 
T A V R , 
w h i c h , 
 
t o g e t h e r w i t h t h e 
8 t h F i e l d F o r c e , h a v e s p e c i f i c 
 
r e s p o n s i b i l i t i e s f o r t h e p r o t e c t i o n o f v i t a l  
NATO a n d n a t i o n a l i n s t a l l a t i o n s a n d b a s e s .  
Manpower r e l e a s e d f r o m t h e t r a i n i n g a n d s u p p o r t 
 
o r g a n i s a t i o n t o g e t h e r w i t h t h e r e m a i n d e r o f t h e 
 
R e g u l a r R e s e r v e s w i l l f u r t h e r s u p p l e m e n t t h e s e  
f o r c e s on m o b i l i s a t i o n . 

 

## R O Y A L A I R F O R C E Combat F O R C E S

R A F c o m b a t f o r c e s a r e o r g a n i s e d i n two o p e r a t i o n a l commands 
-
S * i k e Command, whose C o m m a n d e r - i n - C h i e f a l s o h o l d s t h e NATO 
*PPointment o f C o m m a n d e r - i n - C h i e f U n i t e d K i n g d o m A i r F o r c e s , a n d Germany, whose C o m m a n d e r - i n - C h i e f i s **B ^** J ^ J J J ; ^ ^ 
* * * n d A l l i e d T a c t i c a l A i r F o r c e w h i c h i s p a r t o f A l l i e d f o r c e s C e n t r a l E u r o p e . 

V i r t u a l l y a l l R A F combat a n d 
3 * P P 0 r t a i r c r a f t a r e a s s i g n e d t o N A T O . 

I n t h e s t r i k e / a t t a c k a n d 
^ o n n a i s s a n c e r o l e s t h e J a g u a r f r o n t - l i n e f o r c e h a s b e e n b u i l t up t o l e n g t h a n d o t h e r f r o n t - l i n e a i r c r a f t s t r e n g t h s h a v e b e e n m a i n t a i n e d 
0
V
e r t h e p a s t y e a r . 

Sfeike C o n  
^ 
t w . a u i n K i n g d o m m n
 
S t r i k e Command f o r c e s s t a t i o n e d i n t h e U n i t e d K i n g d o m a r e f i t t e  
d t o t h e s u p p o r t o f a l  
l t h r e e maaor NATO 
C o m m a n d e r s : 
S *
C E U R , SAC1AMT a n d C o m m a n d e r - i n - C h i e f C h a n n e l . 

T h e i r t a s k i s t h e a i r d e f e n c e o f t h e U n i t e d K i n g d o m , i n c l u d i n g t h e o p e r a t i o n o f t h e F y l i n g d a l e s B a l l i s t i c M i s s i l e E a r l y W a r n i n g S t a t i o n as p a r t o f t h e c o n t r i b u t i o n t o t h e N A T O - w i d e e a r l y w a r n i n g s y s t e m , a n d a i r s u p p o r t f o r l a n d a n d s e a o p e r a t i o n s i n t h e m a i n NATO command r e g i o n s , i n c l u d i n g a r a n g e o f d e p l o y m e n t o p t i o n s t h r o u g h o u t A C E a s p a r t o f S A C E U R ' 8 
S t r a t e g i c A i r R e s e r v e . 

2 1 4 . 

S t r i k e Commend f o r c e s a r e a r r a n g e d i n f o u r f u n c t i o n a l g r o u p No 
1 G r o u p a i r c r a f t o p e r a t e i n t h e s t r i k e / a t t a c k a n d r e c o n n a i s ^
r o l e s o v e r l a n d a n d s e a , w i t h V u l c a n B 2
f s a n d B u c c a n e e r s f o r s t r i k e / a t t a c k , V u l c a n s a n d C a n b e r r a s f o r r e c o n n a i s s a n c e , a n d t h e V i c t o r t a n k e r f o r c e i n s u p p o r t . 

No 11 G r o u p i s r e s p o n s i ^ 
f o r a i r d e f e n c e w i t h P h a n t o m a n d L i g h t n i n g a i r c r a f t s u p p o r t e d B l o o d h o u n d a n d R a p i e r s u r f a c e - t o - a i r m i s s i l e s , S h a c k l e t o n AEW 
a i r c r a f t a n d g r o u n d r a d a r . 

No 18 G r o u p , w i t h h e a d q u a r t e r s c o - i N o r t h w o o d w i t h t h o s e o f t h e C o m m a n d e r - i n - C h i e f F l e e t , c o m p r i s e m a r i t i m e p a t r o l a n d a n t i - s u b m a r i n e a i r c r a f t , i n c r e a s e d f r o m r
1 J a n u a r y 1977 
b y f o u r a i r c r a f t t o a l l o w f o r a d d i t i o n a l o f f s h s u r v e i l l a n c e a n d f i s h e r y p r o t e c t i o n d u t i e s , t o g e t h e r w i t h Wesse* 
a n d W h i r l w i n d h e l i c o p t e r s i n t h e s e a r c h a n d r e s c u e r o l e . 

No 3^ 
G r o u p , i s r e s p o n s i b l e f o r r e i n f o r c e m e n t o f A C E w i t h J a g u a r and H a r r i e r o f f e n s i v e - s u p p o r t a i r c r a f t a n d J a g u a r r e c o n n a i s s a n c e e S 
a i r c r a f t , a s w e l l a s f o r t h e t r a n s p o r t f o r c e o f V C 1 0 * s , H e r c u l a n d W e s s e x a n d Puma h e l i c o p t e r s . 

T h e R A F R e g i m e n t a l s o p r o v ^ 
w i t h i n t h e U n i t e d K i n g d o m , a s q u a d r o n c o m m i t t e d t o NATO 
f o r e l e v e l a i r d e f e n c e , a n d f i e l d s q u a d r o n s f o r g r o u n d - d e f e n c e d u t i

## Germany

215. 

R A F a i r c r a f t a n d s u r f a c e - t o - a i r m i s s i l e s y s t e m s i n G e r m a n y a s s i g n e d t o SACEUR a n d f o r m p a r t o f t h e S e c o n d A l l i e d T a c t i c a l A i r F o r c e . 

B u c c a n e e r s a n d J a g u a r s o p e r a t e i n t h e s t r i k e / a t t a c k 
*
0 l e a n d J a g u a r s a l s o h a v e r e c o n n a i s s a n c e r e s p o n s i b i l i t i e s . 

T h e v e r t i c a l a n d s h o r t t a k e - o f f a n d l a n d i n g H a r r i e r s o p e r a t i n g f r o m A s p e r s e d f i e l d s i t e s p r o v i d e o f f e n s i v e a i r s u p p o r t a n d t a c t i c a l 
^ c o n n a i s s a n c e f o r NORTHAG. 

P h a n t o m s a r e a v a i l a b l e f o r a i r d e f e n c e a * l B l o o d h o u n d s u r f a c e - t o - a i r m i s s i l e s p r o v i d e a r e a d e f e n c e o f f i e l d s  
. 

T h e R A F R e g i m e n t o p e r a t e s t h e R a p i e r s u r f a c e - t o - a i r 
^ - d e f e n c e m i s s i l e s y s t e m s a n d i s e n g a g e d i n t h e l o c a l g r o u n d 
*
e * e n c e o f R A F a i r f i e l d s a n d o f t h e H a r r i e r s i n t h e f i e l d . 

A 
M a d r o n o f W e s s e x h e l i c o p t e r s s u p p o r t s 1 ( B R ) C o r p s a n d f r o m 
1
 A p r i l 1
9
7
8 
a f u r t h e r W e s s e x s q u a d r o n w i l l a l s o b e a v a i l a b l e f o r 
^ i n f o r c e m e n t . 

## E X E R C I S E S In Support Of Nato

* ^
1
1 
t h r e e S e r v i c e s h a v e c o n t i n u e d t o make s i g n i f i c a n t O n t * i b u t i o n s t o NATO e x e r c i s e s i n 1
9
7
7
- 
W i t h i n A C E , e m p h a s i s a g a i n b e e n p l a c e d o n t h e AUTUMN FORGE e x e r c i s e s e r i e s , a e
^
c t i o n o f e x e r c i s e s d e s i g n e d t o d e m o n s t r a t e NATO 
i n t e g r a t i o n l e
 
 h a s a l s o b e e n
 
t h e x i b i l i t y  
. 

E m p h a s i s
 
a g a i n p l a c e d o n
^ a i n -
Q
l n g o f R e g u l a r a n d TAVR s o l d i e r s f r o m t h e U n i t e d K i n g d o m , and i V  
J 
Q
l s y e a r o v e r 4 0 , 0 0 0 o f them t r a i n e d o n t h e E u r o p e a n m a i n l a n d . 

e c e n  
t measure t o i m p r o v e t h e v a l u e o f e x e r c i s e s h a s b e e n a s t u d y d e s i g n e d t o make b e t t e r u s e o f e x p e n s i v e r e s o u r c e s b y i n t e g r a t i n g n a t i o n a l a n d NATO 
e x e r c i s e s . 

E a s t e r n A t l a n t i c A r e a 
217. 

A n i m p o r t a n t NATO m a r i t i m e e x e r c i s e , OCEAN SAFARI 77, s t a g e d l a s t O c t o b e r i n t h e I b e r l a n t a n d E a s t l a n t a r e a s a n d s o u t h ­
w e s t a p p r o a c h e s t o t h e U n i t e d K i n g d o m . 

T h e U n i t e d K i n g d o m c o n t r i b u t i o n t o t h i s e x e r c i s e c o m p r i s e d 16 w a r s h i p s , i n c l u d i n g HMS A r k R o y a l , HMS H e r m e s a n d t h e f r i g a t e a s s i g n e d t o t h e S t a n d i n g N a v a l F o r c e i n t h e A t l a n t i c , t o g e t h e r w i t h e i g h t R o y a l F l e e t A u x i l i a r i e s a n d 1
3 R A F s q u a d r o n s . 

The e x e r c i s e was d e s i g n t o d e m o n s t r a t e N A T O ' s d e t e r m i n a t i o n a n d a b i l i t y t o r e t a i n c o n t r o l o f s e a l a n e s v i t a l t o t h i s c o u n t r y a n d t o t h e r e i n f o r c e m e n t 01 
E u r o p e . 

N o r t h e r n R e g i o n 
2 1 8 . 

T h e 6 t h F i e l d F o r c e a n d t h e U n i t e d K i n g d o m c o n t i n g e n t 
01 
AMF p a r t i c i p a t e d i n E x e r c i s e ARROW E X P R E S S i n Denmark i n S e p t e m ^ 
1977, p r a c t i s i n g c o - o p e r a t i o n b e t w e e n t h e D a n i s h A r m y a n d exte r e i n f o r c e m e n t s . 

S i m i l a r l y , t h e U n i t e d K i n g d o m w i l l t a k e p a r ^ 
i n E x e r c i s e A R C T I C E X P R E S S i n M a r c h 1
9
7
8
, d e m o n s t r a t i n g N A T O ' s el 
& 
 
0? 

a b i l i t y t o r e i n f o r c e t h e n o r t h e r n f l a n k . 

T h e R o y a l N a v y , R
i n e s , the A r m y a n d t h e R o y a l A i r F o r c e w i l l a l l be i n v o l v e d , e x e r c i s i n g w i n t e r w a r f a r e t e c h n i q u e s w h i c h h a v e b e e n p r a c t i s e N o r w a y p r e v i o u s l y . 

C e n t r a l R e g i o n 
0 1  
1 
219. 

BAOR u n i t s h a v e p a r t i c i p a t e d i n t h r e e NATO a n d t e n n a t i e x e r c i s e s 
 
e a c h i n v o l v i n g two or more b a t t l e g r o u p s . 

T h e a n n u a l Central R e g i o n a i r e x e r c i s e , COLD F I R E 
77, t o o k p l a c e l a s t September. 

A l  
l R A F s q u a d r o n s i n G e r m a n y t o g e t h e r w i t h some U n i t e d Kingdom-based s q u a d r o n s w e r e i n v o l v e d , a n d t h e U n i t e d K i n g d o m A i r Defence R e g i o n was f u l l y t e s t e d . 

Southern R e g i o n 
220. 

A l  
l t h r e e S e r v i c e s t o o k p a r t i n E x e r c i s e DAWN P A T R O L 77 
i n the M e d i t e r r a n e a n . 

N a v a l , a i r a n d a m p h i b i o u s f o r c e s w e r e i n v o l v e d in the r e g i o n - w i d e E x e r c i s e D I S P L A Y 
DETERMINATION 
77 
t o p r a c t i s e e x t e r n a l r e i n f o r c e m e n t t o t h e r e g i o n a n d t h e t r a n s f e r o f command of n a v a l f o r c e s a c r o s s NATO command b o u n d a r i e s . 

I n November 
1977 
E x e r c i s e AVON E X P R E S S , w h i c h i n v o l v e d c o n t i n g e n t s o f t h e AMF f r o m five NATO c o u n t r i e s , was h e l d on S a l i s b u r y P l a i n . 

U K L F 
p r o v i d e d a c o m p r e h e n s i v e s u p p o r t o r g a n i s a t i o n i n c l u d i n g e l e m e n t s o f t h e 
6th F i e l d F o r c e as e x e r c i s e enemy f o r c e s . 

Other E x e r c i s e s i n s u p p o r t o f NATO 
221. 

The U n i t e d K i n g d o m h a s c o n t r i b u t e d t o a w i d e r a n g e o f s m a l l e r e x e r c i s e s i n s u p p o r t o f NATO r a n g i n g f r o m t h e w e s t e r n A t l a n t i c t o the n o r t h e r n f l a n k a n d e a s t e r n M e d i t e r r a n e a n . 

A s a means o f p r o v i d i n g m a r i t i m e t r a i n i n g f o r b o t h o u r own a n d NATO f o r c e s , t h e Royal Navy a n d R o y a l A i r F o r c e h a v e a l s o c o n d u c t e d a programme o f j o i n t m a r i t i m e c o u r s e s , w e l l s u p p o r t e d b y o u r NATO A l l i e s  
. 

R o y a l N a v y m i n e - c o u n t e r m e a s u r e s f o r c e s a n d h e a d q u a r t e r s c o n c e r n e d w i t h t h e n a v a l c o n t r o l o f s h i p p i n g h a v e c o n d u c t e d a f u l l programme o f e x e r c i s e s , i n v o l v i n g a l s o t h e R o y a l N s v a l R e s e r v e , a n d t h e R o y a l M a r i n e s h a v e e x e r c i s e d w i t h t h e i r c o u n t e r p a r t s i n f i v e NATO c o u n t r i e s , i n c l u d i n g a r c t i c w a r f a r e t r a i n i n g i n N o r w a y a n d t h r e e e x e r c i s e s w i t h s u b ­
units o f t h e R o y a l N e t h e r l a n d s M a r i n e C o r p s . 

2 2 2 . 

D e s p i t e t h e A r m y ' s c o n t i n u e d commitment i n N o r t h e r n I r e l a n d s i x b a t t l e g r o u p s f r o m BAOR a n d one f r o m U K L F c a r r i e d o u t t a c t i c s f i r i n g e x e r c i s e s a t S u f f i e l d i n C a n a d a . 

T h r e e b a t t a l i o n g r o u p s f r o m U K L F a l s o e x e r c i s e d a t V a i n w r i g h t i n C a n a d a , one o f them 
0 
t a k i n g p a r t i n 8 C a n a d i a n b r i g a d e e x e r c i s e . 

A r m y u n i t s h s v e s i s t b e e x o r c i s e d i n s u p p o r t o f t h e i r NATO r o l e i n t h e U n i t e d S t a t e s , F e d e r a l R e p u b l i c o f G e r m a n y , D e n m a r k , N o r w a y , I t a l y a n d F r a n c e . 

T h e s e b i l a t e r a l e x e r c i s e s h a v e c o n t r i b u t e d t o w a r d s b e t t e r mutual u n d e r s t a n d i n g a n d c o - o p e r a t i o n , w h i c h w i l l l e a d t o i m p r o v e d o p e r a t i o n a l e f f i c i e n c y w i t h i n N A T O . 

e  
d 
2 2 3 . 

A R A F d e t a c h m e n t o f B u c c a n e e r a n d V u l c a n a i r c r a f t d e p l o y c
8 n t o N e l l i s A i r F o r c e B a s e i n t h e U n i t e d S t a t e s t o u s e t h e A m e r i e d 
-
uis*
R e d F l a g r a n g e f a c i l i t i e s , g a i n i n g v a l u a b l e t r a i n i n g i n a simu d h o s t i l e e n v i r o n m e n t . 

21 R A F s q u a d r o n s b a s e d i n t h e U n i t e d K i n g
8 
a n d F e d e r a l R e p u b l i c o f G e r m a n y u t i l i s e d t h e NATO s q u a d r o n e x c b scheme t o i m p r o v e o p e r a t i n g t e c h n i q u e s . 

RAF a i r t r a n s p o r t u n i o  
r a l s o h e l d e x e r c i s e s w i t h t h e A m e r i c a n a n d C a n a d i a n a i r t r a n s p f o r c e s t o p r a c t i s e j o i n t p r o c e d u r e s . 

## United Kingdom Operations

N o r t h e r n I r e l a n d 
2 2 4 . 

The G o v e r n m e n t s p o l i c y f o r s e c u r i t y i n N o r t h e r n I r e l s D 0 * 
c o n t i n u e s 
 
t o b e b a s e d on t h e d e v e l o p m e n t o f t h e R o y a l U l s t e r w f i s C o n s t a b u l a r y ( R U C ) a s t h e i n s t r u m e n t f o r t h e m a i n t e n a n c e o i end o r d e r . 

T h e A r m e d F o r c e s , i n c l u d i n g t h e U l s t e r D e f e n c e Regiment ( U D R ) , w i l l r e m a i n s s t h e e s s e n t i a l b u t t r e s s o f t h i s P o l i c y f o r a s l o n g a s i s n e c e s s a r y . 

T h e Araed F o r c e s h a v e m a i n t a i n e d t h e i r h i g h s t a n d a r d s o f c o u r a g e , r e s o u r c e f u l n e s s a n d e f f e c t i v e n e s s a n d l a s t y e a r 20 a w a r d s f o r g a l l a n t r y 
*ere made t o p e r s o n n e l s e r v i n g i n N o r t h e r n I r e l a n d . 

2
2
5
. 

I n J u n e 1
9
7
7 
t h e S e c r e t a r y o f S t s t e f o r N o r t h e r n I r e l s n d b o u n c e d m e a s u r e s t o i n c r e a s e t h e e f f e c t i v e n e s s o f t h e G o v e r n m e n t ' s s e c u r i t y p o l i c y . 

T h e s e i n c l u d e d a n i n c r e a s e i n t h e f u l l - t i m e e s t a b l i s h m e n t o f t h e U D R , a c o n t i n u i n g b u i l d - u p i n t h e s t r e n g t h o f BUG, a g r e a t e r e m p h a s i s o n t h e a c q u i s i t i o n o f i n t e l l i g e n c e a n d 
8 s t r e n g t h e n i n g o f t h e l a w s a g a i n s t t e r r o r i s t o f f e n c e s . 

T h e r e 
^ s b e e n a p r o g r e s s i v e r e d u c t i o n i n t h e g e n e r a l l e v e l o f v i o l e n c e a * i h g t h e y e a r , w i t h a m a r k e d f a l l i n t h e number o f c i v i l i a n e a s u a u i e s a n d o f s h o o t i n g a n d b o m b i n g i n c i d e n t s , a n a i n c r e a s i n g s u c c e s s i n b r i n g i n g l a w - b r e a k e r s t o j u s t i c e . 

l n  1
9
7
? 

1
3
0
8 
p e o p l e w e r e c h a r g e d w i t h t e r r o r i s t - t y p e o f f e n c e s , d e l u d i n g 
266 
w i t h m u r d e r o r a t t e m p t e d m u r d e r . 

T h e s e c u r i t y f o p  o e s f o u n d 
5
9
0 
f i r e a r m s , 5
2
,
0
9
1 
r o u n d s o f a m m u n i t i o n a n d  
?

2 
 
t o n s o f e x p l o s i v e 
( i n c l u d i n g n e u t r a l i s e d d e v i c e s ) , 
 
-
^ e t t a b l  
y t h e r e h a s b e e n n o r e d u c t i o n i n t h e s c a l e o f s e c u r i t y 
"
0 p c e E d e a t h s s i n c e 
29 
s e r v i c e p e r s o n n e l i n c l u d i n g 
14 
" e ^ e r g o f t h e ^
 
h a v e  g i v e n t h e i r l i v e s . 

2
2
5 ' 
U  
l t h r e e S e r v i c e s o f t h e A r m e d F o r c e s a r e i n v o l v e d i n  
G a i n i n  
g s e c u r i t y , b u t t h e A r m y i n e v i t a b l y b e a r s t h e m a i n  
r e s p o n s i b i l i t y f o r p r o v i d i n g a s s i s t a n c e a n d s u p p o r t t o t h e p o l i c e t h o u g h t h e R o y a l M a r i n e s h a v e a l s o b e e n i n v o l v e d i n t h e i n f a n t r y r o l e . 

T h e f o r c e l e v e l r e m a i n e d a t a r o u n d 14 m a j o r u n i t s o f the c o m b a t arms u n t i l e a r l y 
1978 
when i t was r e d u c e d ' t o 
13. 

R e i n f o r c e m e n t s w e r e c a l l e d i n as n e c e s s a r y t o meet t h e s e c u r i t y r e q u i r e m e n t s . 

A m a j o r r e i n f o r c e m e n t o f 3,000 men,  
i n C ^
u
( ^ 
i n g t h r e e i n f a n t r y b a t t a l i o n s , was d e p l o y e d p r i m a r i l y b y the RAP a i r t r a n s p o r t f o r c e a t t h e t i m e o f t h e U n i t e d U n i o n i s t A c t i o n C o u n c i l 
(UUAC) 
s t r i k e i n May 1977. 

A t o t a l o f 
47 
e t  
m a j o r u n i t s s e r v e d d u r i n g 1
9
7
7
* N i n e m a j o r u n i t s h a v e now c o m p I
s i x t o u r s o f d u t y t h e r e a n d s i x u n i t s h a v e c o m p l e t e d s e v e n t o u r s -
C o a s t a l a n d l o u g h p a t r o l s a r e c a r r i e d o u t b y t h e R o y a l N a v y 8nd R o y a l M a r i n e s t o d e t e r t h e s m u g g l i n g o f a r m s a n d t h e R o y a l A i r t D 
F o r c e p r o v i d e s r e c o n n a i s s a n c e f a c i l i t i e s , a n d , t o g e t h e r w i t h e R o y a l N a v y , p e r s o n n e l a n d l o g i s t i c a i r t r a n s p o r t s u p p o r t a n d t a c t i c a l m o b i l i t y f o r t h e s e c u r i t y f o r c e s . 

The R A F R e g i m e ^ 
p r o v i d e s p r o t e c t i o n f o r t h e a i r f i e l d a t A l d e r g r o v e a n d f o r the r a d a r u n i t a t B i s h o p ^ 
C o u r t . 

2 2 7 - 
. T h e s t r e n g t h o f t h e UDR a t 1 J a n u a r y 1
9
7
8
, i n c l u d i n g b o t b f u l l - t i m e a n d p a r t - t i m e members, was 
7 , 8 1 2 , o f w h i c h 
7 ^ 
u w e r e women. 

I n a d d i t i o n t o r o u t i n e o p e r a t i o n s , t h e UDR c o n t i n t o p r o v i d e a c o m p a n y - s i z e f o r c e e a c h weekend f o r d e p l o y m e n t s o  
r i n t h e P r o v i n c e . 

T h e UDR now p r o v i d e s i m m e d i a t e m i l i t a r y s u p P
5 
f o r t h e R U C , w h o l l y o r i n p a r t , i n 
11 
P o l i c e D i v i s i o n s t h ^
d e m o n s t r a t i n g t h e i m p o r t a n c e o f t h i s l a r g e l y p a r t - t i m e b o d y i n the m a i n t e n a n c e o f s e c u r i t y i n N o r t h e r n I r e l a n d , I n 1977 
e l e m e n t s of f i v e UDR b a t t a l i o n s b e n e f i t e d f r o m t h e g r e a t e r r a n g e o f t r e i n i n g f a c i l i t i e s a v a i l a b l e i n G r e a t B r i t a i n a n d i t i s p l a n n e d to e x t e n d s u c h t r a i n i n g i n 1978. 

T h e r e were two g e n e r a l C 8 l l - u p s for the UDR d u r i n g t h e y e a r a n d t h e t u r n - o u t o n e a c h o c c a s i o n was at a g r a t i f y i n g h i g h l e v e l o f w e l l o v e r 
9
0
%
. 

The a c t i o n s o f t h e UDR d u r i n g t h e UUAC s t r i k e l a s t M a y , i n r e s p o n s e t o a g e n e r a l c a l l - u p , n o t o n l y c o n t r i b u t e d m a t e r i a l l y t o t h e m a i n t e n a n c e o f law and o r d e r d u r i n g t h e s t r i k e b u t a l s o e n h a n c e d t h e U D R ' s r e p u t a t i o n f o r i m p a r t i a l i t y a n d e f f e c t i v e n e s s . 

f u r t h e r a s s i s t a n c e t o t h e c i v i  
l power 
228. 

D u r i n g t h e y e a r A r m y bomb d i s p o s a l teams h a v e c o n t i n u e d to be a v a i l a b l e t o a s s i s t l o c a l p o l i c e f o r c e s i n t h e e v e n t o f bomb i n c i d e n t s i n Great B r i t a i n . 

A J o i n t f o r c e c o n t i n u e s t o be h e l d a t s h o r t n o t i c e to s u p p o r t t h e p o l i c e i n c o u n t e r - t e r r o r i s t o p e r a t i o n s a t H e a t h r o w A i r  
port a n d , a t t h e r e q u e s t o f t h e M e t r o p o l i t a n P o l i c e , t h i s f o r c e has t a k e n p a r t i n s e v e n e x e r c i s e s a t H e a t h r o w . 

F i r e - f i g h t i n g 
. 

229. 

On 1'i- November 
1977, p e r s o n n e l f r o m a l  
l t h r e e S e r v i c e s w e r e deployed t o a s s i s t t h e f i r e a u t h o r i t i e s i n m a i n t a i n i n g f i r e c o v e r throughout t h e U n i t e d K i n g d o m d u r i n g t h e f i r e m e n ' s s t r i k e . 

A t t h e peak o f t h e o p e r a t i o n , some 2 0 , 0 0 0 s e r v i c e m e n were i n v o l v e d . 

T h e servicemen r e m a i n e d on d u t y u n t i l m i d - J a n u a r y d u r i n g w h i c h t i m e they a t t e n d e d 
39,612 
i n c i d e n t s , and r e c e i v e d c o n s i d e r a b l e p r a i s e from t h e f i r e o f f i c e r s s u p e r v i s i n g them f o r t h e i r s u c c e s s i n t a c k l i n g an u n f a m i l i a r t a s k . 

I n e v i t a b l y , the commitment o f so many man-hours t o t h e s e d u t i e s c a u s e d c o n s i d e r a b l e d i s r u p t i o n t o t h e normal programme o f S e r v i c e t r a i n i n g , a n d i m p o s e d a d d i t i o n a l s e p a r a t i o n o n many S e r v i c e f a m i l i e s . 

P r o t e c t i o n o f O f f s h o r e I n s t a l l a t i o n s 
2 3 0 . 

S h i p s a n d a i r c r a f t a r e d e p l o y e d t h r o u g h o u t t h e y e a r f o r t h e p r o t e c t i o n o f o f f s h o r e o i l a n d g a s i n s t a l l a t i o n s . 

T h e y c a r r y o u t a i r a n d s e a s u r v e i l l a n c e a n d d e t e r r e n t p a t r o l s a n d , t o g e t h e r w i t h o t h e r f o r c e s i n t h e a r e a , a r e a v a i l a b l e t o r e a c t s w i f t l y to a n y e m e r g e n c y . 

T h e s e c u r i t y o f o f f s h o r e i n s t a l l a t i o n s a n d t h e a b i l i t y t o p r o v i d e a s s i s t a n c e q u i c k l y a r e r e g u l a r l y t e s t e d i n e x e r c i s e s c o n d u c t e d j o i n t l y b y t h e M i n i s t r y o f D e f e n c e a n d c i v i l a u t h o r i t i e s . 

F i v e new I s l a n d c l a s s s h i p s , o r d e r e d s p e c i f f o r o f f s h o r e p r o t e c t i o n t a s k s , a r e now i n s e r v i c e t o g e t h e r w i t b w n f o u r a d d i t i o n a l R A F N i m r o d a i r c r a f t . 

T h e s e c a n b e a u g m e n t e d n e c e s s a r y b y o t h e r s h i p s a n d a i r c r a f t . 

T h e e s t i m a t e d c o s t s o f t e s D 
r o t e c t i o n o f o f f s h o r e o i l a n d gas i n s t a l l a t i o n s a n d o t h e r o f f a s k s a r e shown i n T a b l e 
5 o f A n n e x A . 

F i s h e r y P r o t e c t i o n 
231. 

S i n c e t h e e x t e n s i o n o f U n i t e d K i n g d o m f i s h e r y l i m i t s on 
1 J a n u a r y 1
9
7
7 
t h e e n l a r g e d F i s h e r y P r o t e c t i o n t a s k h a s b e e n p e r f o r m e d w i t h c o n s i d e r a b l e s u c c e s s . 

I n t h e t w e l v e - m i l e b e l t ? 

t h e T o n c l a s s m i n e s w e e p e r s o f t h e C o a s t a l D i v i s i o n o f t h e F i s k e r ^ 
 f A by P r o t e c t i o n S q u a d r o n c a r r y o u t t h e i r t r a d i t i o n a l t a s k a s s i s t e d 
 
D 
e wing; a i r c r a f t a n d , as n e c e s s a r y , h e l i c o p t e r s . 

O u t s i d e t h i s t a s k i s now u n d e r t a k e n b y I s l a n d c l a s s v e s s e l s a n d R A F N i m r o d 
0 ^ 
0 1  
1 
s u r v e i l l a n c e p a t r o l s . 

T h e e s t i m a t e d c o s t s o f f i s h e r y p r o t e c t !

o t h e r o f f s h o r e t a s k s a r e shown i n T a b l e 
5 o f A n n e x A . 

S e a r c h a n d R e s c u e 
232. 

D u r i n g 1
9
7
7 
RN a n d R A F h e l i c o p t e r s p a r t i c i p a t e d i n 
13
0^ 
s e a r c h a n d r e s c u e o p e r a t i o n s , many o f w h i c h t o o k p l a c e u n d e r e x t r e m e l y d i f f i c u l t a n d d a n g e r o r c o n d i t i o n s . 

917 
l i v e s were s a v e d a n d f o u r a w a r d s  
f
8
a l l a n t r y a n d one c o m m e n d a t i o n f o r b r a v e c o n d u c t were g i v e n 
0
 the o f f i c e r s a n d men c o n c e r n e d . 

T h e l a s t o f t h e RN W h i r l w i n d l c o p t e r s were r e p l a c e d b y W e s s e x h e l i c o p t e r s a n d p l a n s a r e w e l l Q c e d f o r t h e i n t r o d u c t i o n o f R A F Sea K i n g h e l i c o p t e r s f o r t h i s 
- £ - J j j - l i t a r y A i d t o t h e C i v i l C o m m u n i t y t h r o u g h o u t 1
9
7
7 
a l l t h r e e S e r v i c e s c a r r i e d o u t p r o j e c t s o f a B s i z e a n d c o m p l e x i t y . 

T h e t y p e o f a i d g i v e n i n c l u d e d A
l n B 
a p l a y i n g f i e l d i n n o r t h Y o r k s h i r e , a i r l i f t i n g s e r i o u s l y P a t i e n t s , a n d d e l i v e r i n g p o r t a b l e d i a l y s i s u n i t s b y R A F 

## Hm T H E Q U E E N ' S S I L V E R J U B I L E E Reviews

A l  
l t h r e e S e r v i c e s p a r t i c i p a t e d i n t h e n a t i o n a l c e l e b r a t i o n s Of  £
e r M a j e s t y T h e Q u e e n ' s S i l v e r J u b i l e e l a s t y e a r . 

H e r Ma j e s t y r e v i e w e d the l e e t a t S p i t h e a d f r o m HMY" B r i t a n n i a a n d s h i p s o f t h e R o y a l N a v y a n d 
^ U  
i 
^ y S e r v i c e s i n t h e R e v i e w l i n e s were a c c o m p a n i e d b y v e s s e l s u ^ i n g t h e B r i t i s h m e r c h a n t a n d f i s h i n g f l e e t s a n d o t h e r 
^ i t i m e o r g a n i s a t i o n s h a v i n g c l o s e a s s o c i a t i o n s w i t h t h e R o y a l N a v y . 

e s e
 * t t-n L O O were s h i p s f r o m t h e n a v i e s o f c o u n t r i e s i n t h e h e a l t h , N A T O , t h e C e n t r a l T r e a t y O r g a n i s a t i o n ( C E N T O ) 
a n d t h e 
^
e Q n E c o n o m i c C o m m u n i t y . 

T h e R e v i e w was c o n c l u d e d b y a f l y ­
th h e l i c o p t e r s o f t h e F l e e t A i r A r m . 

T h e R e v i e w a l s o p r o v i d e d 
^  
^ 
0
r t u n i t y t o c o n d u c t a m a j o r n a t i o n a l m a r i t i m e e x e r c i s e w i t h and RNZN f o r c e s t o p r a c t i s e j o i n t o p e r a t i n g p r o c e d u r e s a n d t a c t i c s . 

I n A u g u s t H e r M a j e s t y i n s p e c t e d t h e R o y a l M a r i n e s o n P l y m o u t h H o e . 

235- 
T h e c l i m a x o f t h e A r m y ' s c e l e b r a t i o n s , was t h e S i l v e r J u b i l R e v i e w o f t h e A r m y . 

S i n c e t h e l a r g e s t number o f f i g h t i n g u n i t s o f t h e A r m y w e r e s t a t i o n e d i n G e r m a n y i t was c o n s i d e r e d a p p r o p r i o '
f o r H e r M a j e s t y t o r e v i e w t h e B r i t i s h A r m y o f t h e R h i n e . 

D u r i n g t h e R e v i e w , w h i c h t o o k p l a c e a t S e n n e l a g e r , H e r M a j e s t y was a c c o m p a n i e d b y t h e P r e s i d e n t o f t h e F e d e r a l R e p u b l i c o f G e r m a n y , H e r r W a l t e r S c h e e l . 

236. 

T h e c e n t r e p i e c e o f R o y 8 l A i r F o r c e S i l v e r J u b i l e e c e l e b r a t i was t h e R e v i e w b y H e r M a j e s t y a t F i n n i n g l e y . 

S i x Q u e e n
1 s C o l o u r s , 
68 s q u a d r o n s t a n d a r d s a n d 838 S e r v i c e p e r s o n n e l p a r a d e d o n t h e o c c a s i o n o f t h e p r e s e n t a t i o n o f a new Q u e e n
1 s C o l o u r f o r t h e R o y a l A i r F o r c e i n t h e U n i t e d K i n g d o m . 

1
4
-
1 a i r c r a f t t o o k p a r t i n a f l y i n g d i s p l a y r e p r e s e n t i n g t h e v a r i o u s r o l e s a n d n e a r l y e v e r y 
1 1 ^ 
s q u a d r o n i n t h e R o y a l A i r F o r c e a n d a f u r t h e r 7
^
- a i r c r a f t i n c l ^ d i y s e v e r a l f r o m C o m m o n w e a l t h a i r f o r c e s w e r e o n s t a t i c d i s p l a y .  
^
a i r c r a f t a l s o t o o k p a r t i n a s p e c i a l l y a u g m e n t e d Q u e e n
1 s B i r t h d a y f l y - p a s t o v e r B u c k i n g h a m P a l a c e . 

237- 
"In J u n e H e r M a j e s t y r e v i e w e d t h e R e s e r v e a n d C a d e t F o r c e s t h e S e r v i c e s M i l i t a r y M u s i c a l P a g e a n t a t W e m b l e y . 

238. 

A s p a r t o f t h e c e l e b r a t i o n s f o r t h e S i l v e r J u b i l e e , Her M a j e s t y , a c c o m p a n i e d b y H i s R o y 8 l H i g h n e s s T h e Duke o f E d i n b u r g h t n e v i s i t e d N o r t h e r n I r e l a n d i n A u g u s t . 

A l  
l s e c u r i t y f o r c e s i n P r o v i n c e p l a y e d t h e i r p a r t i n e n s u r i n g t h e s u c c e s s o f t h i s v** 

## Deployments And **Operations** M E D I T E R R A N E A N

239. 
ja. 
C y p r u s . 
T h e A r m y g a r r i s o n i n t h e 
S o v e r e i g n 
B a s e 

A r e a s r e m a i n s an i n f a n t r y b a t t a l i o n , two i n f a n t r y c o m p a n i e s , a n a r m o u r e d r e c o n n a i s s a n c e s q u a d r o n a n d a f l i g h t o f A l o u e t t e h e l i c o p t e r s , t o g e t h e r w i t h t h e i r l o g i s t i c s u p p o r t u n i t s . 

T h e A r m y a l s o c o n t r i b u t e s t o t h e U n i t e d N a t i o n s F o r c e i n C y p r u s 
( U N F I C Y P ) 
one i n f a n t r y b a t t a l i o n l e s s two c o m p a n i e s , a n a r m o u r e d r e c o n n a i s s a n c e s q u a d r o n , a f l i g h t o f A l o u e t t e h e l i c o p t e r s a n d l o g i s t i c s u p p o r t . 

T h e R o y a l A i r F o r c e o p e r a t e s a s q u a d r o n o f W h i r l w i n d h e l i c o p t e r s i n C y p r u s o f w h i c h f o u r 

a r e 
i n s u p p o r t 
o f 
U N F I C Y P a n d t h e r e m a i n d e r 
i n 
t h e 
s e a r c h a n d r e s c u e 
r o l e . 
A s q u a d r o n o f 
t h e R A F 
R e g i m e n t 
i s 
d e p l o y e d 
t o 
p r o t e c t 
t h e 
a i r f i e l  
d 
a t 
A k r o t i r i . 
b . 
M a l t a . 
A R o y a l 
M a r i n e company g r o u p , 
some 
A r m y 
e l e m e n t s a n d m i n o r a d m i n i s t r a t i v e 
u n i t s 
w i l l 
r e m a i n d u r i n g t h e 
r u n d o w n a n d w i t h d r a w a l 
p e r i o d 
w h i c h w i l  
l b e 
c o m p l e t e d 
b y 3
1 
M a r c h 1979. 
T h e 
n a v a l 
f a c i l i t i e s 
i n 
M a l t a 
a r e a l s o b e i n g 
r e d u c e d 
i n 
p r e p a r a t i o n f o r 
t h e 
end o f 
t h e 
M i l i t a r y 
F a c i l i t i e  
s A g r e e m e n t . 
T h e C a n b e r r a 
a n d 
N i m r o d 
s q u a d r o n s b a s e d i n I f e l t a w i l l h a v e b e e n w i t h d r a w n b y t h e end o f 
1978 
a n d R A F L u q a w i l l c l o s e when t h e A g r e e m e n t e x p i r e s o n 31 M a r c h 1979* 

c;. 
G i b r a l t a r . 
A R o y a l N a v y d e s t r o y e r 
or f r i g a t e 
i s 
s t a t i o n e d 
8t 
G i b r a l t a r 
a n d a n i n f a n t r y 
b a t t a l i o n 
f o r m s 
t h e 
m a j o r p a r t o f 
t h e 
g a r r i s o n . 
T h e 
R o y a l 
A i r 
F o r c e a l s o 
o p e r a t e s 
t h e 
a i r f i e l d t h e r e 
a n d a 
d e t a c h m e n t o f two H u n t e r a i r c r a f t . 

## B E L I Z E

2 4 0 . 

T h r e a t e n i n g s t a t e m e n t s b y G u a t e m a l a n l e a d e r s a n d t h e c a l l "
u P 
o f t h e i r r e s e r v i s t s l e d t o a n i n c r e a s e o f t e n s i o n b e t w e e n t h e U n i t e d K i n g d o m a n d G u a t e m a l a a n d a f u r t h e r r e i n f o r c e m e n t o f t h e 
8
0
B e l i z e g a r r i s o n i n m i d 1977* 
A r m y r e i n f o r c e m e n t s c o n s i s t e d o f n 0 r i n f a n t r y b a t t a l i o n t a c t i c a l h e a d q u a r t e r s p l u s two c o m p a n i e s ,
 
i n i a d m i n i s t r a t i v e u n i t s a n d i n d i v i d u a l r e i n f o r c e m e n t s t o t h e f o r c e h e a d q u a r t e r s . 

R A F r e i n f o r c e m e n t s i n c l u d e d H a r r i e r s , a s t r e n g t h o f t h e RAF R e g i m e n t d e t a c h m e n t a n d a n i n c r e a s e i n t h e h e l i c o p t e r t t i e s u p p o r t f o r c e . 

A r m y a n d R A F r e i n f o r c e m e n t s w e r e f l o w n i n b y e RAF a i r t r a n s p o r t f o r c e . 

I n a d d i t i o n , a R o y a l N a v y f r i g a t e t o g z e
0
1
 
1 
w i t h s u p p o r t i n g R o y a l F l e e t A u x i l i a r i e s was d e p l o y e d t o B e l i  
t e r r i t o r i a l w a t e r s . 

B e r m u d a n g d 
2 4 1 . 

A f o r c e o f 
80 
men f r o m B e l i z e a n d 168 
f r o m t h e U n i t e d K i  
was f l o w n t o B e r m u d a i n December 
1977 
i n r e s p o n s e t o t h e G o v e r r e q u e s t f o r m i l i t a r y a s s i s t a n c e . 

T h e r a p i d d e p l o y m e n t o f t h i s f o r c e , t r a n s p o r t e d b y t h e R o y a l A i r F o r c e , h e l p e d t o c a l m t h e C O N F I D E N T I A L 
disturbances and a l l the r e i n f o r c i n g troops were withdrawn **before**  
Christmas.  

## £Alkland **Islands**

A 
 Royal Marines detachment supported by the i c e **p a t r o l**  
^ i p HMS Endurance i n the course of her survey work remains 
 
stationed i n the F a l k l a n d **Islands.**  
Hong Kong Squadron of f i v e p a t r o l c r a f t makes occasional Visits to neighbouring s t a t e s . 

The g a r r i s o n remains at four G a n t r y b a t t a l i o n s ( i n c l u d i n g three Gurkha b a t t a l i o n s ) , an 
* * i n e e r squadron, an Army A i r Corps f l i g h t of G a z e l l e h e l i ­
c*Pters and a squadron of RAF Wessex h e l i c o p t e r s . 

The Royal A i r J * c e h e l i c o p t e r s w i l l vacate K a i Tak i n Kerch 1978 
and w i l l redeploy t  
o Sek Kong i n the New T e r r i t o r i e s , 

## ££Unei

**. 

consultations continue on the duration of our commitment **o f**  
6
Qurkha b a t t a l i o n **to Brunei.**  

## Ssatp **Deployments**

* 5 .
               of the Royal Navy and supporting Royal F l e e t A u x i l i a r i e s  
       S
         h
          i
            p
              s e 
*  deployed for exercises outside the NATO area from time to time.  

T
  h
     e  h e l i c o p t e r - c r u i s e r HttS Ti£er, f i v e f r i g a t e s and four Royal F l e e t A  * * i l i a  
                                                    , accompanied i n i t i a l l y by a nuclear-powered 
                                                                                                                                                                                                                                                                                                    submarine, 
                                                                                                                                                                                                                                                                                                                                                                  
                                     r
                                        i
                                            e
                                                s  

8 8 i l e d from the United Kingdom i n September 1977 
                                                                                                                                                                                  for a deployment  

t
0  the Far E a s t l a s t i n g about seven months. 
On the outward **passage**  
S h i * * of the group v i s i t e d **p o r t s i n the Mediterranean, the Black**  
3
e
a  and the Middle East taking part i n the CENTO exercise **ICDLINK**  
b e f o r e c r o s s i n g t h e I n d i a n O c e a n e n r o u t e t o Hong K o n g , S i n g a p o r e a n d A u s t r a l i a , T h e g r o u p r e t u r n s t o t h e U n i t e d K i n g d o m i n A p r i l 
1978 
m a k i n g c a l l s i n J a p a n , S o u t h K o r e a , P h i l i p p i n e s , I n d i a ' 
S r i L a n k a , M a l d i v e s a n d M a l t a on t h e way. 

24-6. 

I n May 1978 
a g r o u p c o m p r i s i n g t h e h e l i c o p t e r - c r u i s e r HMS B l a k e , t h e n u c l e a r - p o w e r e d s u b m a r i n e HMS C o n q u e r o r , t h e T y p e 42 
d e s t r o y e r HMS B i r m i n g h a m , f o u r f r i g a t e s a n d t h r e e R o y a l F l e e t A u x i l i a r i e s , w i l l l e a v e t h e U n i t e d K i n g d o m . 

T h i s g r o u p w i l l t h r o u g h t h e Panama C a n a l i n J u l y 
1978 
f o r a s e r i e s o f e x e r c i s e s a n d v i s i t s t o p o r t s on t h e w e s t c o a s t o f N o r t h , C e n t r a l a n d S o u t h A m e r i c a b e f o r e r e t u r n i n g home s h o r t l y b e f o r e t h e end o f t h e y e a r -

## S E R V I C E A S S I S T A N C E Overseas

D i s a s t e r R e l i e f 
24-7- 
F o l l o w i n g a n e a r t h q u a k e i n t h e S o l o m o n I s l a n d s i n A p r i l 
19?^' 
a team o f s i x men f r o m t h e Q u e e n ' s G u r k h a E n g i n e e r s i n H o n g Kong was s e n t t o h e l p s u r v e y t h e damage c a u s e d a n d t o a s s i s t i n r e c o n s t r u c t i o n . 

A f t e r t h e c y c l o n e i n s o u t h e r n I n d i a i n November 
1977, RAF a i r c r a f t f l e w r e l i e f s u p p l i e s t o t h e d i s a s t e r a r e a . 

 
0 
RAF s e a r c h a n d r e s c u e d e t a c h m e n t s i n C y p r u s a n d Hong K o n g have y t a k e n p a r t i n c i v i l r e s c u e s a n d t h e C y p r u s d e t a c h m e n t was h e a v i l e n g a g e d o n 12 
November i n t h e r e s c u e o f 
117 
p e r s o n s f r o m t h e T u r k i s h f e r r y ERTURK I . 

R A F a i r c r a f t h a v e a l s o f l o w n o u t emerb e l e c t r i c i t y g e n e r a t i n g e q u i p m e n t t o t h e G a m b i a . 

H y d r o g r a p h y 
248. 

M a j o r s u r v e y s a r e b e i n g c a r r i e d o u t i n I r a n i a n w a t e r s o n repayment f r o m t h e I r a n i a n G o v e r n m e n t . 

T h e t a s k c o v e r s a p e r i o d of some t h r e e y e a r s , a n d i s c u r r e n t l y e m p l o y i n g t h r e e s h i p s o f the H y d r o g r a p h i c S u r v e y F l e e t . 

A s u r v e y o f M a r s a x l o k k B a y h a s been c o m p l e t e d f o r t h e M a l t e s e G o v e r n m e n t , a n d f u r t h e r c o a s t a l surveys a r e t a k i n g p l a c e i n Ghana u n d e r t h e h y d r o g r a p h i c a s s i s t a n c e programme f u n d e d b y t h e M i n i s t r y o f O v e r s e a s D e v e l o p m e n t . 

D i v i n p 249. 

I n May 1977 
a RN d i v i n g team w o r k i n g i n c o - o p e r a t i o n w i t h E g y p t i a n n a v a l d i v e r s r e c o v e r e d t h e G a t e o f D i o c l e t i a n f r o m t h e area f l o o d e d b y t h e Aswan H i g h Dam. 

F u r t h e r d i v i n g t o r e c o v e r the r u i n s o f t h e T e m p l e o f A u g u s t u s C a e s a r b e g a n i n O c t o b e r 
1977 
and i s e x p e c t e d t o f i n i s h i n A p r i l 
1978. 

A n o t h e r RN d i v i n g t e a m a s s i s t e d b y A r m y and R A F bomb d i s p o s a l e x p e r t s h a s c o m p l e t e d a n assignment t o c l e a r u n e x p l o d e d w a r t i m e o r d n a n c e i n t h e G i l b e r t I s l a n d s and T u v a l u i n t h e w e s t e r n P a c i f i c . 

Oman 
250. 

W i t h t h e e x c e p t i o n o f a s m a l l t r a i n i n g team a l l d i r e c t a s s i s t a n c e u n i t s w e r e w i t h d r a w n f r o m Oman d u r i n g 1977. 

P r i o r t o d e p a r t u r e a R o y a l E n g i n e e r t r o o p c o m p l e t e d t h e r o a d l i n k i n g D h o f a r to D a l q u a t , w h i c h was o p e n e d i n December 
1977. 

T h e number o f l o a n s e r v i c e p e r s o n n e l i n t h e S u l t a n o f O m a n ' s F o r c e s i s g r a d u a l l y b e i n g reduced a s O m a n i s become a v a i l a b l e t o o c c u p y t h e i r p o s i t i o n s . 

## E X E R C I S E S

251. 

T h e t o t a l number o f e x e r c i s e s o u t s i d e t h e NATO a r e a i n w h i c h t h e S e r v i c e s p a r t i c i p a t e d d u r i n g 1977 
d e c r e a s e d . 

W h i l e on p a s s a g e RN g r o u p s h a v e c o n d u c t e d e x e r c i s e s w i t h n a v a l f o r c e s o f t h e U n i t e d S t a t e s , t h e N e t h e r l a n d s , I t a l y , P o r t u g a l , F r a n c e , A u s t r a l i a and B r a z i l , a n d R o y a l M a r i n e s h i p d e t a c h m e n t s h a v e c o n t i n u e d t o t r a i n a n d e x e r c i s e i n v a r i o u s p a r t s o f t h e w o r l d . 

A r m y u n i t s h a v e t r a i n e d i n A u s t r a l i a , New Z e a l a n d , F i j i  
, B r u n e i , C y p r u s , K e n y a , t h e G a m b i a , S u d a n , t h e C a r i b b e a n a n d t h e U n i t e d S t a t e s , p r a c t i s i n g t a c t i c s a n d l i v e - f i r i n g i n c h a l l e n g i n g and u n f a m i l i a r t e r r a i n , a n d t e c h n i q u e s o f sea a n d a i r movement. 

The t s e c o n d a n n u a l f o u r - m o n t h i n d i v i d u a l e x c h a n g e o f A r m y p e r s o n n e l p l a c e b e t w e e n t h e U n i t e d K i n g d o m , A u s t r a l i a a n d New Z e a l a n d . 

3A"F 
a i r c r a f t f r o m M a l t a j o i n e d t h e s h i p s o f t h e g r o u p d e p l o y m e n t en r o u t e t o t h e F a r E a s t t o t a k e p a r t i n t h e CENTO m a r i t i m e e x e r c i s e MIDLINK o f f t h e c o a s t o f I r a n . 

RAF a i r c r a f t a l s o t o o k p a r t i n o t h e r CENTO e x e r c i s e s i n I r a n a n d a RAF m o u n t a i n r e s c u e team p a r t i c i p a t e d i n t h e a n n u a l CENTO s e a r c h a n d r e s c u e e x e r c i s e a l s o h e l d i n I r a n . 

I n O c t o b e r l a s t y e a r a S t r i k e Command N i m r o d won t h e F i n c a s t l e a n t i - s u b m a r i n e w a r f a r e t r o p h y i n c o m p e t i t i o n a i r c r a f t f r o m A u s t r a l i a , C a n a d a a n d New Z e a l a n d . 

## Equipment

301. 

E x p e n d i t u r e on e q u i p m e n t a c c o u n t s f o r a p p r o x i m a t e l y 40% 
o f the d e f e n c e b u d g e t , a n d i s e x p e c t e d to amount t o 
£2770 
m i l l i c n i  
G ^978/79. 

B y c o m p a r i s o n ( a t t h e same p r i c e l e v e l ) 
t h e e x p e n d i t u r e R e c a s t f o r 1977/78 was 
£2523 m i l l i o n . 

I n c l u d i n g a s s o c i a t e d 
* * 8 o n a e l a n d o t h e r c o s t s , t o t a l p r o c u r e m e n t e x p e n d i t u r e f o r 1978/79 
i s e s t i m a t e d a t 
£3060 m i l l i o n , s p l i t up a s f o l l o w s : -

## F I G U R E 7 Research Production And Development £ £ ^ M I L L I O N ( 7 1 % ) £876 Million **£9%)**

I n c l u d i n g R &  
D s u p p o r t c o s t s e . g . 

h e a d q u a r t e r s e x p e n s e s 
3 0 2 . 

T h e 
£ 2 1 8 4 
m i l l i o n t o be s p e n t on p r o d u c t i o n o f new e q u i p m e n t a n d s p a r e s c a n r o u g h l y be s u b d i v i d e d i n t o : 
31 % 
on s h i p s , s h i p e q u i p m e n t and w e a p o n s ; 
26 % on A r m y e q u i p m e n t 
*nd v e h i c l e s ; 
34 
% on a i r c r a f t , a i r c r a f t e n g i n e s , a i r c r a f t e q u i p m e n t and w e a p o n s ; 
and
 
9
% 
on g e n e r a l s u p p o r t . 

O f the 
£ 2 1 8 4 
m i l l i o n 
, o v e r £1900 m i l l i o n w i l l be s p e n t w i t h B r i t i s h i n d u s t r y a n d t h e R o y a l O r d n a n c e F a c t o r i e s . 

303. 

T o t a l R &  
D e x p e n d i t u r e a t 
£876 
m i l l i o n r e p r e s e n t s 
13% 
o f t h e o v e r a l l d e f e n c e b u d g e t a n d c o m p a r e s 
( a t t h e same p r i c e l e v e l ) 
w i t h f o r e c a s t e x p e n d i t u r e o f 
£ 8 6 9 
m i l l i o n i n 1977/78. 

£ 6 0 8 
m i l l i o n o f t h e R &  
D f i g u r e w i l l b e s p e n t e x t r a m u r a l l y . 

## Industrial And Employment I M P L I C A T I O N S Of T H E Equipment

i
3 0 4 . 

I n 1976/77, t h e M i n i s t r y o f D e f e n c e s p e n t 
£ 2 1 3 8 
m i l l  
on d e f e n c e e q u i p m e n t . 

O f t h i s a b o u t 7
0
% 
was s p e n t on n a t i o n a l
0 
p l a c e d w i t h B r i t i s h i n d u s t r y , a b o u t 
2
0
% 
a s o u r s h a r e o f c o l l a b p r o j e c t s a n d a b o u t 
1
0
% 
on c o n t r a c t s p l a c e d o v e r s e a s . 

O f t h e p a y m e n t s made d i r e c t l y b y t h e M i n i s t r y o f D e f e n c e t o c o n t r a c t o r -
i n t h e U n i t e d K i n g d o m t h e b u l k , a b o u t £ 1 , 6 0 0 
m i l l i o n , went t o t h e 
38 
f i r m s 
( i n c l u d i n g t h e R o y a l O r d n a ^
F a c t o r i e s ) , l i s t e d a t A n n e x H 8s e a c h r e c e i v i n g more t h a n m i l l i o n . 

305. 

T h e d e f e n c e e q u i p m e n t programme g e n e r a t e s d i r e c t l y the n
0
e q u i v a l e n t o f a b o u t 200,000 f u l l - t i m e j o b o p p o r t u n i t i e s ,  
a V e r ,  s e a s s a l e s g e n e r a t e a b o u t 
70,000 
m o r e , i n t h e d e f e n c e n ^ u s t r i
^ 
R o u g h l y t h e same n u m b e r s a g a i n a r e g e n e r a t e d i n e s  
n d u s t r y g e n e r a l l y i n s u p p o r t o f t h e m a n u f a c t u r e o f d e f e n c e e ^ p u e n t . 

The d e f e n c e e q u i p m e n t programme i s t h e r e f o r e l a r g e e n o u g h i t s e l f t o b e o f c o n s i d e r a b l e e c o n o m i c a n d i n d u s t r i a l s i g n i f i -
C a n c e . 

The n a t u r e o f t h e programme t e n d s t o c o n c e n t r a t e t h e 
^ n d i t u r e i n p a r t i c u l a r i n d u s t r i e s . 

F o r i n s t a n c e we e s t i m a t e a t ) o u t h a l f o f t h o s e e m p l o y e d i n t h e a e r o s p a c e i n d u s t r y a r e on m i l i t a r y w o r k i n c l u d i n g work f o r e x p o r t , a n d w a r s h i p ­
l n
 6 
a c c o u n t s f o r up t o a t h i r d o f t h o s e e m p l o y e d i n t h e 
8 kipbui 1 A -
A J . Q i n g i n d u s t r y . 

D e f e n c e work v / i l l c o n t i n u e t o b e a m a j o r f a c t o r 
^ 
A 
n s u s t a i n i n g t h e l e v e l s o f e m p l o y m e n t a n d t e c h n o l o g i c a l l s e i n B r i t i s h A e r o s p a c e , B r i t i s h S h i p b u i l d i n g a n d o t h e r i m p o r t a n t iated s e c t o r s o f i n d u s t r y , n o t a b l y e l e c t r o n i c s . 

G i v e n t h e s e s u b s t a n t i a l e f f e c t s , t h e M i n i s t r y o f r e c o g n i s e s t h e n e e d t o t a k e t h e i n d u s t r i a l i m p l i c a t i o n s 
0  
f e q ­
b e Pment programmes i n t o a c c o u n t i n m a k i n g p r o c u r e m e n t n s t h e 
, t h o u g h t h e p r i m a r y o b j e c t i v e o f d e f e n c e p r o c u r e m e n t m u s t t i m e l y a n d c o s t - e f f e c t i v e m a n n e r . 

e Q s u r e t h a t t h e e q u i p m e n t n e e d s o f t h e S e r v i c e s a r e met i n INTERNATIONAL 
COLLABORATION 
50Q 
The 
£ r o w i n g c o m p l e x i t y a n d c o s t o f e a c h new g e n e r a t i o n o f a 
^ 
makes i n c r e a s i n g l y h e a v y demands o n R & D 
c a p a c i t y U ( i E e t s t h r o u g h o u t t h e A l l i a n c e . 

No E u r o p e a n NATO 
c o u n t r y c o n i n t h e s e c i r c u m s t a n c e s a f f o r d t o d e v e l o p f r o m i t s own r e s o u r c e s a l  
l i t s a r m e d f o r c e s ' 
r e q u i r e m e n t s . 

New s y s t e m s must be b u i l t t o s o p e r a t e i n c o n j u n c t i o n w i t h o t h e r s i n N A T O , s n d i n some c a s e s i t  i d e s i r a b l e f o r them t o be s t a n d a r d i s e d . 

I n a d d i t i o n , u n i t c o s t s are v e r y h i g h i f t h e p r o d u c t i o n i s l i m i t e d t o our n a t i o n a l r e q u i r e m e n t . 

T h e r e i s t h u s a c o n t i n u i n g n e e d t o s e e how f a r o u r own S e r v i c e s
1 
r e q u i r e m e n t s c a n b e met t h r o u g h c o - o p e r a t i v e p r o c u r e ­
ment a r r a n g e m e n t s w i t h o u r A l l i e s , f o r e x a m p l e , b y c o l l a b o r a t i o n i n i n d i v i d u a l p r o j e c t s , w h i c h w i l l e n s b l e us t o m a i n t a i n t h e e s s e n t i a l r a n g e o f R & D c a p a b i l i t i e s a n d t o s h a r e i n t h e d e v e l o p ­
ment o f more e q u i p m e n t s t h a n we c o u l d a c h i e v e f r o m n a t i o n a l p r o j e c t s a l o n e . 

309* 
I n t e r n a t i o n a l c o - o p e r a t i o n i n t h i s c o m p l e x f i e l d r a i s e s d i f f i c u l t p r o b l e m s . 

O p e r a t i o n a l r e q u i r e m e n t s a n d t i m e s c a l e s both n e e d t o be a g r e e d ; 
t h e i n d u s t r i a l a r r a n g e m e n t s n e e d t o b e s a t i s f a c t o r y f o r e a c h p a r t i c i p a t i n g c o u n t r y ; 
b a l 8 n c e - o f - t r a d e c o n s i d e r a t i o n s a r i s i n g f r o m r e c i p r o c a l s a l e s a n d p u r c h a s e s must be t a k e n i n t o a c c o u n t ; 
a n d t h e n e e d i n t h e l o n g t e r m t o m a i n t a i n a d e q u a t e R &  
D c a p a b i l i t i e s h a s t o b e b o r n e i n m i n d . 

o r
310. 

T h e U n i t e d K i n g d o m i s t a k i n g a l e a d i n g p a r t i n t h e e f f t o o v e r c o m e t h e p r o b l e m s a n d make c o - o p e r a t i o n more e f f e c t i v e , p a r t i c u l a r l y i n E u r o p e . 

We a r e a c t i v e members o f t h e i n d e p e n d e n t E P G w h i c h i s c o n c e n t r a t i n g o n a number o f i m p o r t a n t p r o j e c t s , e s p e c i a l l y i n t h e a i r c r a f t a n d m i s s i l e f i e l d s . 

T h e s e o f f e r m
0
j o p p o r t u n i t i e s f o r c o l l a b o r a t i o n i n t h e d e v e l o p m e n t s t a g e o f p r o j e c t s , c o - o p e r a t i o n i n p r o d u c t i o n , m a n u f a c t u r e u n d e r l i c e n c e a n d d i r e c t s a l e s a n d p u r c h a s e s . 

A t t h e N o r t h A t l a n t i c Summit 
" e e t i n g i n L o n d o n i n May 1
9
7
7 
P r e s i d e n t C a r t e r w e l c o m e d t h e i n i t i a t i v e s t a k e n b y t h e E P G i n E u r o p e , a n d u n d e r t o o k t h a t t h e U n i t e d S t a t e s w o u l d s e e k i n c r e a s e d o p p o r t u n i t i e s t o b u y E u r o p e a n defence e q u i p m e n t . 

F o r i t s p a r t , t h e E P G h a s p r o p o s e d t o t h e U n i t e d S t a t e s a n d C a n a d a t h a t t h e y s h o u l d j o i n t l y e x a m i n e a number of means t o i m p r o v e t h e i m b a l a n c e i n t r a d e b e t w e e n E u r o p e a n d North A m e r i c a i n t h e d e f e n c e e q u i p m e n t s e c t o r , a n d a s a r e s u l t t e c h n i c a l d i s c u s s i o n s b e t w e e n t h e E P G a n d t h e U n i t e d S t a t e s a n d 
^anada a r e u n d e r way. 

## Production And Development

ROYAL 
NAVY 
fe- 
S h i p s ********** ertt *e lob-ro no * *  
* ae, 

a.. 
N u c l e a r - P o w e r e d F l e e t 
S u b m a r i n e s . 
T h e s e 
v e s s e l s 
a r e 
d e s i g n e d 
f o r h u n t e r / k i l l e r o p e r a t i o n s 
a g a i n s t 
s u r f a c e 
s h i p s 
a n d s u b m a r i n e s . 
HMS S c e p t r e , 
t h e 
t e n t h 
n u c l e a r - p o w e r e d 
f l e e t 
s u b m a r i n e a n d 
t h e 
f o u r t h o f t h e S w i f t s u r e c l a s s , i s p l a n n e d t o e n t e r s e r v i c e s h o r t l y a n d two more o f t h e c l a s s a r e u n d e r c o n s t r u c t i o n . 

T h e o r d e r f o r HMS T r a f a l g a r , t h e f i r s t v e s s e l o f a new c l a s s o f n u c l e a r - p o w e r e d f l e e t s u b m a r i n e s , was p i e c e d l a s t y e a r and a s e c o n d i s p l a n n e d f o r t h e c o m i n g y e a r . 

T h e s e s u b m a r i n e s w i l l h a v e i m p r o v e m e n t s i n e q u i p m e n t , e n d u r a n c e a n d s p e e d w h i c h w i l l e n a b l e them t o b e more e f f e c t i v e 

i n 
t h e i r 
p r i m a r y r o l e 
o f 
h u n t i n g a n d 
d e t e c t i n g 
enemy 
s u b m a r i n e s 
a n d s u r f a c e 
s h i p s 
i n s u p p o r t 
o f 
NATO 
o p e r a t i o n s . 

b . 
A n t i - S u b m a r i n e C r u i s e r s . 
HMS I n v i n c i b l e , 
t h e 
f i r s t 
o f 
t h e 
a n t i - s u b m a r i n e 
c r u i s e r s 
was 
l a u n c h e d 
i n 
May 1
9
7
7 
a n d c o n s t r u c t i o n 
w o r k o n t h e 
s e c o n d , 
HMS I l l u s t r i o u s , 
c o n t i n u e s . 
A t h i r d 
s h i p 
o f 
t h i s 
c l a s s 
i s 
p l a n n e d . 
(5. 
D e s t r o y e r s . 
Two T y p e 42 
g u i d e d - m i s s i l e 
d e s t r o y e r s 
a r e now i n s e r v i c e 
a n d a t h i r d , 
HMS N e w c a s t l e , 
w i l l 
s h o r t l y b e 
a c c e p t e d 
i n t o 
s e r v i c e . 
T h r e e more 
a r e 
due 
t o 
e n t e r 
s e r v i c e 
i n t h e 
c o m i n g y e a r . 
F o u r 
more s h i p s 
were o n o r d e r a t 
t h e 
b e g i n n i n g 
o f 
t h i s 
y e a r 
a n d f u r t h e r 
o r d e r s 
a r e 
p l a n n e d . 
&. 
F r i g a t e s . 
S e v e n T y p e 2
1 
f r i g a t e s 
a r e now 
i n 
s e r v i c e 
a n d t h e 
l a s t 
o f 
t h e 
c l a s 3 
i s 
e x p e c t e d 
t o 
e n t e r 
s e r v i c e 
s h o r t l y . 
W i t h t h e 
l a u n c h i n g 
o f 
HMS B a t t l e a x e 
i n 1
9
7
7
, 
two T y p e 2? 
f r i g a t e s 
a r e 
now f i t t i n g 
o u t 
a n d two more a r e 
u n d e r 
c o n s t r u c t !
0 1 1  ' 
A f i f t h 
T y p e 2
2 
i s 
p l a n n e d t o be 
o r d e r e d t h i s 
y e a r . 
M i n e C o u n t e r m e a s u r e s V e s s e l s . 

HMS L e d b u r y , t h e s e c o n d v e s s e l o f t h e H u n t C l a s s o f M i n e C o u n t e r ­
m e a s u r e s V e s s e l s , i s u n d e r c o n s t r u c t i o n a n d f u r t h e r 

o r d e r s 
a r e p l a n n e d 
f o r 
t h i s 
y e a r . 
^f. 
P a t r o l 
V e s s e l s . 
F i v e 
s h i p s 
o f 
t h e 
I s l a n d 
c l a s s 
h a v e 
now e n t e r e d 
s e r v i c e 
as 
o f f s h o r e 
p a t r o l 
v e s s e l s . 

Two f u r t h e r s h i p s o f t h i s c l a s s h a v e b e e n o r d e r e d f o r 
8 v a r i e t y o f t a s k s i n c l u d i n g c o a s t a l f i s h e r y p r o t e c t i o n . 

£  
. 
F l e e t 
R e p l e n i s h m e n t 
S h i p s . 
RFA F o r t 
G r a n g e 
w i l l 
e n t e r 
s e r v i c e 
t h i s 
y e a r 
a n d a 
f u r t h e r 
v e s s e l 
i s 
u n d e r 
c o n s t r u c t i o n . 
h . 
 
R e f i t s . 
T h e m o d e r n i s a t i o n 
o f HMS D i d o , 
t h e 
l a s t 
o f 
t h e 
f i r s t 
b a t c h o f 
e i g h t 
s h i p s 
i n t h e 
L e a n d e r 
c l a s s 
f r i g a t e 
r e f i t 
p r o g r a m m e , 
i s 
e x p e c t e d 
t o 
b e 
c o m p l e t e d 
l s t e r 
t h i s 
y e a r . 
M o d e r n i s a t i o n o f 
t h r e e 
s h i p s 
i n 
t h e 
s e c o n d b a t c h 
i s 
c o m p l e t e , 
w i t h 
f o u r 
more i n p r o g r e s s . 
Work h a s 
a l s o 
b e g u n 
o n t h e r e f i t o f HMS A n d r o m e d a , t h e f i r s t s h i p i n t h e t h i r d b a t c h , w h i c h w i l l i n c l u d e t h e f i t t i n g o f t h e S e a W o l f p o i n t - d e f e n c e m i s s i l e s y s t e m , E x o c e t a n t i - s h i p m i s s i l e s , e n h a n c e d s o n a r e q u i p m e n t s a n d e l e c t r o n i c w a r f a r e e q u i p m e n t . 

## N A V E L A V I A T I O N

a.. 
S e a H a r r i e r . 
T h e f i r s t 
f r o n t - l i n e 
Sea 
H a r r i e r 
s q u a d r o n i s p l a n n e d t o f o r m i n 
1980 
f o r e m b a r k a ­
t i o n i n i t i a l l y i n HMS H e r m e s . 

T h e s e c o n d w i l l e m b a r k i n HMS I n v i n c i b l e , a n d u l t i m a t e l y a l l s q u a d r o n s w i l l b e d e p l o y e d i n s h i p s o f h e r c l a s s . 

T h e a i r c r a f t w i l l b e armed w i t h S i d e w i n d e r A I M 3L a i r - t o - a i r a n d P ^ T a i r - t o - s u r f a c e m i s s i l e s t o p r o v i d e i t w i t h 8 q u i c k - r e 8 c t i o n c a p a b i l i t y a g a i n s t enemy a i r c r a f t a n d a n a t t a c k c a p a b i l i t y a g a i n s t s u r f a c e v e s s e l s , 

b . 
 
N a v a l H e l i c o p t e r s . 
Sea K i n g 
M a r k 1 
h e l i c o p t e r s 
a r e b e i n g m o d i f i e d t o 
t h e 
s t a n d a r d s o f 
M a r k
 
2 
h e l i c o p t e r s , 
c u r r e n t l y i n p r o d u c t i o n . 
Sea 
K i n g s 
w i l l 
a l s o 
be 
f i t t e d 
w i t h an i m p r o v e d r a d a r 
and 
c o m m u n i c a t i o n s 
s y s t e m 
a n d a n a c o u s t i c 
p r o c e s s o r 
and s o n o b u o y s 
t o 
s u p p l e m e n t 
t h e 
e x i s t i n g 
d u n k i n g 
s o n a r . 
T h e o t h e r 
h e l i c o p t e r 
u n d e r p r o d u c t i o n 
f o r 
t h e 
R o y a l N a v y i s 
t h e 
L y n x 
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w i l l be o p e r a t e d f r o m most d e s t r o y e r s a n d f r i g a t e s . 

## N A V A L Weapons 313. A I R - D E F E N C E Weapons

^a. 
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m e d i u m - r a n g e s u r f a c e - t o - a i r 
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f r i g a t e a n d o t h e r s h i p s w i t h a c l o s e - r a n g e s e l f ­
d e f e n c e c a p a b i l i t y a g a i n s t m i s s i l e s a n d a i r c r a f t . 

A programme o f i m p r o v e m e n t s i s i n h a n d t o m a i n ­
t a i n t h e c a p a b i l i t y o f S e a W o l f i n t h e f a c e o f 
 
e x p e c t e d d e v e l o p m e n t s i n t h e t h r e a t . 

 

## A N T I - S U R F A C E S H I P Weapons

S u b - H a r p o o n . 

N e g o t i a t i o n s were c o m p l e t e d w i t h t h e U n i t e d S t a t e s G o v e r n m e n t l a s t O c t o b e r f o r t h e f u l l d e v e l o p m e n t o f S u b - H a r p o o n , a s u b m a r i n e ­
l a u n c h e d , a i r f l i g h t l o n g - r a n g e a n t i - s h i p m i s s i l e w h i c h w i l l p r o v i d e t h e m a i n a n t i - s u r f a c e s h i p armament o f our s u b m a r i n e f l e e t f r o m t h e e a r l y 
1 9 8 0 s . 

^ * 
S e a S k u a . 

T h i s a n t i - s h i p m i s s i l e i s e x p e c t e d t o e n t e r s e r v i c e i n t h e e a r l y 1980's. 

C a r r i e d b y t h e L y n x h e l i c o p t e r , i t i s i n t e n d e d t o p r o v i d e d e s t r o y e r s a n d f r i g a t e s w i t h a n a t t a c k c a p a b i l i t y s t r e t c h i n g f a r b e y o n d t h e i r h o r i z o n . 

NATO A n t i - S u r f a c e S h i p M i s s i l e . 

J o i n t f e a s i b i l i t y s t u d i e s a r e now i n h a n d w i t h a number o f NATO A l l i e s f o r t h e n e x t g e n e r a t i o n o f a n t i - s h i p m i s s i l e s f o r s e r v i c e i n t h e l a t e 1980s and 1990s. 

## ^ ^ I - S U B M N ^ - J Ne Weapons

H e a v y w e i g h t T o r p e d o e s . 

F e a s i b i l i t y s t u d i e s f o r a s u c c e s s o r t o t h e s u b m a r i n e - l a u n c h e d T i g e r f i s h t o r p e d o h a v e b e g u n . 

b . 
 
L i K h t w e i R h t T o r p e d o e s . 
D e v e l o p m e n t 
i s 
c o n t i n u i n g 
o n S t i n g R a y , 
t h e 
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t o r p e d o . 
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a i r c r a f t . 
3 1 6 . 
 
O t h e r N a v a l E q u i p m e n t 
j3. 
 
P r o p u l s i o n u n i t s . 
A new m a r i n e p r o p u l s i o n 
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S p e y a e r o - e n g i n e 
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d e v e l o p m e n t . 
b . 
 
S o n a r s . 
S e v e r a l 
t y p e s 
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a n d C o m m u n i c a t i o n s E q u i p m e n t . 
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w a r f a r e 
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e q u i p m e n t s 
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a n d 
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t i v e 
d e v e l o p m e n t 
a n d p r o d u c t i o n p r o g r a m m e s . 
A NATO 
c o l l a b o r a t i v e 
d e v e l o p m e n t 
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i n h a n d 
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&. 
 
N a v i g a t i o n E q u i p m e n t . 
P r o d u c t i o n o r d e r s 
h a v e 
b e e n p l a c e d 
f o r 
e n i m p r o v e d i n e r t i a l 
n a v i g a t i o n a l 
s y s t e m w h i c h w i l l b e f i t t e d i n s u b m a r i n e s a n d t h e new a n t i - s u b m a r i n e c r u i s e r . 

S h i p R a d a r s . 

A n a d v a n c e d a i r s u r v e i l l a n c e a n d t a r g e t i n d i c a t i o n r a d a r i s b e i n g d e v e l o p e d a n d w i l l b e i n s e r v i c e w i t h t h e s u r f a c e f l e e t b y t h e m i d - 1 9 8 0 s . 

X * 
A i r b o r n e R a d a r s . 

T h e S e e s p r a y a i r b o r n e s e a r c h r a d a r i s now i n f u l l p r o d u c t i o n . 

T h i s i s b e i n g f i t t e d i n t h e L y n x h e l i c o p t e r a n d w i l l p r o v i d e t a r g e t i n f o r m a ­
t i o n f o r S e a Skua m i s s i l e s . 

B l u e F o x , a d e r i v a t i v e o f S e a s p r a y , i s u n d e r d e v e l o p m e n t a n d w i l l b e f i t t e d i n t h e Sea H a r r i e r f o r a i r - t o - a i r a n d a i r - t o - s u r f a c e r o l e s . 

£ * 
A c t i o n I n f o r m a t i o n S y s t e m s . 

T h e l a r g e m a j o r i t y o f t h e s u r f a c e f l e e t w i l l b e f i t t e d w i t h c o m p u t e r ­
b a s e d a c t i o n i n f o r m a t i o n s y s t e m s t o g e t h e r w i t h d i g i t a l d a t a l i n k s b y t h e m i d - 1 9 8 0 s . 

## Army

A r m o u r e d F o r c e s 
£.* 
C h i e f t a i n . 

Work on t h e p l a n n e d i m p r o v e m e n t s t o m a i n t a i n a n d e n h a n c e t h e e f f e c t i v e n e s s o f C h i e f t a i n i n t o t h e 
1980s i s g o i n g a h e a d . 

I n a d d i t i o n t o l a t e s t m a r k s o f t h e t a n k l a s e r s i g h t , u n i t s w i l l a l s o t h i s y e a r b e g i n t o r e c e i v e t h e m u z z l e r e f e r e n c e s y s t e m . 

A number o f m o d i f i c a ­
t i o n s t o i m p r o v e t h e r e l i a b i l i t y o f t h e m a i n e n g i n e a r e b e i n g i n c o r p o r a t e d i n t o t h e f l e e t . 

b . 
 
C h i e f t a i n R e p l a c e m e n t 
(MBT 8 0 ) . 
T h e A n g l o - G e r m a n 
c o l l a b o r a t i v e 
s t u d i e s 
on a f u t u r e 
m a i n b a t t l e 
t a n k 
w e r e t e r m i n a t e d i n M a r c h l a s t y e a r . 

A l t h o u g h t h e r e was a l a r g e m e a s u r e o f a g r e e m e n t on t h e d e t a i l s o f t h e r e q u i r e m e n t , b o t h c o u n t r i e s f e l t t h a t c o l l a b o r ­
a t i v e d e v e l o p m e n t a n d p r o d u c t i o n w o u l d n o t b e p o s s i b l e , m a i n l y b e c a u s e t h e t i m e s c a l e s i n w h i c h e a c h c o u n t r y r e q u i r e d t h e r e p l a c e m e n t t a n k became i n c o m p a t i b l e d u r i n g t h e c o u r s e o f t h e j o i n t w o r k . 

N a t i o n a l s t u d i e s on t h e b e s t way o f m e e t i n g o u r r e q u i r e m e n t f o r a t a n k t o b e i n s e r v i c e b y t h e 

l a t e 1980s a r e now i n p r o g r e s s , 
a n d t h e s e 
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make u s e 
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t h e 
v a l u a b l e 
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d u r i n g 
t h e 
j o i n t 
c o n c e p t 
s t u d i e s . 
£ . 
M e c h a n i s e d I n f a n t r y 
Combat V e h i c l e . 
T h e 
s e c o n d 
p h a s e 
o f p r o j e c t 
d e f i n i t i o n 
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t h e 
p r e s e n t FV430 s e r i e s 
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t h e 1980s, b e g a n 
i n A u g u s t l a s t 
y e s r . 
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d e f i n i t i o n 
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ck 
 
T r a c k e d 
Combat R e c o n n a i s s a n c e 
V e h i c l e s . 
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v e r i a n t s 
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t h e 
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s e r v i c e 
-
S t r i k e r , w h i c h c a r r i e s t h e S w i n g f i r e a n t i - t a n k g u i d e d weapon s y s t e m , a n d t h e command v e h i c l e , S u l t a n . 

T h e l e s t v a r i a n t s i n t h e s e r i e s , S a m a r i t
8 1 1 ' 
e n a r m o u r e d a m b u l a n c e , a n d S a m s o n , 
8 
r e c o v e r y v e h i c l e , a r e p l a n n e d t o e n t e r t h e p r o d u c t i o n p h a s e t h i s y e a r . 

Combat E n g i n e e r T r a c t o r . 

T h e new c o m b a t e n g i n e e r t r a c t o r w i l l e n t e r s e r v i c e t h i s y e a r . 

A r t i l l e r y a n d A s s o c i a t e d E q u i p m e n t a.. 

F H 70 a n d SP 70. 

T h e towed 1
5
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m m f i e l d h o w i t z e r , F H 70, w i l l b e g i n t o e n t e r s e r v i c e e a r l y n e x t y e a r . 

T h e t h r e e c o l l a b o r a t i n g c o u n t r i e s , t h e U n i t e d K i n g d o m , t h e F e d e r a l R e p u b l i c o f G e r m a n y a n d I t a l y , a r e a l s o c o n t i n u i n g d e v e l o p m e n t w o r k on t h e s e l f ­
p r o p e l l e d v e r s i o n , SP 70. 

P r o t o t y p e s h a v e b e e n p r o d u c e d a n d a r e now u n d e r g o i n g t e c h n i c a l e v a l u a t i o n t r i a l s . 

Ji* 
S u p e r v i s o r . 
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S u p e r v i s o r , 
a 
b a t t l e f i e l d 
s u r v e i l l a n c e and t a r g e t a c q u i s i t i o n s y s t e m u s i n g r e a l - t i m e d a t a t r a n s m i s s i o n , i s c o n t i n u i n g . 

S u p e r ­
v i s o r i s b a s e d on a n unmanned m i n i a t u r e h e l i c o p t e r , t h e p r o t o t y p e o f w h i c h w i l l make i t s f i r s t f l i g h t i n t h e s p r i n g o f t h i s y e a r . 

£.* 
C e r v a n t e s . 
D e v e l o p m e n t 
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a t r a i l e r - m o u n t e d 
r a d a r , 
t o 
l o c a t e r o c k e t 
l a u n c h e r s 
a n d m o r t a r s , 
i s 
c o n t i n u i n g , 
£ £ m y G u i d e d Weapons 
-2.* 
R a p i e r A i r - D e f e n c e M i s s i l e S y s t e m . 

D e p l o y m e n t o f t h e a l l - w e a t h e r b l i n d f i r e t r a c k i n g r a d a r , DN 1 8 1 , w i l l 
 
b e g i n e a r l y t h i s y e a r . 

S t u d i e s a r e now b e i n g c a r r i e d o u t on f u r t h e r i m p r o v e m e n t s t o R a p i e r a n d t o e v a l u a t e t h e c o s t - e f f e c t i v e n e s s o f a t r a c k e d 

v e r s i o n . 
b . 
 
H e l i c o p t e r - b o r n e A n t i - T a n k 
G u i d e d W e a p o n . 
F o l l o w i n g 
t h e 
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t h e 
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t h e 
A m e r i c a n TOW s y s t e m s , 
t h e 
M i n i s t r y 
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t h e 
A r m y 
L y n x 
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e a r l y 1 9 8 0 s . 
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p s r t 
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t h e 
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m a n u f a c t u r e d 
u n d e r 
l i c e n c e 
i n t h e U n i t e d K i n g d o m . 

£ . 
 
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L o n g - R a n g e A n t i - T a n k 
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D e v e l o p m e n t 
i s 
c o n t i n u i n g 
o f 
a 
t h e r m a l - i m a g i n g 
n i g h t 
s i g h t 
f o r 
S w i n g f i r e . 
D i s c u s s i o n s 
h a v e 
a l s o 
b e g u n w i t h F r a n c e a n d t h e 
F e d e r a l R e p u b l i c 
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f o r e 
t h i r d - g e n e r a t i o n 
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g u i d e d 
w e a p o n . 
d . 
 
M i l a n 
M e d i u m - R a n g e A n t i - T a n k 
G u i d e d W e a p o n . 
I t 
has 
b e e n p o s s i b l e 
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o f 
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b a t c h 
o f 
M i l a n e q u i p m e n t s 
b e i n g b o u g h t 
f r o m 
t h e 
F r a n c o - G e r m a n c o n s o r t i u m , 
E u r o r a i s s i l e . 
D e l i v e r i e s 
o f t h i s b a t c h b e g a n l a s t y e a r a n d w i l l b e s p r e a d o v e r two y e a r s . 

D e v e l o p m e n t o f a t h e r m a l - i m a g i n g n i g h t s i g h t f o r M i l a n h a s b e g u n on a c o l l a b o r a t i v e t r i p a r t i t e b a s i s b e t w e e n t h e U n i t e d K i n g d o m , t h e F e d e r a l R e p u b l i c o f G e r m a n y a n d F r a n c e . 

O t h e r A r m y E q u i p m e n t L i p ; h t A n t i - A r m o u r W e a p o n . 

F r o j e c t d e f i n i t i o n b e g a n l a s t y e a r on a m a n - p o r t a b l e a n t i - a r m o u r weapon t o r e p l a c e t h e 
84mm C 8 r l G u s t a v r e c o i l - l e s s r i f l e a n d and 66mm M72 r o c k e t . 

D i s c u s s i o n s a r e t a k i n g p l a c e w i t h i n t h e E P G o n t h e p o s s i b i l i t i e s o f c o l l a b o r a t i o n . 

h . 

 
S m a l l A r m s . 

NATO t e c h n i c a l t r i a l s t o s e l e c t a s t a n d a r d c a l i b r e f o r f u t u r e s n a i l arms b e g a n l a s t y e a r , a n d m i l i t a r y t e s t s w i l l b e g i n l a t e r t h i s y e a r . 

T h e new B r i t i s h 
4.85mm weapon s y s t e m , c o m p r i s i n g a n a u t o m a t i c r i f l e a n d l i g h t s u p p o r t w e a p o n , h a s b e e n e n t e r e d i n the t r i a l s a n d t h e r e s u l t s s h o u l d be a v a i l a b l e b y t h e e n d o f n e x t y e a r . 

M i n e s . 

T h e B a r m i n e a n t i - t a n k mine i s new i n s e r v i c e a n d w o r k b e g a n l a s t y e a r t o d e v e l o p a d d i t i o n a l f u s e s t o e x t e n d i t s o p e r a t i o n a l a p p l i c a t i o n and i m p r o v e i t s r e s i s t a n c e t o c o u n t e r m e a s u r e s . 

T h e c o m p l e m e n t a r y o f f - r o u t e mine a n d t h e R a n g e r s c a t t e r a b l e a n t i ­
p e r s o n n e l mine s y s t e m w i l l e n t e r s e r v i c e l a t e r t h i s 

y e a r . 
5.* 
E l e c t r o n i c W a r f a r e . 
I n J u l y l a s t 
y e a r , 
an 
e l e c t r o n i c ­
w a r f a r e r e g i m e n t 
t o o k 
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p l a c e 
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t h e 
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1 (BR) 
C o r p s . 
M o s t o f 
i t s 
e q u i p m e n t w i l l 
be 
B r i t i s h , a l t h o u g h some i s b e i n g b o u g h t f r o m F r a n c e . 

F u r t h e r i m p r o v e m e n t s i n our e l e c t r o n i c w a r f a r e c a p a b i l i t y a r e u n d e r c o n s i d e r a t i o n . 

e. 
L y n x H e l i c o p t e r . 
I n t e n s i v e 
f l y i n g 
t r i a l s 
o f 
t h e 
A r m y v e r s i o n 
o f L y n x h a v e b e e n 
c o m p l e t e d , 
a n d 
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T h e s e v e s s e l s w i l l p r o v i d e p e a c e t i m e l o g i s t i c s u p p o r t t o t h e H e b r i d e s a n d l o g i s t i c s u p p o r t f o r t h e r e i n f o r c e m e n t o f E u r o p e i n w a r . 

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,a. 

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have so f a r b e e n o r d e r e d , a r e e x p e c t e d n e x t y e a r . 

T h e v a r i a b l e g e o m e t r y c o n f i g u r a t i o n w i l l c o n f e r g r e a t o p e r a t i o n a l f l e x i b i l i t y a n d p e r m i t a c o m b i n a t i o n o f h i g h - s p e e d l o w - l e v e l f l i g h t , good r a n g e a n d a n e x c e l l e n t t a k e - o f f a n d l a n d i n g p e r f o r m ­
a n c e . 

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h o u r s b y t h e e n d o f 
1977, a n d t e s t d a t a i n d i c a t e t h a t S e r v i c e r e q u i r e m e n t s w i l l be m e t . 

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T h e T o r n a d o F 2 a i r - d e f e n c e v a r i a n t i s now i n f u l l d e v e l o p m e n t w i t h t h e f i r s t o f t h r e e d e v e l o p m e n t a i r c r a f t u n d e r c o n s t r u c t i o n . 

I t w i l l h a v e a n e x c e l l e n t l o i t e r c a p a b i l i t y a n d i t s armament w i l l i n c l u d e S k y F l a s h m e d i u m - r a n g e a n d A I M 9 L 
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r a n g e a i r - t o - a i r m i s s i l e s , a n d c a n n o n . 

T h e f i r s t p h a s e o f t h e a i r b o r n e t r i a l s o f an i m p o r t a n t new a i r - i n t e r c e p t r a d a r f o r t h e T o r n a d o F 2 
h a s b e e n c o m p l e t e d a n d t h e s e c o n d p h a s e , t o d e m o n s t r a t e f u l l m i s s i o n c a p a b i l i t y , w i l l b e i n g s h o r t l y . 

N i m r o d AEW. 

F u l l d e v e l o p m e n t i s u n d e r way t o c o n v e r t e l e v e n N i m r o d a i r c r a f t t o t h e AEW r o l e . 

T h e y w i l l e n t e r s e r v i c e p r o g r e s s i v e l y i n t h e e a r l y 
1 9 8 0 s , r e p l a c i n g t h e S h a c k l e t o n . 

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T h e a i r c r a f t i s p l a n n e d t o b e i n t e r o p e r a b l e t o t h e maximum e x t e n t p o s s i b l e w i t h o t h e r NATO a i r b o r n e e a r l y w a r n i n g s y s t e m s . 

T h e H a r r i e r / J a g u a r s u c c e s s o r . 

S t u d i e s o f v a r i o u s d e s i g n s f o r an a i r c r a f t t o r e p l a c e t h e H a r r i e r and J a g u a r a r e c o n t i n u i n g w i t h t h e a i m o f c o m b i n i n g a c a p a b i l i t y f o r b a t t l e f i e l d a t t a c k a n d f o r a i r c o m b a t i n one a i r f r a m e . 

T h e p o s s i b i l i t y o f d e v e l o p i n g s u c h a n a i r c r a f t c o l l a b o r a t i v e l y i s b e i n g e x p l o r e d w i t h a number o f p o t e n t i a l p a r t n e r s i n t h e E P G . 

S u p p o r t H e l i c o p t e r s . 

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C h i n o o k h e l i c o p t e r s f r o m t h e U n i t e d S t a t e s . 

T h e h e l i c o p t e r s would be e q u i p p e d w i t h B r i t i s h e q u i p m e n t , where a p p r o p r i a t e , t o e n s u r e c o m m o n a l i t y w i t h e q u i p m e n t a l r e a d y i n s e r v i c e w i t h t h e R o y a l A i r F o r c e . 

A t t h e same t i m e a number o f W e s s e x h e l i c o p t e r s w o u l d be w i t h d r a w n f r o m t h e f r o n t - l i n e a n d t r a n s f e r r e d t o o t h e r r o l e s , o r p l a c e d i n r e s e r v e . 

Sea K i n g S e a r c h end R e s c u e H e l i c o p t e r s . 

T h e f i r s t o f t h e S e a K i n g s e a r c h a n d r e s c u e h e l i c o p t e r s h a v e b e e n d e l i v e r e d t o t h e R o y a l A i r F o r c e . 

T h e y w i l l e n t e r s e r v i c e d u r i n g t h e y e a r a n d t h e W h i r l w i n d s t h e y r e p l a c e w i l l b e w i t h d r a w n . 

## A I R C R A F T I N S E R V I C E

N i m r o d M a r i t i m e R e c o n n a i s s a n c e 
(MR) A i r c r a f t . 

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The f i r s t r e f i t t e d N i m r o d MR2s w i t h t h e p r o c e s s o r , t h e a s s o c i a t e d a c t i v e a t t a c k and l o n g - r a n g e p a s s i v e s o n o b u o y s , and t h e S e a r c h w a t e r r i d a r a r e due t o e n t e r s e r v i c e n e x t y e a r . 

T h e r e f i t i s t o be c o m p l e t e d b y t h e m i d - 1 9 8 0 ' s . 

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p l a c e d a n d d e l i v e r i e s s h o u l d s t a r t n e x t 

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R e q u i r e m e n t s f o r f u t u r e s h o r t - r s n g e a i r - t o - a i r m i s s i l e s f o r t h e P h a n t o m a n d T o r n a d o F 2 w i l l be met b y t h e p r o c u r e m e n t o f A I M 9 L m i s s i l e s most o f w h i c h , s u b j e c t t o s a t i s f a c t o r y n e g o t i a t i o n , w i l l b e m a n u f a c t u r e d b y a E u r o p e a n c o n s o r t i u m o f w h i c h t h e U n i t e d K i n g d o m w i l l be a member. 

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s k i m m i n g m i s s i l e , w h i c h w i l l b e f i t t e d t o t h e B u c c a n e e r i n t h e e a r l y 1980s t o r e p l a c e T V M a r t e l and w i l l l a t e r b e c a r r i e d b y t h o s e T o r n a d o GR1s w h i c h o p e r a t e i n t h e m a r i t i m e s t r i k e / a t t a c k r o l e . 

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1 s e l e c t r o n i c c o u n t e r m e a s u r e s 
(ECM) d e f e n c e s . 

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l b h i g h - e x p l o s i v e bombs a n d l a s e r ­
d e s i g n a t o r p o d s f o r use on B u c c a n e e r s w i l l be d e l i v e r e d . 

A g r e e m e n t i n p r i n c i p l e has b e e n r e a c h e d w i t h t h e U n i t e d S t a t e s f o r t h e c o - o p e r a t i v e d e v e l o p ­
ment o f an a d v a n c e d a i r f i e l d a t t a c k s y s t e m . 

O t h e r weapons p r o j e c t s i n c l u d e s t u d i e s o f a n t i - a r m o u r and d e f e n c e - s u p p r e s s i o n w e a p o n s , p l a n n e d t o e n t e r s e r v i c e i n t h e 
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m i s s i o n a n d c o m p u t e r s w i t c h i n g t e c h n i q u e s , i s b e i n g i n v e s t i g a t e d . 

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(UHF) a i r b o r n e r a d i o s y s t e m s a r e b e i n g i n s t a l l e d i n most R A F a i r c r a f t t o r e p l a c e o b s o l e s c e n t e q u i p m e n t a n d t o s a t i s f y r e v i s e d i n t e r n a t i o n a l c o m p a t i b i l i t y s t a n d a r d s ; 
new V H F 
a n d UHF g r o u n d r a d i o s a r e a l s o b e i n g i n t r o d u c e d . 

T e c h n i q u e s t o i m p r o v e b e y o n d - l i : ; c - o f - s i g h t r a d i o s y s t e m s a r e b e i n g s t u d i e d a n d t h e i n s t a l l a t i o n o f a new H F r a d i o g r o u n d / a i r n e t w o r k f o r S t r i k e Command a i r c r a f t b a s b e g u n . 

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o p e r a t i n g c l o s e l y w i t h i t s A l l i e s t o e n s u r e t h a t , v/here n e c e s s a r y , f u t u r e c o m m u n i c a t i o n s s y s t e m s a r e i n t e r o p e r a b l e . 

E l e c t r o n i c W a r f a r e . 

P a s s i v e r a d a r w a r n i n g e q u i p m e n t i s b e i n g f i t t e d i n a v a r i e t y o f c o m b a t a i r c r a f t a n d a c t i v e E C M e q u i p m e n t i s p l a n n e d t o b e f i t t e d i n t h e T o r n a d o GR1 a n d t h e J a g u a r G R 1 . 

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"*"
Aty a n d on r e d u c i n g c o s t s . 

I n o r d e r t o b u i l d up e x p e r i e n c e n c e d t e c h n o l o g i e s r e l e v a n t t o new a i r c r a f t a n d w e a p o n s , p r o g r a m m e s a r e b e i n g c a r r i e d o u t on t h e use o f c o m p o s i t e o r a t o r p r o s f o r n e
 
C
0
 
e r s
 
o n
 
t n e te l i P t  
' y
 
a p p l i c a t i o n o f A c t i v e C o n t r o l t o e n a b l e t h e p i l o t t o g e t maximum c a p a b i l i t y f r o m t h e a n ^ 
a l l o w g r e a t e r f r e e d o m t o t h e d e s i g n e r ; 
a n d o n a d v a n c e d t o
 
a
"  i r m i s s i l e s . 

327. 

T h e d e f e n c e r e s e a r c h programme i s c a r r i e d o a t b o t h i n R & D 
e s t a b l i s h m e n t s a n d u n d e r o u t s i d e c o n t r a c t s . 

I t c o v e r s a w i d e r a n g e o f a c t i v i t i e s e x t e n d i n g f r o m t h e g e n e r a t i o n a n d a s s e s s m e n t o f new i d e a s t o e x p e r i m e n t a l w o r k a n d e x p l o r a t o r y d e v e l o p m e n t u n d e r t a k e n t o t h e p o i n t where an o p e r a t i o n a l s t a f f t a r g e t i s f o r m u l a t e d a g a i n s t w h i c h f e a s i b i l i t y s t u d i e s a n d f u l l ­
s c a l e d e v e l o p m e n t o f s p e c i f i c p r o j e c t s c a n be i n i t i a t e d . 

One o f t h e m a i n o b j e c t i v e s o f d e f e n c e r e s e a r c h , a c c o u n t i n g f o r a b o u t t w o - t h i r d s o f t h e e x p e n d i t u r e , i s t h e r e m o v a l o f m a j o r s c i e n t i f i c a n d t e c h n i c a l u n c e r t a i n t i e s b e f o r e h e a v y e x p e n d i t u r e i s c o m m i t t e d t o d e v e l o p m e n t . 

T h e r e m a i n i n g o n e - t h i r d o f t h e e x p e n d i t u r e i s c o n c e r n e d w i t h m a i n t a i n i n g a n a d e q u a t e s c i e n t i f i c a n d t e c h n o l o g i c a l b a s e t o meet f u t u r e m i l i t a r y n e e d s . 

I n 1978/79 r e s e a r c h i s e x p e c t e d t o c o s t 
£129 
m i l l i o n . 

328. 

T h e M i n i s t r y o f D e f e n c e a l s o manages p r o g r a m m e s o f r e s e a r c h a n d t e c h n o l o g y on b e h a l f o f t h e D e p a r t m e n t o f I n d u s t r y a n d t h e C i v i l A v i a t i o n A u t h o r i t y . 

I n many c a s e s t h e s e a r e r u n as s e p a r a t e c i v i l p r o g r a m m e s ; 
i n o t h e r s , j o i n t p r o g r a m m e s a i m e d a t m i l i t a r y
 
8 J 3 ^ 
5 
c i v i l o b j e c t i v e s a r e p o s s i b l e . 

T h e t o t a l e f f o r t i n v o l v e d c o n t i n u e t o r e d u c e . 

I n e a c h c a s e a n a p p r o p r i a t e s h a r e o f t h e c o s t s i s met 
^ 
1 
b y t h e c i v i l a u t h o r i t y c o n c e r n e d . 

I n a d d i t i o n , some o f t h e f a c i l a n d c a p a b i l i t i e s r e q u i r e d i n e s t a b l i s h m e n t s f o r d e f e n c e p u r p o s e ^ 
0 
Y^C AO
s e r v e t h e c i v i l r e s e a r c h n e e d s o f p u b l i c a n d i n d u s t r i a l c o n c e r n s w o r k o n r e p a y m e n t i s c a r r i e d o u t o n t h e i r b e h a l f . 

T o t a l r e c e i p t ^ 
^ 
b o t h s o u r c e s a r e e s t i m a t e d t o b e 
£ 2 4 
m i l l i o n i n 1978/79* 
 
0 
t h e c r e a t i o n o f B r i t i s h A e r o s p a c e i n 1977, some r e - a r r a n g e m e n t r e s p o n s i b i l i t i e s , e s p e c i a l l y o n n o n - d e f e n c e w o r k , w i l l be r e q u i r e s a n d t h e i m p l i c a t i o n s , i n c l u d i n g t h o s e f o r d e f e n c e R &  
D e s t a b H  
a r e b e i n g e x a m i n e d . 

f the 
329. 

A s a r e s u l t o f t h e Management R e v i e w t h e h e a d q u a r t e r s 
01 
C o n t r o l l e r R &  
D E s t a b l i s h m e n t s a n d R e s e a r c h 
( C E R ) a r e b e i n g 
^ 
r e o r g a n i s e d . 

T h e m a i n f e a t u r e i s t h e d e l e g a t i o n t o R & D 
e s t a b l
1 ^ 
e n i e r i m e n t s o f r e s p o n s i b i l i t i e s f o r t h e d e t a i l e d f o r m u l a t i o n , mane6
*nd c o - o r d i n a t i o n o f e x t r a m u r a l a n d i n t r a m u r a l r e s e a r c h p r o g r a m m e s , 
* i t h o v e r a l l p o l i c y a n d c o n t r o l e x e r c i s e d b y t h e r e d u c e d a n d 
^ o r g a n i s e d h e a d q u a r t e r s u n d e r C E R . 

530. 

F o l l o w i n g t h e a n n o u n c e m e n t i n t h e 
1977 
S t a t e m e n t on t h e D e f e n c e 
^ t i m a t e s t h a t a s e p a r a t e d e f e n c e e s t a b l i s h m e n t was n o t r e q u i r e d 
0 * M i c r o b i o l o g i c a l r e s e a r c h , t h e C e n t r a l P o l i c y R e v i e w S t a f f a n d t h e M e d i c a l R e s e a r c h C o u n c i l h a v e c a r r i e d o u t s t u d i e s o f t h e c i * i l r e q u i r e m e n t s f o r t h e M i c r o b i o l o g i c a l R e s e a r c h E s t a b l i s h m e n t a t P o r t o n . 

T h e G o v e r n m e n t i s c o n s i d e r i n g t h e f u t u r e o f 
*
E 
as a c i v i l e s t a b l i s h m e n t i n t h e l i g h t o f t h e s t u d i e s . 

A n y P
r o P o s a l  w i l l b e t h e s u b j e c t o f c o n s u l t a t i o n s w i t h t h e S t a f f s A s s o c i a t i o n s a n d T r a d e U n i o n s c o n c e r n e d . 

## Royal Ordnance F A C T O R I E S

331.  
M , 
-Ltie R o y a l O r d n a n c e F a c t o r i e s o r g a n i s a t i o n i s now i n i t s y e a r o f o p e r a t i o n u n d e r a t r a d i n g f u n d . 

T h i s m e t h o d o f a i l c i n g , t o g e t h e r w i t h e x t e n s i o n s t o t h e d e l e g a t e d p o w e r s g r a n t e d e i n t r o d u c t i o n , p r o v i d e s t h e means f o r i t t o c o n t i n u e t o ilal*ovp m o t i v a t i o n a n d e f f i c i e n c y a n d e x t e n d t h e s c o p e o f i t s 
0 p 6 * a t i x o n s . 

T h e o r g a n i s a t i o n c o n t i n u e s t o meet i t s f i n a n c i a l l v e and t o make some p r o v i s i o n f o r r e s e r v e s . 

B e s i d e s m e e t i n g ds o f t h e S e r v i c e s o v e r a w i d e r a n g e o f d e f e n c e e q u i p m e n t , i t i s b r o a d e n i n g t h e b a s e o f i t s o v e r s e a s b u s i n e s s b o t h o f o v e r s e a s c u s t o m e r s a n d i t s r a n g e o f d e f e n c e e q u i p m e n t . 

332. 

D u r i n g 1978/79 i t s c a s h r e c e i p t s a r e e x p e c t e d t o r i s e t o some £370 m i l l i o n , o f w h i c h w e l l o v e r h a l f w i l l be f r o m e x p o r t s . 

E q u i p m e n t m a n u f a c t u r e d d u r i n g t h e y e a r w i l l i n c l u d e a r m o u r e d e f i g h t i n g v e h i c l e s , b o t h h e a v y and l i g h t , a n d i n c l u d i n g m a i n b a t t l t a n k s ; 
t h e 
105 
l i g h t g u n ; 
t h e c o m b a t e n g i n e e r t r a c t o r ; 
s m a l l a r m s ; 
a v/ide v a r i e t y o f a m m u n i t i o n ; f u s e s ; 
e x p l o s i v e s a n d p r o p c o m p o n e n t s f o r use b y B r i t i s h i n d u s t r y ; 
a n d s p a r e s o f a l l k i n d s . 

T h e s c o p e o f d e s i g n a n d d e v e l o p m e n t w o r k a l s o c o n t i n u e s t o widen a n d i n c l o s e c o l l a b o r a t i o n w i t h t h e M i n i s t r y ' s R &  
D 
e s t a b l i s h m e n t s w i t h B r i t i s h i n d u s t r y , a n d i n t e r n a t i o n a l c o l l a b o r a t i o n i n t h e d e v e l o p m e n t a n d p r o d u c t i o n o f e q u i p m e n t c o n t i n u e s t o b e f o s t e r e d ­
333. 

A n i n c r e a s e d c a p i t a l i n v e s t m e n t programme i s t o b e u n d e r t a ^ 
ed j i n o r d e r t o m a i n t a i n t h e s t a n d a r d o f p l a n t a n d b u i l d i n g s r e q u i r ts etoen t o i n t r o d u c e new t e c h n i q u e s and p r o c e s s e s ; 
and t o meet r e q u i r f o r new e q u i p m e n t . 

T h e f u t u r e c o m p u t e r r e q u i r e m e n t s o f t h e 
 
t 
0 
o r g a n i s a t i o n a r e a l s o u n d e r r e v i e w , a n d s t e p s a r e b e i n g t a k e n i n t r o d u c e a p p r o p r i a t e c h a n g e s i n a c c o u n t i n g p r a c t i c e i n p r e p e n f o r t h e e x p e c t e d a d o p t i o n o f c u r r e n t c o s t a c c o u n t i n g . 

334. 

T h e s i z e o f t h e o v e r a l l m a n u f a c t u r i n g programme i s expec i n
 
g t o r e q u i r e a s l i g h t l y i n c r e a s e d work f o r c e i n 1978/79* 
T r a i n  
w i l l c o n t i n u e t o be g i v e n s t r o n g e m p h a s i s , p a r t i c u l a r l y c o u r s e s d^ 
r e l a t i n g t o management a n d s a f e t y . 

T h e number o f a p p r e n t i c e s t r a i n i n g i s a g a i n e x p e c t e d t o i n c r e a s e , t o meet t h e r e q u i r e m e s k i l l e d men. 

## Defence S A L E S

O v e r s e a s s a l e s o f d e f e n c e e q u i p m e n t and a s s o c i a t e d s e r v i c e s C
o v e r a w i d e r a n g e o f i t e m s p r o d u c e d b y B r i t i s h i n d u s t r y and b y e
^
n  R o y a l O r d n a n c e F a c t o r i e s , w i t h t h e D e f e n c e S a l e s O r g a n i s a t i o n P r o v i d i n g s u p p o r t , a s s i s t a n c e a n d a d v i c e . 

T h e s e s a l e s c o n t i n u e t o B l a ^
e 
6 
s u b s t a n t i a l c o n t r i b u t i o n t o t h e c o u n t r y ' s b a l a n c e o f p a y m e n t s . 

"Shipment s a l e s w i l l p r o b a b l y amount t o a t l e a s t £900 m i l l i o n i n 

1
9
 7
  8
  /
   7
    9
    .  

## Manpower Recruitment, Re-Engagement And Wastage, And **Redundancy**

R e c r u i t m e n t o f men a n d women t o a l  
l t h r e e S e r v i c e s h a s r e m a i n e d g e n e r a l l y s a t i s f a c t o r y a n d , w i t h t h e e x c e p t i o n o f s e v e r a l k e y R A F 
0 - ^ i c e r b r a n c h e s a n d c e r t a i n o t h e r s p e c i a l i s t a r e a s , r e q u i r e m e n t s h a v e b e e n met. 

I n t h e t w e l v e months t o 
31 
M a r c h 1978 
a t o t a l o f 
39,800 
0^*"icers, s e r v i c e m e n a n d s e r v i c e w o m e n a r e e x p e c t e d t o b e r e c r u i t e d C o m p a r e d w i t h 4 0 , 2 4 4 r e c r u i t e d d u r i n g t h e p r e v i o u s y e a r . 

F u r t h e r d e t a i l s o f r e c r u i t m e n t f o r t h e f i r s t n i n e months o f 1977/78 and f o r the same p e r i o d i n t h e p r e v i o u s y e a r a r e g i v e n i n A n n e x G T a b l e 
5. 

geC] f i t m e n t o f O f f i c e r s The number o f R o y a l N a v y o f f i c e r s e n t e r i n g f r o m c i v i l i a n has b e e n g e n e r a l l y s a t i s f a c t o r y b u t t h e r e a r e s t i l l s h o r t a g e s e n g i n e e r o f f i c e r s a n d m e d i c a l o f f i c e r s . 

T h e R o y a l M a r i n e s have 
* once a g a i n , r e c r u i t e d t h e r e q u i r e d n u m b e r s .  
R e c r u i t m e n t o f A r m y o f f i c e r s h a s c o n t i n u e d t o i m p r o v e .  
n7 
a p p l i c a n t s a r e o f h i g h q u a l i t y and t h i s h a s b e e n r e f l e c t e d i n 
 
the award o f 43 u n d e r g r a d u a t e c a d e t s h i p s a n d 105 
b u r s a r i e s i n t h e 
*a t s h i n e months o f 
1977-
A new company, t h e R o w a l l a n **C o m p a n y ,**  
D e e n f o r m e d a t t h e R o y a l M i l i t a r y A c a d e m y S a n d h u r s t t o p r o v i d e  
^-onal l e a d e r s h i p t r a i n i n g , p r i o r t o f o r m a l e n t r y i n t o t h e 
 

a ^
e m y ,  f
0  
t h o s e 
o f f i c e r 
a p p l i c a n t s 
f o r whom t h e R e g u l a r  
r
s s i o n s B o a r d c o n s i d e r s i t d e s i r a b l e . 

R e c r u i t m e n t o f q u a l i f i e d d o c t o r s r e m a i n s b e l o w t a r g e t b u t t h e e n t r y o f m e d i c a l c a d e t s c o n t i n u e s t o be e n c o u r a g i n g . 

4 0 4 . 

T h e r e h a s b e e n a s h o r t a g e o f c a n d i d a t e s o f a d e q u a t e g u s l i ^ 
t o meet t h e r e c r u i t i n g r e q u i r e m e n t s f o r t h e R o y a l A i r F o r c e . 

1* 
h a s n o t p r o v e d p o s s i b l e t o r e c r u i t t h e n u m b e r s r e q u i r e d f o r t h e G e n e r a l D u t i e s 
( P i l o t , N a v i g a t o r , A i r c r a f t C o n t r o l a n d F i g h t e r C o n t r o l ) , E n g i n e e r , S e c u r i t y 
( R A F R e g i m e n t ) 
a n d A d m i n i s t r a t i v e e
( E d u c a t i o n ) 
B r a n c h e s , i n some c a s e s b y a s u b s t a n t i a l m a r g i n .  
^ 
U n i v e r s i t y C a d e t s h i p Scheme h a s a t t r a c t e d o n l y h a l f t h e e x p e c t e d number o f r e c r u i t s t o t h e G e n e r a l D u t i e s , E n g i n e e r a n d A d m i n i s w -
B r a n c h e s . R e c r u i t m e n t o f S e r v i c e m e n 
4 0 5 . 

T h e r e c r u i t i n g r e q u i r e m e n t s f o r most b r a n c h e s i n t h e RoJ
8^ 
 
8 
D 
N a v y w i l l b e met b u t t h e r e w i l l be a s h o r t f a l l o f a r t i f i c e r s , a r e a i n w h i c h c e r t a i n c a t e g o r i e s a r e a l r e a d y b e l o w e s t a b l i s h m e n t a p p l i c a t i o n r a t e f o r R o y a l M a r i n e s o t h e r r a n k s r e m a i n s b u o y a n t a n d t a r g e t s s h o u l d b e a c h i e v e d . 

4 0 6 . 

Due t o t h e r u n d o w n o f t h e A r m y , t h e r e c r u i t m e n t t a r g e t s o l d i e r s f o r 1977/78 a r e l o w e r t h a n i n p r e v i o u s y e a r s a n d t h e p r o s p e c t s f o r m e e t i n g them a r e g o o d . 

T h e r e c r u i t m e n t t a r g e t 
1978/79 and f u t u r e y e a r s w i l l b e h i g h e r t o p r e v e n t a manpower d e f i c i t i n t h e e a r l y 1980's. 

o U
 
S 
4 0 7 . 

T h e 1977/78 a i r m e n t a r g e t i s v e r y s i m i l a r t o t h e p r e v i except  
ye8r's a n d t h e r e h a v e b e e n no s e r i o u s r e c r u i t i n g p r o b l e m s , i n some s u p p o r t t r a d e s . 

## Re-Encasement

408. 

R e - e n g a g e m e n t r a t e s i n a l l t h r e e S e r v i c e s r e m a i n s a t i s f a c t o r y . 

## Vastsre

409. 

T h e r e h a s b e e n a s i g n i f i c a n t i n c r e a s e i n t h e number o f t r a i n e d o f f i c e r s who h a v e a p p l i e d f o r p r e m a t u r e v o l u n t a r y r e l e a s e from the A r m y i n t h e f i r s t s i x months o f 1
9
7
7
/
7
8 a n d t h e r a t e o f exit f o r s o l d i e r s h a s a l s o b e e n h i g h . 

T h e R o y a l A i r F o r c e i s e x p e r ­
iencing a n e q u a l l y s u b s t a n t i a l r i s e i n a p p l i c a t i o n s f r o m t r a i n e d o f f i c e r s and men, p a r t i c u l a r l y t h o s e w i t h c o n s i d e r a b l e s k i l l and e x p e r i e n c e . 

No such i n c r e a s e h a s b e e n e v i d e n t i n t h e R o y a l N a v y . 

## Redundancy

410. 

I n t h e R o y a l N a v y t h e l i m i t e d programme o f o f f i c e r r e d u n d a n c y , i n v o l v i n g a t o t a l o f 
50 
C o m m a n d e r s , w i l l h a v e b e e n c o m p l e t e d b y 
1 A p r i l 1
9
7
9
* 
T h e A r m y ' s r e d u n d a n c y programme w i l l b e c o m p l e t e d in 1979/80; b y 31 December 1
9
7
7 some 820 
o f f i c e r s a n d 3,500 
s o l d i e r s had been s e l e c t e d f o r r e d u n d a n c y , a l  
l e x c e p t 7 o f f i c e r s a n d 134­
aoldiers b e i n g v o l u n t e e r s . 

R e d u n d a n c y i n t h e R o y a l A i r F o r c e i s dearly c o m p l e t e a n d i n t h e t h r e e y e a r s up t o M a r c h 1
9
7
8 
728 
o f f i c e r s and 
1
,
6
9
5 
a i r m e n w i l l h a v e l e f t t h e R o y a l 
^ir F o r c e . 

T h e scheme h a s b e e n p r e d o m i n a n t l y v o l u n t a r y t h o u g h 
2
7
1 
o f f i c e r s were made r e d u n d a n t c o m p u l s o r i l y . 

## Women 1S S E R V I C E S

^11. 

Members o f Q u e e n A l e x a n d r a ' s R o y a l N a v a l N u r s i n g S e r v i c e aod the Women's R o y a l N a v a l S e r v i c e 
(WRNS) became s u b j e c t t o t h e N a v a l D i s c i p l i n e A c t o n 1 J u l y 1977* 
T h e M i n i s t r y o f D e f e n c e i s a l s o c o n t i n u i n g t h e p o l i c y o f p r o v i d i n g w i d e r e m p l o y m e n t f o r WRNS p e r s o n n e l a n d some 4-00 RN s h o r e a p p o i n t m e n t s o r i g i n a l l y c o m p l e m e n t e d f o r RN o f f i c e r s b u t w h i c h c o u l d be f i l l e d b y WRNS 
o f f i c e r s o n a n o p p o r t u n i t y b a s i s h s v e b e e n i d e n t i f i e d . 

So f a r 
4-3 
WRNS o f f i c e r s a r e f i l l i n g , o r h a v e b e e n n o m i n a t e d f o r , t h i s Q 
e d t y p e o f a p p o i n t m e n t , a n d members o f t h e WRNS w i l l t h u s b e e m p l y i n more o f t h e s e n i o r p o s t s i n a r e a s o f Management, I n t e l l i g e n c e , C o m m u n i c a t i o n s , O p e r a t i o n a l s u p p o r t , a n d S t 8 f f d u t i e s . 

I n o f WRNS r a t i n g s , a l t e r a t i o n s t o t h e t r a i n i n g , r o l e a n d s t r u c t u r e D 
o f t h e WRNS R e g u l a t i n g c a t e g o r y h a v e b e e n made t o a l i g n i t w i t o n t h e RN R e g u l a t i n g b r a n c h so t h a t a g r e a t e r d e g r e e o f i n t e g r e t i i n e m p l o y m e n t c a n be a c h i e v e d . 

A WRNS P h y s i c a l T r a i n i n g a n d 
* 
s t  
^ 
R e c r e a t i o n c a t e g o r y h a s b e e n s e t up a n d w i l l o p e n i  
n 1978* 
c o n t i n u e s i n t o t h e o p p o r t u n i t i e s f o r b r o a d e n i n g t h e s c o p e o f e m p l o y m e n t o f t h e Women
1 s R o y a l A r m y C o r p s i n t h e A r m y . 

Members o f t h e Women
1s R o y a l A i r F o r c e 
(WRAF) e r e e m p l o y e d t h r o u g h o u t t h e R o y a l A i r F o r c e 8t a l l l e v e l s up t o A i r R a n k . 

I n May 1977
D i r e c t o r o f t h e WRAF was e l e c t e d c h a i r m a n o f t h e C o m m i t t e e on Women i n NATO F o r c e s f o r a t w o - y e a r t e r m . 

## R E S E R V E S And Cadet F O R C E S

4 1 2 . 

T h e new a r r a n g e m e n t s s i n c e t h e l a p s e o f t h e p o s t o f A d  
^ 
tb Commanding R o y a l N a v a l R e s e r v e s a r e w o r k i n g w e l l . 

T h e s t r e n g t h e V o l u n t e e r N a v a l R e s e r v e s o n 31 
O c t o b e r 
1977 
was £ 
^ 
o f f i c e r s and /  
" 
J 
r a t i n g s . 

T h e s t r e n g t h o f t h e R o y a l 
*
e s e r v e was /  
" 
J 
o f f i c e r s a n d /  
" 
J 
men. T h e TAVR 
h a d n o t h e r v e r y s u c c e s s f u l n a t i o n a l p u b l i c i t y c a m p a i g n i n the s p r i n g o f 
1977 
^h P a r t i c u l a r n e e d s o f S c o t l a n d a n d N o r t h e r n I r e l a n d w e r e e c o g n i s e d b y m o u n t i n g p u b l i c i t y c a m p a i g n s t h e r e i n t h e a u t u m n . 

 
Th  
e s t r e n g t h o f t h e TAVR on 31 
December 
1977 
was /  
" 
J 
Q c l u d i n g /  
" 
J 
 
60,  
women, c o m p a r e d w i t h a t o t a l s t r e n g t h o f 
*104 on 31 
December 
1976. 

The R o y a l A i  
r F o r c e R e g u l a r a n d  
V o **l u n t**  
e e r R e s e r v e s s t r e n g t h was 
3902 
o n 31 December 1977* 
T h e e
^e r s i t y O f f i c e r T r a i n i n g C o r p s h a v e a g a i n p r o v e d r 
 
v a l u a b l e . 

the p a s t y e a r t h e y h a v e i n c r e a s e d i n s i z e a n d h a v e p r o d u c e d o f f i c e r s f o r t h e R e g u l a r A r m y a n d 162 
f o r t h e T A V R . 

^he C a d e t F o r c e s c o n t i n u e t o p l a y a n i m p o r t a n t r o l e i n d o p i n g amongst y o u n g p e o p l e b e t w e e n t h e a g e s o f 
12 a n d 20 
t h e 
8
o O a l q u a l i t i e s o f s e l f - d i s c i p l i n e a n d l e a d e r s h i p a n d t o a 8 e an i n t e r e s t i n t h e A r m e d F o r c e s . 

S i n c e 
1 J a n u a r y 
1978 
 
the  
e a C a d e t C o r p s h a s b e e n r e o r g a n i s e d i n t o s i x a r e a s more c l o s e l y 
^ S n e d t o t h e R o y a l N a v y f s g e o g r a p h i c a l a r e a s i n t h e U n i t e d 
^Bdom, p e r m i t t i n g e a c h o f t h e a r e a F l a g O f f i c e r s t o t a k e a more e c t i n t e r e s t i n t h e C o r p s . 

T h e s i z e o f t h e A r m y C a d e t T r a i n i n g x s t o be i n c r e a s e d t o e n a b l e them t o o r g a n i s e a d v e n t u r e a i n i t * 8 f o r t h e C a d e t F o r c e s . 

T h i s w i l l e n a b l e t h e A r m y C a d e t a i n 8 
Teams t o t a k e o v e r one o f t h e t a s k s p r e v i o u s l y c a r r i e d D * the A r m y Y o u t h Teams w h i c h a r e t o be d i s b a n d e d b y A p r i l 
1978 
e i n t e r e s t s o f economy i n manpower a n d e x p e n d i t u r e . 

T h e V e n t u r e Mk 2 s e l f - l a u n c h i n g g l i d e r h a s now b e e n i n t r o d u c e d i n t o s e r v i c e t o augment t h e g l i d i n g f a c i l i t i e s f o r A i r C a d e t s . 

T h i s u s e f u l a n d p o p u l a r a c t i v i t y c o n t i n u e s t o p l a y a n i m p o r t a n t p a r t i n a t t r a c t i n g r e c r u i t s f o r t h e R o y a l A i r F o r c e . 

## P A Y And Other Conditions Of S E R V I C E

P a y a n d P e n s i o n s 
4 1 4 . 

I n t h e i r S i x t h R e p o r t (1977), t h e R e v i e w B o d y on A r m e d F o r c e s P a y r e c o m m e n d e d t h e p a y m e n t o f a s u p p l e m e n t o f
 
5
% o f t o t a l e a r n i n g s , s u b j e c t t o a c a s h minimum o f £ 2 . 5 0 a n d a n u p p e r c a s h maximum o f £ 4 
a week, t o a l  
l members o f t h e A r m e d F o r c e s w i t h i n t h e i r t e r m s o f r e f e r e n c e . 

P r o p o r t i o n a t e r a t e s o f s u p p l e m e n t wer^ 
s 
0 
r e c o m m e n d e d f o r j u n i o r s e r v i c e m e n a n d women. 

T h e R e v i e w B o d y a ^ 
r e c o m m e n d e d i n c r e a s e s i  
n c h a r g e s f o r f o o d a n d a c c o m m o d a t i o n -
a  
n T h e s e r e c o m m e n d a t i o n s , w h i c h c o m p l i e d w i t h t h e G o v e r n m e n t
1 s g u i ^
on i n c o m e s s e t o u t i n t h e W h i t e P a p e r 
"The A t t a c k o n I n f l a t i o n f r o D
1 
T h e S e c o n d Y e a r " 
(Cmnd 6507), w e r e i m p l e m e n t e d w i t h e f f e c t
1 A p r i l 
1977. 

415. 

T h e A r m e d F o r c e s P e n s i o n Scheme p r o v i d e s members t h e t h r e e S e r v i c e s w i t h r e t i r e m e n t p e n s i o n s a n d t e r m i n a l g r a n t s w h i c t l t o g e t h e r w i t h a r a n g e o f d e a t h , i n j u r y a n d o t h e r b e n e f i t s
* 
A 
t a k e a c c o u n t o f t h e s p e c i a l c i r c u m s t a n c e s o f a S e r v i c e c a r e e r , number o f i m p r o v e m e n t s t o t h e Scheme h a v e b e e n i n t r o d u c e d m y e a r s . 

I n a c c o r d a n c e w i t h G o v e r n m e n t p o l i c y f o r p u b l i c s e c t o r s c h e m e s i t i s i n t e n d e d t h a t members o f t h e Scheme s h o u l d be c o n t r a c t e d o u t o f t h e a d d i t i o n a l p e n s i o n e l e m e n t o f t h e new earnings r e l a t e d State scheme which comes i n t o operation on 

6 A p r i l 1978 and a p p l i c a t i o n 
                                has 
                                    been made to 
                                                   the Occupational 

Pensions Board for a contracting-out c e r t i f i c a t e i n accordance 

with the 
         p r o v i s i o n s o f 
                          the 
                               S o c i a l S e c u r i t y Pensions Act 1975-

Contracting out 
                w i l l have no e f f e c t on current b e n e f i t s but w i l l 

Permit reduced N a t i o n a l Insurance c o n t r i b u t i o n s and 
                                                            an extension 

i a the p r o v i s i o n of 
                                     preserved pensions f o r e a r l y l e a v e r s . 

Reparations are 
                 i n 
                   hand to enable accrued pension r i g h t s to 
                                                             be 

transferred both i n t o and 
                           out 
                                o f 
                                   the 
                                       Scheme. 
                                                

## £Gaily **Welfare**

The Naval Personal and Family Service was formally inaugurated on 1 A p r i l 1977- 
T n i s brings together, under the 

overall c o n t r o l o f 
                     the 
                         Commander-in-Chief Naval Home Command, 
                                                                     the E l a t i n g Naval welfare and 
                                                community s e r v i c e s and 
                                                                                           r e l a t e d aspects 

o
  f  housing. 
                                           In each Area a senior o f f i c e r i n 
                                                                                                                                                                  the 
                                                                                                                                                                                Command s t r u c t u r e  

w
  i U be responsible for ensuring the 
                                                                                                                                  co-ordination o f these  

d e v i c e s . 
                   S a i l o r s and 
                                         F a m i l i e s Advice Bureaux manned by senior  

P
   a  t i n   have been opened i n 
                                                                                                                       a l l 
                                                                                                                                         the 
                                                                                                                                                           main Naval p o r t s . The bureaux 
                                                                                                                                                                                                                                                                                                  
                     8
                        s 

p P o v i d e a quick and easy information s e r v i c e for Naval personnel  

a
n
a  their f a m i l i e s on 
a wide range o f 
welfare matters **and are**  
Moving popular and most **s u c c e s s f u l .**  

^ I c  
     e 
         Voting 
                    

H 7 . 

The 
     new a r r a n g e m e n t s 
                              f o r 
                                    t h e r e g i s t r a t i o n 
                                                            o f 
                                                                S e r v i c e 
                                                                            p e r s o n n e l 

t h e i r 
            s p o u s e s , 
                               c o n t a i n e d 
                                                     i n t h e 
                                                                    R e p r e s e n t a t i o n 
                                                                                                     o f 
                                                                                                           t h e 
                                                                                                                    P e o p l e 

t n e ( ^ 
                   f o r c e s ) 
                                                             A c t 1976, 
                                                                                                                    a r e r e f l e c t e d 
                                                                                                                                                                                               i n t h e 
                                                                                                                                                                                                                                    R e g i s t e r 
                                                                                                                                                                                                                                                                                      o f 
                                                                                                                                                                                                                                                                                                      E l e c t o r s 

c o m i n g i n t o f o r c e on 16 F e b r u a r y 1978. 

A l  
l S e r v i c e p e r s o n n e l a n d t h e i r s p o u s e s a r e now a b l e t o r e g i s t e r a s S e r v i c e v o t e r s on a o n c e - a n d - f o r - a l l b a s i s a n d r e m a i n o n t h e r e g i s t e r f o r a s l o n g a s t h e y r e m a i n i n t h e S e r v i c e s . 

T e l e v i s i o n i n G e r m a n y 
4 1 8 . 

More t h a n 20,000 members o f t h e S e r v i c e s a n d t h e i r f a m i l s t a t i o n e d i n G e r m a n y a r e now a b l e t o r e c e i v e r e c o r d e d t r a n s m i s s i o n o f B r i t i s h t e l e v i s i o n p r o g r a m m e s a n d t h i s number w i l l b e f u r t h e r i n c r e a s e d d u r i n g 
1978. 

## D E F E N C E S T U D I E S , Education And Training D E F E N C E S T U D I E S A N D E D U C A T I O N

419. 

T h e c l o s e r e l a t i o n s h i p b e t w e e n t h e M i n i s t r y o f D e f e n c e 
8 
t h e u n i v e r s i t i e s i n t h e f i e l d o f h i g h e r d e f e n c e s t u d i e s s t i m n l a n a l y s i s a n d d i s c u s s i o n o f d e f e n c e m a t t e r s . 

I n 1977 
two major 
 
0
1
 
1 
s e m i n a r s were h e l d u n d e r M i n i s t r y o f D e f e n c e s p o n s o r s h i p , one S o v i e t M i l i t a r y P o w e r , C a p a b i l i t i e s a n d P u r p o s e s o r g a n i s e d b y S o u t h a m p t o n U n i v e r s i t y a n d t h e o t h e r o n T h e S o u t h e r n F l a n k e r r b y O x f o r d U n i v e r s i t y . 

4 2 0 . 

T h e N a t i o n a l D e f e n c e C o l l e g e c o u r s e a t L a t i m e r h a s been a D 
r e d u c e d i n l e n g t h a n d t h e f i r s t new s t y l e c o u r s e b e g a n i n  J 
1978. 

4 2 1 . 

T h e R o y a l N a v y h a s 
166 
u n i v e r s i t y c a d e t s a n d 64 
o t h e r 
^ 
c a r e e r o f f i c e r s s t u d y i n g f o r d e g r e e s a t c i v i l i a n u n i v e r s i t i e S * 
 
1
1
 
1 
a d d i t i o n , t h e r e a r e 
168 
o f f i c e r s r e a d i n g f o r a f i r s t d e g r e e e n g i n e e r i n g  a t t h e R o y a l N a v a l E n g i n e e r i n g C o l l e g e M a n a d o n . 

135 
I r v i n g A r m y o f f i c e r s , s i x u n d e r g r a d u a t e c a d e t s a n d t h r e e h o l d e r s Q f u n d e r g r a d u a t e b u r s a r i e s a r e r e a d i n g f o r d e g r e e s  i n e n g i n e e r i n g a n a a p p l i e d s c i e n c e  a t t h e R o y a l M i l i t a r y C o l l e g e  o f S c i e n c e . 

T h e W 
a l s o h a s  8 9 r e g u l a r o f f i c e r s a n d 160 
u n d e r g r a d u a t e c a d e t s b u y i n g  a t u n i v e r s i t y , t o g e t h e r w i t h 
153 
s t u d e n t s who h a v e e n t e r e d u n d e r t h e u n d e r g r a d u a t e b u r s a r y s c h e m e . 

T h e r e a r e a l s o 
2 2 6 RAF u n i v e r s i t y c a d e t s p u r s u i n g d e g r e e c o u r s e s w h i l e 
28 
ether s e r v i n g o f f i c e r s a r e a t t e n d i n g p o s t g r a d u a t e c o u r s e s  
a t d i v e r s i t y . 

Th The e S t a f f C o l l e g e , C a m b e r l e y h a s i n t r o d u c e d  a n a n n u a l two W
e e k c o u r s e i n t e n d e d  t o p r o v i d e s e l e c t e d TAVR o f f i c e r s w i t h a b a s i s i c
^
8 
k n o w l e d g e  o f s t a f f d u t i e s a n d r e s p o n s i b i l i t i e s . 

^3. 

T h e s t u d y  o f i n i t i a l R A F o f f i c e r t r a i n i n g m e n t i o n e d  i n t h e 
^ 7 
S t a t e m e n t  
o n t h e D e f e n c e E s t i m a t e s h a s now b e e n c o m p l e t e d . 

S t * p s  t o i m p l e m e n t i t s p r o p o s a l s w i l l  b e a n n o u n c e d s h o r t l y . 

^ S i n e e r i n p ; 
T r a i n i n g 
* S 
The c o m p r e h e n s i v e s t u d y  o f t h e s t r u c t u r e a n d t r a i n i n g  o f t h
 * E n g i n e e r i n g B r a n c h  o f t h e R o y a l N a v y h a s now b e e n c o m p l e t e d . 

T h e C b a * e e  " n i c h a r e b e i n g made a r e d e s i g n e d  t o e n s u r e t h a t s
0
f
 ^ e r  
s a n d r a t i n g s  o f t h e B r a n c h a r e h o t t e r t r a i n e d a n d o r g a n i s e d  
t 
0
 
d * a l w i t h m o d e r n weapon a n d p r o p u l s i o n s y s t e m s .  
F l y i n g T r a i n i n g ; 
4 2 5 . 

A number o f R o y a l N a v y p i l o t s a r e now t r a i n i n g w i t h t h e R o y a l A i r F o r c e f o r S e a H a r r i e r f l y i n g d u t i e s . 

A f t e r c o n v e r s i o n t o t h e H a r r i e r , t h e y v / i l l c a r r y o u t o p e r a t i o n a l f l y i n g t r a i n i n g on t h e RN Sea H a r r i e r s b a s e d a t R o y a l N a v a l A i r S t a t i o n 
(RNAS) 
Y e o v i l t o n . 

T h e L y n x t r a i n i n g s q u s d r o n f o r m e d a t RNAS Y e o v i l t o n S 
i n J a n u a r y 1978 a n d i s due t o r e m a i n t h e r e u n t i l t h e e a r l y 1980'
when i t w i l l move t o RNAS P o r t l a n d . 

J e t s t r e a m a i r c r a f t a r e b e i n g o r c o n v e r t e d t o r e p l a c e t h e Sea P r i n c e f o r b a s i c f l y i n g t r a i n i n g f RN h e l i c o p t e r o b s e r v e r s f r o m 
1979. 

4 2 6 . 

T h e r e h a v e b e e n t h r e e s i g n i f i c a n t d e v e l o p m e n t s i n R o y a l F o r c e p i l o t t r a i n i n g . T h e Hawk h a s b e e n i n t r o d u c e d i n t o s e r v i c e f o r a d v a n c e d p i l o t t r a i n i n g a n d t a c t i c a l weapons t r a i n i n g ; 
t h e J e t s t r e a m h a s b e e n r e - i n t r o d u c e d f o r a d v a n c e d p i l o t t r a i n i n g r e f r e s h e r f l y i n g o n m u l t i - e n g i n e a i r c r a f t ; 
a n d a new a d v a n c e d t r a i n i n g c o u r s e u s i n g t h e W e s s e x h a s b e e n e s t a b l i s h e d f o r h e l i " 
c o p t e r p i l o t s . 

B o t h t h e Hawk a n d J e t s t r e a m c o u r s e s make e x t e n t u s e o f a d v a n c e d s i m u l a t o r s . 

T h e f i r s t R A F p i l o t s a l s o b e g a n e o p e r a t i o n a l t r a i n i n g o n t h e Sea K i n g h e l i c o p t e r a t RNAS 
C u l d r o s l a s t N o v e m b e r . 

8
i r
4 2 7 . 

RAF F i n n i n g l e y i s now t h e c e n t r e f o r a l l n a v i g a t o r , e e e l e c t r o n i c a n d 8 i r e n g i n e e r t r a i n i n g . 

F u r t h e r p r o g r e s s h a s  b 
1 1 , 8 de w i t h t h e r e d e p l o y m e n t o f t r a i n i n g u n i t s ; 
t h e m a j o r e l e m e n t s 
0 ^ the C e n t r a l F l y i n g S c h o o l a r e now c o - l o c a t e d a t R A F L e e m i n g a n d Qther e l e m e n t s o f t h e f l y i n g t r a i n i n g t a s k a r e b e i n g d i s t r i b u t e d b e t w e e n t h e C o l l e g e C r a n w e l l , R A F L i n t o n - o n - O u s e a n d RAP 
A s p a r t o f t h e p r o c e s s o f r a t i o n a l i s i n g s h o r e t r a i n i n g t h e 
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^ e l o p e d t o accommodate r e l a t e d t a s k s f r o m o t h e r t r a i n i n g e s t a b l i s h -
HMS D a e d a l u s w i l l r e m a i n a t L e e - o n - S o l e n t i n m o d e r n i s e d 
^ o * m o d a t i o n i n s t e a d o f b e i n g t r a n s f e r r e d t o t h e f o r m e r R A F a i r f i e l d a t F o r n e y I s l a n d . 

T h e l a t t e r h a s b e e n t r a n s f e r r e d t o t h e P r o p e r t y e r v i c e s A g e n c y f o r d i s p o s a l . 

^ 9 . 

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o f them w i l l h a v e b e e n t r a i n e d i n G e r m a n . 

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^ r a t i o n i n t h i s f i e l d a r e L a n c e m i s s i l e t r a i n i n g , n a v a l c o n t r o l o f s h i p p i n g t r a i n i n g and a p i l o t c o u r s e f o r l o n g - r a n g e r e c o n n a i s s a n c e p a t r o l s i n t h e c o n t e x t o f l a n d w a r f a r e . 

4 3 1 . 

T h e G o v e r n m e n t s o f t h e U n i t e d K i n g d o m a n d t h e F e d e r a l R e p u b l i c o f G e r m a n y h a v e a g r e e d i n p r i n c i p l e t h a t a T o r n a d o t r a i n i n g e s t a b l i s h m e n t r e s p o n s i b l e f o r a i r c r e w c o n v e r s i o n t r a i n i
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c o n f i r m a t i o n o f I t a l i a n  P 
p a t i o n i s a w a i t e d . 

D e t a i l e d p l a n n i n g i s u n d e r way a n d , s u b j e c t t f i n a l a g r e e m e n t , t r a i n i n g i s p l a n n e d t o s t a r t w i t h t h e i n t r o d u c o f t h e T o r n a d o i n t o s e r v i c e . 

4 3 2 . 

T h e p o s s i b i l i t y o f e s t a b l i s h i n g a t r i - n a t i o n a l Weapons o  
n C o n v e r s i o n U n i t f o r t h e T o r n a d o i n S a r d i n i a has h a d t o be a b a n d b e c a u s e f a c i l i t i e s on t h e r e q u i r e d s c a l e c o u l d n o t be p r o v i d e d D 
I t i s now h o p e d t o e s t a b l i s h a b i - n a t i o n a l Weapons C o n v e r s i o n  ^
a t R A F H o n i n g t o n w h e r e B r i t i s h and G e r m a n a i r c r e w v / i l l be taug h a n d l e the T o r n a d o a s a c o m p l e t e weapons s y s t e m . 

433. 

NATO a n d o t h e r c o u n t r i e s a l s o use some o f t h e h e l i c o p t e r p i l o t t r a i n i n g and b a s i c o b s e r v e r f l y i n g t r a i n i n g p r o v i d e d hy RNAS C u l d r o s e . 

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4 3 4 . 

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I n a d d i t i o n , t h e t h r e e S e r v i c e s a l s o  P
p e r s o n n e l on l o a n and i n t r a i n i n g teams t o a s s i s t w i t h l o c a l t r a i n i n g , 

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* p  d e f e n c e s u p p o r t o r g a n i s a t i o n h a s u n d e r g o n e many n e S
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e f e n c e i n 1 9 6 4 . 

T h e c o n s t a n t o b j e c t i v e h a s b e e n t o c u t t h e c o s t of s u p p o r t t o t h e maximum e x t e n t p o s s i b l e w i t h o u t d a m a g i n g t h e S e * v i c e t o t h e f r o n t - l i n e . 

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t h e s e t t i n g up o f common o r I n t e g r a t e d s e r v i c e s , s u c h as t h e D e f e n c e L a n d s O r g a n i s a t i o n a n d t n e C l a i m s C o m m i s s i o n ; t h e i n t e g r a t i o n o f t h e M i n i s t r y o f D e f e n c e 
0 * i c e and t h e c r e a t i o n o f a u n i f i e d D e f e n c e C o m m u n i c a t i o n s 
^ t w o r k ; 
t h e a m a l g a m a t i o n o f t h e f o u r A d m i r a l t y S u p p l y D e p a r t m e n t s ; 
r a t i o n a l i s a t i o n o f t h e A r m y ' s s u p p l y , t r a n s p o r t , movement a n d e P a i r f u n c t i o n s ; 
a r e d u c t i o n o f t h e R A F ' s o r g a n i s a t i o n a l s t r u c t u r e i n the U n i t e d K i n g d o m f r o m 8 R A F Commands a n d 9 G r o u p s t o 
2 R A F 
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new w o r k i n g a n d management t e c h n i q u e s ; 
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a n d t h e use o f fewer a t i o n s a n d t h e more e c o n o m i c a l use o f a c c o m m o d a t i o n . 

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1 9 ? 4 
D e f e n c e R e v i e w t h i s l a t t e r p r o c e s s h a s b e e n a c c e l e r a t e d . 

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l be g i v e n r e n t r o l e s , t r a n s f e r r e d b e t w e e n S e r v i c e s or g i v e n u p . 

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## 5 0 Oth

n e r p r o p o s e d c l o s u r e s o r c h a n g e s h a v e b e e n a n n o u n c e d o r a r e V Q r i o u s s t a g e s o f c o n s u l t a t i o n . 

503. 

O p p o r t u n i t i e s f o r f u r t h e r e c o n o m i e s , e s p e c i a l l y t h r o u g h c l o s e r c o l l a b o r a t i o n w i t h o u r NATO A l l i e s a n d a l s o t h r o u g h f u r t h e r i n t e r - S e r v i c e r a t i o n a l i s a t i o n i n r e m a i n i n g a r e a s , w i l l c o n t i n u e t o be e x a m i n e d c l o s e l y . 

B u t we do n o t e x p e c t , a f t e r t h e a c h i e v e m e n t s o f t h e l a s t few y e a r s , t h a t t h e r e w i l l b e a g r e a t d e a l o f s c o p e f o r l a r g e f u r t h e r s a v i n g s i n t h i s f i e l d . 

## Nato Co-Operation In L O G I S T I C S

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5 0 4 . 

I n r e c e n t y e a r s t h e r e h a s b e e n g r o w i n g e m p h a s i s t h r o u g n t h e A l l i a n c e o n m a k i n g b e t t e r u s e , t h r o u g h c o l l a b o r a t i o n , o f NATO l o g i s t i c r e s o u r c e s . 

T h e U n i t e d K i n g d o m p l a y s i t s f u l l p a r ^ 
1 1 
i n t h i s a r e a , a n d a t t a c h e s h i g h p r i o r i t y t o c o l l a b o r a t i o n throws o u t t h e l o g i s t i c f i e l d w h e r e v e r i t i s m i l i t a r i l y a n d economica-
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a d v a n t a g e o u s a n d c o n s i s t e n t w i t h p o l i t i c a l a n d i n d u s t r i a l c o n s i d e r a t i o n s . 

T h e e m p h a s i s g i v e n t o l o g i s t i c s u p p o r t i n the NATO programme o f s h o r t - t e r m a n d l o n g - t e r m i n i t i a t i v e s s e t i n 
0 
h a n d f o l l o w i n g P r e s i d e n t C a r t e r ' s s t a t e m e n t t o t h e N o r t h A t l a n t a o t  
D 
C o u n c i l i n May 1977 
i s p a r t i c u l a r l y w e l c o m e . 

T h e U n i t e d K i n g d a l s o a t t a c h e s i m p o r t a n c e t o t h e work o f t h e E u r o l o g C o m m i t t e e and p r o v i d e s t h e C h a i r m a n f o r b o t h t h e E u r o l o g S t e e r i n g Commi and i t s N a v a l S u b - G r o u p . 

I m p o r t a n t a r e a s u n d e r c o n s i d e r a t i o n i n NATO l o g i s t i c s a n d C
l v i  
l e m e r g e n c y p l a n n i n g s t u d i e s i n c l u d e t h e p r o v i s i o n o f f u r t h e r c i v i i a i r a n d s e a t r a n s p o r t t o e n a b l e c o u n t r i e s , e s p e c i a l l y t h e U n i t e d a t e s a n d C a n a d a , t o r e i n f o r c e E u r o p e a s q u i c k l y a s p o s s i b l e ill ar^ 
a u e m e r g e n c y . 

T h e U n i t e d K i n g d o m h a s f o r i t s p a r t made s a t i s ­
8 c t o r y a r r a n g e m e n t s f o r t h e u s e o f c i v i l s i r a n d s e a t r a n s p o r t 
 
fop our own f o r c e s , a n d a r r a n g e m e n t s f o r t h e s u p p o r t o f 
 
-"-can l i n e s o f c o m m u n i c a t i o n t h r o u g h t h e U n i t e d K i n g d o m 
8re 
 
c e a m g s a t i s f a c t o r i l y . 

O t h e r s t u d i e s o f i m p o r t a n c e c o n c e r n a ^ r a n g e m e n t s f o r t h e p r o v i s i o n a n d s t o r a g e o f war r e s e r v e s t o c k e n d , i n r e s p o n s e t o t h e s h o r t - t e r m i n i t i a t i v e s , t h e U n i t e d s 
^ o m i s i n c r e a s i n g i t s h o l d i n g s o f some k e y i t e m s . 

506. 

A c h i e v e m e n t s i n c o l l a b o r a t i v e p r o c u r e m e n t , s t a n d a r d i s a t i o n , i n t e r o p e r a b i l i t y o f weapons a n d o t h e r e q u i p m e n t s h o u l d a l s o 
^ m i t 
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g r e a t e r c o l l a b o r a t i o n i n t h e f i e l d o f l o g i s t i c s u p p o r t . 

l n K 
p r i n c i p l e s f o r t h e c o l l a b o r a t i v e s u p p o r t o f common e q u i p ­
^ e r e a g r e e d b y E u r o g r o u p M i n i s t e r s i n 
1975 
a n d a r e now a p p l i e d
 
p o s s i b l e . 

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Maintenance S u p p l y A g e n c y 
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f o r t h e a r m i e s o f t h e k i n g d o m , t h e F e d e r a l R e p u b l i c o f G e r m a n y a n d I t a l y , a s M l f o r * t h e L a n c e m i s s i l e a n d NATO A i r D e f e n c e G r o u n d E n v i r o n m e n t 
' 
a i r - d e f e n c e r a d a r s . 

507. 

T h e r e a r e many f u r t h e r e x a m p l e s o f d i r e c t b i l a t e r a l a n d m u l t i l a t e r a l c o l l a b o r a t i o n b e t w e e n t h e A l l i e s . 

Some c u r r e n t e x a m p l e s i n c l u d e : ­

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F e d e r a l R e p u b l i c o f G e r m a n y a n d I t a l y a r e a l r e a d y i n h a n d f o r t h e s u p p o r t o f T o r n a d o when i t comes i n t o s e r v i c e . 

T h e t w o - w a y s u p p o r t a r r a n g e m e n t f o r J a g u a r , b e t w e e n F r a n c e a n d U n i t e d K i n g d o m , h a s b e e n e n h a n c e d b y a d i r e c t ADP d a t a l i n k b e t w e e n t h e F r e n c h c o m p u t e r a t B o r d e a u x a n d t h e S u p p l y C o n t r o l C e n t r e a t RAF H e n d o n . 

P r o g r e s s c o n t i n u e s t o be made o n l o g i s t i c s u p p o r t a r r a n g e ­
m e n t s w i t h t h e U n i t e d S t a t e s A i r F o r c e s i n E u r o p e f o r whom U n i t e d K i n g d o m i n d u s t r y i s t o u n d e r t a k e some d e p o t - l e v e l m a i n t e n a n c e o f F111 
a i r c r a f t . 

C o l l a b o r a t i v e a r r a n g e m e n t s w i t h t h e U n i t e d S t a t e s f o r t h e s u p p o r t o f R A F P h a n t o m a n d H e r c u l e s a i r c r a f t a r e w o r k i n g w e l l . 

I m p o r t a n t s t u d i e s a r e c o n t i n u i n g on t h e d e v e l o p m e n t o f c r o s s - s e r v i c i n g p r o c e d u r e s a n d t e c h n i q u e s so t h a t a i r c r a f t o f one NATO 
a i r 
1 s f o r c e c a n b e o p e r a t e d a n d m a i n t a i n e d f r o m a n o t h e r b a s e s . 

I N T E R - S E R V I C E 
C O - O R D I N A T I O N OF SUPPORT 
508 
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J­n t h e c o n t i n u i n g s e a r c h f o r e c o n o m i e s m t h e s u p p o r t a r e a , e M i n i s t r y o f D e f e n c e h a s i n i t i a t e d s t u d i e s i n t o t h e p r a c t i c a l i t y Of 
^ k i n g a s i n g l e S e r v i c e r e s p o n s i b l e f o r t h e s u p p l y o f e l e c t r i c a l J - e c t r o n i c e q u i p m e n t , a n d h a n d t o o l s . T h i s f o l l o w s t h e e a r l i e r U
c c e s s f u l r a t i o n a l i s a t i o n o f t h e s u p p l y o f a i r s t o r e s , motor 
8 ! l 8 p o r t s t o r e s , f o o d a n d o t h e r r a n g e s o f m a t e r i e l i n common u s e . 

c e P r o j e c t t o e n a b l e t h e n e x t g e n e r a t i o n o f s u p p l y c o m p u t e r s 
^977 h a s s e e n t h e c o m p l e t i o n o f t h e m a i n p8rt o f t h e i n t e r ­
e *
c h a n g e d a t a a n d r a t i o n a l i s e f u r t h e r t h e s u p p o r t b e t w e e n t h e to t h r e e S e r v i c e s . 

T h e p r o j e c t w i l l b e i m p l e m e n t e d a s t h e new g e n e r a t i o n o f ADP s u p p l y s y s t e m s a r e i n t r o d u c e d b e t w e e n now a n d t h e mid-1980s. 

510. 

T h e N a t i o n a l E c o n o m i c D e v e l o p m e n t O r g a n i s a t i o n (NEDO) 
r e p o r t o n t h e u s e a n d a p p l i c a t i o n o f s t a n d a r d s i n e n g i n e e r i n g i n d u s t r i e s 
( T h e W a r n e r R e p o r t ) made f a v o u r a b l e comments on s t a n d a r d i s a t i o n w o r k w i t h i n t h e M i n i s t r y o f D e f e n c e . 

B r i t i s h S t a n d a r d s a r e a d o p t e d w h e n e v e r p o s s i b l e f o r p r o c u r e m e n t p u r p o s e s , s u p p l e m e n t e d , when n e c e s s a r y , b y a w i d e r a n g e o f D e f e n c e S t a n d a r d s -
T h e M i n i s t r y o f D e f e n c e h a s a l s o p l a y e d an i m p o r t a n t p a r t i n e s t a b l i s h i n g t h e new NATO C o m m i t t e e o f D i r e c t o r s o f S t a n d a r d i z e d w h i c h w i l l e n c o u r a g e w i d e r a c c e p t a n c e o f s t a n d a r d s a n d component s p e c i f i c a t i o n s t h r o u g h o u t t h e A l l i a n c e . 

The f i r s t C h a i r m a n o f t h i s C o m m i t t e e i s t h e M i n i s t r y o f D e f e n c e D i r e c t o r o f S t a n d a r d i z e 
511. 

The M i n i s t r y o f D e f e n c e h e a d q u a r t e r s s t a f f o f t h e t h r e e M e d i c a l D i r e c t o r a t e s w i l l t h i s y e a r b e b r o u g h t t o g e t h e r i n one b u i l d i n g . 

F u r t h e r p r o g r e s s h a s a l s o b e e n made w i t h t h e r e ­
o r g a n i s a t i o n o f S e r v i c e h o s p i t a l s . 

D u r i n g t h e p a s t y e a r t h e RAF 
h o s p i t a l a t W r o u g h t o n was r e f o r m e d 8s a j o i n t R A F / A r m y h o s p i t a l o n t h e c l o s u r e o f t h e M i l i t a r y H o s p i t a l , T i d w o r t h . 

T h e new 
1 
Q u e e n E l i z a b e t h M i l i t a r y H o s p i t a l a t W o o l w i c h h a s b e e n c o m m i s s a c e a n d h a s r e p l a c e d f o u r o t h e r m i l i t a r y h o s p i t a l s a n d w i l l r e p l  
a f i f t h l a t e r t h i s y e a r . 

T h e J o i n t S e r v i c e s M e d i c a l t h R e h a b i l i t a t i o n U n i t a t R A F C h e s s i n g t o n w i l l a l s o be m e r g e d w i  
8 
t h e R A F M e d i c a l R e h a b i l i t a t i o n U n i t a t R A F H e a d l e y C o u r t i n 
19
HAF H o s p i t a l C o s f o r d was c l o s e d a t t h e e n d o f 1
9
7
7 
a n d s t u d i e s are c o n t i n u i n g i n t o t h e p r o p o s a l t h a t e i t h e r R A F H o s p i t a l E l y or RAF H o s p i t a l N o c t o n H 8 l l s h o u l d be c l o s e d . 

## Royal Navy Support Organisation

512. 

S a t i s f a c t o r y p r o g r e s s h a s b e e n made i n a c h i e v i n g t h e s t a f f r e d u c t i o n s i n t h e F l e e t s u p p o r t o r g a n i s a t i o n t h a t were a n n o u n c e d in the 1
9
7
6 
a n d 1
9
7
7 
S t a t e m e n t s o n t h e D e f e n c e E s t i m a t e s . 

S e v e r a l e s t a b l i s h m e n t s w i l l h a v e c l o s e d b y t h e end o f t h e y e a r . 

T h e Royal N a v y h a s a l s o d e c i d e d n o t t o r e t a i n t h e f o r m e r R A F T h o r n e y I s l a n d , w h i c h h a s b e e n t r a n s f e r r e d t o t h e P r o p e r t y S e r v i c e s Agency f o r d i s p o s a l . 

## Gavel D O C K Y A R D S

513. 

T h e r e i s more t h a n a f u l l programme o f w o r k a v a i l a b l e f o r g l l the N a v a l d o c k y a r d s f o r t h e f o r e s e e a b l e f u t u r e . 

F o r t h e forthcoming y e a r a number o f m e a s u r e s h s v e a l r e a d y b e e n t a k e n t o bring t h e l o a d i n t o b e t t e r b a l a n c e w i t h a v a i l a b l e c a p a c i t y , i n c l u d i n g some i n c r e a s e i n t h e use o f c o m m e r c i a l s h i p r e p a i r f a c i l i t i e s . 

F i r s t p r i o r i t y , h o w e v e r , i s b e i n g g i v e n t o i m p r o v i n g dockyard p r o d u c t i v i t y as a means o f i n c r e a s i n g c a p a c i t y . 

514. 

Work on g u i d e d - m i s s i l e d e s t r o y e r s a n d l a r g e r s h i p s w i l l b e c o n c e n t r a t e d a t P o r t s m o u t h w h i c h a l s o h a s a f u l l s u p p o r t i n g Programme on p a t r o l s u b m a r i n e s and o t h e r v e s s e l s . 

T h e r e f i t t i n g Qnd r e f u e l l i n g o f n u c l e a r s u b m a r i n e s w i l l r e m a i n t h e m a j o r t a s k s for Chatham a n d R o s y t h i n a d d i t i o n t o t h e i r s u p p o r t i n g p r o g r a m m e s 
0 f major a n d n o r m a l r e f i t s o f f r i g a t e s , o t h e r s h i p s a n d c r a f t , a Q d a s t e a d y programme a t R o s y t h o n p a t r o l s u b m a r i n e s . 

D e v o n p o r t w i U 
make a n i n c r e a s i n g c o n t r i b u t i o n t o t h e u p k e e p o f n u c l e a r s u b m a r i n e s i n a d d i t i o n t o u n d e r t a k i n g t h e m a j o r s h a r e o f L e s n d e r C l a s s f r i g a t e m o d e r n i s a t i o n s a n d o t h e r s u p p o r t , i n c l u d i n g , f o r e x a m p l e , t h e new T y p e 21 
f r i g a t e s . 

V e s s e l s 
515. 

T h e new F l e e t r e p l e n i s h m e n t s h i p , RFA F o r t G r a n g e , w i l l now e n t e r s e r v i c e d u r i n g 1978, r e p l a c i n g R F A s T a r b a t n e s s a n d R e t 8 J n e £ . ' 
A n o t h e r s h i p o f t h e c l a s s , RFA F o r t A u s t i n , i s u n d e r c o n s t r u c t i o n a n d w i l l r e p l a c e RFA R e s u r g e n t . 

T h e R F A s T i d e r e a c h a n d E m p i r e G u l l w i l l b e w i t h d r a w n d u r i n g 1978. 

A new R o y a l M a r i t i m e A u x i l i a r y S e r v i c e v e s s e l , RMA.S T h r o s k , was i n t r o ­
d u c e d i n t o s e r v i c e i n S e p t e m b e r 
1977, r e p l a c i n g two o l d v e s s e l s a n d p r o v i d i n g t h e p r i n c i p a l means o f c o a s t a l t r a n s p o r t f o r n a v a l armament s t o r e s . 

A u t o m a t i c D a t a P r o c e s s i n g 
516. 

T h e i n c r e a s i n g u s e o f c o m p u t e r s i n t h e F l e e t s u p p o r t o r g a n i s a t i o n 
 
i s h e l p i n g t o p r o d u c e g r e a t e r economy a n d e f f i c i f o r e x a m p l e , a s a n a i d t o w o r k s h o p p r o d u c t i o n c o n t r o l i n t h e  P
a n d e l e c t r i c a l s h o p s o f e a c h o f t h e home d o c k y a r d s . 

P i l o t scne w i l l i n v e s t i g a t e t h e i r p o s s i b l e e x t e n s i o n t o o t h e r d o c k y a r d d e p a r t m e n t s . 

A n o t h e r ADP p r o j e c t now u n d e r way i s t h e d i r e c t l i n k i n g o f t h e R o y a l N a v a l A i r S t a t i o n s a n d t h e N a v a l A i r c r a f t R e p a i r O r g a n i s a t i o n w i t h t h e R o y a l A i r F o r c e ' s c e n t r a l computed f o r a i r s t o r e s a t H e n d o n . 

## Army Support Organisation

The m e a s u r e s t o b e t a k e n f o r t h e A r m y ' s l o g i s t i c 
^ s t r u c t u r i n g , i n c l u d i n g t h e c o n c e n t r a t i o n a n d r e d u c t i o n o f s t o r e ­
a i d i n g a n d r e p a i r f a c i l i t i e s , a r e p r o g r e s s i n g w e l l , a n d t h e W o r l d - w i d e t a r g e t r e d u c t i o n o f 5 , 4 0 0 c i v i l i a n s t a f f w i l l be made by -i . 

A p r i  
l 
1 9 8 0 . 

Some 45% o f t h e manpower s a v i n g s h a v e a l r e a d y been 
, . 

a c h i e v e d . 

C l o s u r e s i n t h e p a s t y e a r h a v e i n c l u d e d t h e R o y a l 

e
c
 t r i c a l 
a n d M e c h a n i c a l E n g i n e e r s w o r k s h o p s 
a t K i l l i n g w o r t h 
i n 
a & d Wear a n d a t 
C o y p o o l 
n e a r P l y m o u t h , a n d t h e 
r e g i o n a l 
^ a n c e d e p o t a t Y o r k . 

T h e r e h a s a l s o b e e n a s u b s t a n t i a l 
***Uct ! o n i n s t a f f a t t h e r e g i o n a l d e p o t i n H e r e f o r d . 

T h e A r m y 
^
x s t i  E x e c u t i v e f o r m a l l y came i n t o e x i s t e n c e i n A p r i l 
1977, c
8 l i a i+c 
*
u 8 
major e l e m e n t s h a v e b e e n e s t a b l i s h e d a t A n d o v e r a s t h e Q f a n i n t e g r a t e d l o g i s t i c command a n d c o n t r o l o r g a n i s a t i o n . 

^
u B u s t 1977 
t h e d e c i s i o n was a n n o u n c e d t o c l o s e t h e C e n t r a l 
8 n c e D e p o t , C h i l w e l l a s p a r t o f t h e r e o r g a n i s a t i o n o f t h e C e n t r - , rv.

a O r d n a n c e D e p o t s . 

S t o r e s h e l d a t C h i l w e l l w i l l be t r s n s ­
i
 
t 
0 
D o n n i n g t o n 8nd B i c e s t e r a n d s u b s t a n t i a l f i n a n c i a l s a v i n g n c w e r om*o  ^ 
0 
 
a n d o v e r h e a d s a r e e x p e c t e d when t h e r e o r g a n i s a t i o n i s 
-The r e - l o c a t i o n o f A r m y M a n n i n g a n d R e c o r d s O f f i c e s a n d 
^e^ 
C e n t a l P a y O f f i c e s w i l l p r o g r e s s s i g n i f i c a n t l y i n 1978 
so a t ab oout 6
0
%
 
0 f t h e r e l o c a t i o n programme w i l l h a v e b e e n a c h i e v e d e end o f t h e y e a r . 

n e Army h a s a l s o b e e n c o n d u c t i n g a t h o r o u g h s t u d y o f i t s 
0
Q a t i o n r e q u i r e m e n t s . 

T h i s i n v o l v e s t a k i n g a c c o u n t o f c e r t a i n c o n t i n g e n c i e s and t h e d i s t r i b u t i o n o f u n i t s t h r o u g h o u t t h e c o u n t r y , a n d r e v i e w i n g a l l i t s a s s e t s i n c l u d i n g t h o s e t a k e n o v e r f r o m o r p l a n n e d t o b e t a k e n o v e r f r o m t h e R o y a l A i  
r F o r c e . 

T h i s o f f e r s o p p o r t u n i t i e s t o make use o f b e t t e r a n d newer a c c o m m o d a t i o n a n d t o c o n t r i b u t e t o t h e f o r e c a s t r e l e a s e o f a s u b s t a n t i a l amount o f p r o p e r t y i n 1978. 

S u b j e c t t o t h e outcome o f c o n s u l t a t i o n s w i t h o t h e r i n t e r e s t s i n v o l v e d , t h e s u r p l u s w i l l ­
i n c l u d e : 
H o p t o n B a r r a c k s , D e v i z e s ; 
N o r t o n Manor Camp, T a u n t o n ; 
C h a u c e r B a r r a c k s , C a n t e r b u r y ; 
H a i g L i n e s , C h u r c h C r o o k h a m ; 
R o y a l V i c t o r i a H o s p i t a l , N e t l e y ; 
t h e R o y 8 l A r m o u r e d C o r p s M a n n i n g and 
1 
R e c o r d s O f f i c e , W h e t s t o n e ; 
a n d S h e r f o r d Camp, T a u n t o n . 

I n s d d i t o r a number o f m i s c e l l a n e o u s , s m a l l p r o p e r t i e s w i l l b e p u t up  
f d i s p o s a l . 

## Royal A I R Force Support Organisation

E c o n o m y i n S u p p o r t C o s t s 
520. 

T h e m e r g e r o f S u p p o r t a n d T r a i n i n g Commands was c o m p l e t e
0 ' 
i n J u n e 1977 
r e s u l t i n g i n t h e c l o s u r e o f R A F A n d o v e r . 

T h e new t s i n t e g r a t e d o r g a n i s a t i o n , known a s R A F S u p p o r t **Command,** 
h8S  i h e a d q u a r t e r s a t R A F B r a m p t o n . 

i n
521. 

P r o p o s a l s f o r t h e r a t i o n a l i s a t i o n o f g r o u n d r a d i o e n g
3 
i n g t a s k s a r e s t i l l b e i n g c o n s i d e r e d . 

S u p p o r t Command S i g n a l H e a d q u a r t e r s and t h e R a d i o I n t r o d u c t i o n U n i t moved t o R A F Benso u i n M a r c h 1977, e n a b l i n g R A F Medmenham t o b e t r a n s f e r r e d f o r b y t h e M i n i s t r y o f D e f e n c e P o l i c e T r a i n i n g S c h o o l . 

522. 

The t r a n s f e r o f e n g i n e e r i n g t a s k s f r o m t h e M a i n t e n a n c e Units (MUs) a t A l d e r g r o v e a n d Sydenham i s p r o c e e d i n g a s p l a n n e d and s h o u l d be c o m p l e t e b y 3
5
1 **M a r c h** 1978. 

T h e s e t r a n s f e r s , t o g e t h e r with t h o s e r e p o r t e d i n l a s t y e a r f s S t a t e m e n t o n t h e D e f e n c e E s t i m a t e s , w i l l c o n c e n t r a t e r e p a i r r e s o u r c e s a t t h e r e m a i n i n g M U s . 

I n p a r t i c u l a r t h i s w i l l a l l o w t h e c e n t r a l i s a t i o n o f p r e v i o u s l y d i s p e n s e d f a c i l i t i e s f o r e q u i p m e n t r e p a i r a t No 30 
MU/RAF S e a l a n d f o r a v i o n i c s and at RAF S t A t h a n f o r e n g i n e s o f f i x e d - w i n g a i r c r a f t and f o r nechanical c o m p o n e n t s , t h u s f u r t h e r s t r e n g t h e n i n g i n - S e r v i c e support f o r f r o n t - l i n e a i r c r a f t . 

523. 

F u r t h e r i m p r o v e m e n t s h a v e b e e n made i n t h e use o f c o m p u t e r s to c o n t r o l t h e s u p p l y o f e x p e n s i v e a s s e t s . 

T h e s y s t e m f o r t h e control o f a e r o - e n g i n e s u p p l y h a s b e e n e x p a n d e d t o i n c l u d e a l  
l nodular e n g i n e s f o r w h i c h t h e Roy8l A i  
r F o r c e a r e r e s p o n s i b l e , a n d the RAF S u p p l y C o n t r o l C e n t r e h a s d e v e l o p e d t e c h n i q u e s t o i m p r o v e f o r e c a s t i n g o f s p a r e s r e q u i r e m e n t s f o r T o r n a d o , N i r a r o d a n d Hawk a i r c r a f t . 

A D e n s i t y A c t i v i t y C o m p l e x was f o r m a l l y o p e n e d a t No 
16 
IU RAF S t a f f o r d o n 6 **A p r i l** 1977* 
I n t h i s c o m p l e x a d v a n c e d m a t e r i a l storage and h a n d l i n g t e c h n i q u e s h a v e g r e a t l y e n h a n c e d t h e s p e e d and c o s t - e f f e c t i v e n e s s o f s u p p l y . 

T h e c o m p l e x a b s o r b e d a l a r g e proportion o f t h e s t o c k f r o m No 25 
M
L
T R A F H a r t l e b u r y a l l o w i n g t h a t unit t o b e c l o s e d i n S e p t e m b e r 
1977­
524. 

HQ P r o v o s t a n d S e c u r i t y S e r v i c e s 
( U K ) and two s u b o r d i n a t e units were a m a l g a m t e d 8nd r e l o c a t e d a t R A F R u d l o e M a n o r . 

5
2
5
. 

The O f f i c e r s
1 
a n d A i r c r e w S e l e c t i o n C e n t r e a t R A F B i g g i n Bill w i l l move t o R A F B e n t l e y P r i o r y i n 1981, a n d most o f t h e l a n d 
8nd b u i l d i n g s s t i l l h e l d b y t h e R o y a l A i r F o r c e a t B i g g i n H i l l w i l l be s o l d . 

A s m a l l e n c l a v e , i n c l u d i n g t h e B a t t l e o f B r i t a i n M e m o r i a l C h a p e l 
8nd t h e O f f i c e r s
1 
Mess w h i c h w i l l accommodate t h e RAF C h a p l a i n s
1 S c h o o l t r a n s f e r r e d f r o m A m p o r t H o u s e , A n d o v e r w i l l , h o w e v e r , be r e t a i n e d . 

T h i s w i l l p r e s e r v e a l i n k b e t w e e n t h e R o y a l A i r F o r c e 8 n d B i g g i n H i l  
l w h i c h h a s p l a y e d s u c h a p r o m i n e n t r o l e i n R A F h i s t o r y . 

## Lands

526. 

T h e M i n i s t r y o f D e f e n c e h a s c o n t i n u e d t o r e d u c e i t s h o l d i n g s a o f l a n d i n k e e p i n g w i t h i t s e s t a b l i s h e d p o l i c y o f d i s p o s i n g o f
^ 
p r o p e r t y f o r w h i c h t h e r e i s no f o r e s e e a b l e d e f e n c e r e q u i r e m e n t . 

 
8 
T h e a r e a o f l a n d h e l d o n l e a s e h o l d a n d f r e e h o l d was r e d u c e d b y f u r t h e r 4,500 a c r e s i n t h e y e a r e n d e d 
30 S e p t e m b e r 1977, making a t o t a l o f 33,400 a c r e s o v e r t h e f i v e y e a r s up t o t h a t d a t e , a n d t h e p r o c e s s o f c o n t r a c t i o n a n d r e d e p l o y m e n t r e s u l t i n g from t h e D e f e n c e R e v i e w w i l l e n a b l e t h e r e l e a s e o f more l a n d i n 
1
9
7
^
* 
527. 

W i t h one e x c e p t i o n , a l l t h e r e c o m m e n d a t i o n s i n t h e r e p o r t o f t h e n o n - s t a t u t o r y i n q u i r y c o n d u c t e d i n 1975/76 b y B a r o n e s s S h a r p i n t o t h e c o n t i n u e d u s e o f D a r t m o o r f o r m i l i t a r y t r a i n i n g h a v e b e e n a c c e p t e d i n p r i n c i p l e a n d a r e r e c e i v i n g d e t a i l e d c o n s i d e r a t i o n . 

0
 
0 
528. 

C o n t i n u i n g a t t e n t i o n i s g i v e n t o t h e n e e d f o r c o n s e r v a t i on d e f e n c e l a n d s . 

N e s r l y 100 
S e r v i c e c o n s e r v a t i o n g r o u p s have b e e n f o r m e d a n d v a l u a b l e l i n k s w i t h e x t e r n a l o r g a n i s a t i o n s e nC* 
s o c i e t i e s a r e m a i n t a i n e d . 

S i n g l e 
8nd m a r r i e d q u a r t e r s i n t h e U n i t e d K i n g d o m a n d 
0 V e r 3 e e s a r e c o n t i n u o u s l y i m p r o v e d t o b r i n g them up t o m o d e r n s ^
a n d a r d s a l t h o u g h i n c e r t a i n a r e a s , s u c h as N o r t h e r n I r e l a n d a n d L
Z
e
"
i o p e r a t i o n a l c o n s i d e r a t i o n s c o n s t r a i n t h e s t a n d a r d s t h a t 
 
8 1  
1 be a c h i e v e d . 

P r o g r e s s i s a l s o n e c e s s a r i l y a f f e c t e d b y w i d e r  
U l*8etary c o n s i d e r a t i o n s , a n d h a s b e e n s l o w e r i n t h e l a s t y e a r 
 
o r i g i n a l l y p l a n n e d . 

I t i s p r o p o s e d t o b e g i n a n e x t e n d e d p r*
08famme o f t h e r m a l i n s u l a t i o n o f m a r r i e d q u a r t e r s , i n c l u d i n g t h e 
^ l i n g o f w a l l c a v i t i e s where a p p r o p r i a t e . 

The h i r e o f m a r r i e d q u a r t e r s f o r a l l t h r e e S e r v i c e s w i l l C
0
8
t about £ 4 3 m i l l i o n i n 1978/79. 

M o s t o f t h e e x p e n d i t u r e i s 
^ r e d i n W e s t Germany where a n i n c r e a s e o f a b o u t 
1,000 
h i r i n g s f o r e s e e n a l t h o u g h t h e number o f h i r i n g s w o r l d w i d e i s e x p e c t e d to "k D
e a b o u t t h e same as i n 1977/78. 

531. 

The number o f m a r r i e d q u a r t e r s i n t h e U n i t e d K i n g d o m c o n t i n u e s to h e d e d u c e d i n s t e p w i t h t h e f a l l i n demand t h a t h a s b e e n a 
^ a o f r e c e n t y e a r s . 

T h i s t r e n d i s p r o d u c i n g an u n a v o i d a b l e 
1 s t u r b i n g l e v e l o f v a c a n t m a r r i e d q u a r t e r s . 

T o k e e p t h i s l e v e l 
^
0 th e minimum, q u a r t e r s a r e p a s s e d t o t h e P r o p e r t y S e r v i c e s A g e n c y 
^ a p o s a l a s s o o n a s i t i s c l e a r t h a t t h e r e i s no l o n g - t e r m n e e d 

## 0R* Th

n e m - 
I n t h e y e a r e n d e d 
31 
O c t o b e r 1977 
some 1,600 
q u a r t e r s e c l a r e d s u r p l u s t o r e q u i r e m e n t s . 

V/here i  
t i s e s s e n t i a l t o 
^ t a i  
n v a c a n t q u a r t e r s f o r a n y s i g n i f i c a n t p e r i o d a g a i n s t f u t u r e 
^9*uip e m e n t s , t e m p o r a r y u s e s a r e s o u g h t i n c l u d i n g l e a s i n g a g r e e m e n t s 
^ a  
l h o u s i n g a u t h o r i t i e s . 

532. 

A b o u t h8lf t h e w o r k s b u d g e t i s s p e n t on new c o n s t r u c t i o n , and p r i o r i t y i s g i v e n t o w o r k r e q u i r e d t o p e r m i t t h e i n t r o d u c t i o n o f new weapons s y s t e m s a n d o t h e r o p e r a t i o n a l r e q u i r e m e n t s , r e o r g a n i s a t i o n a n d h i g h p r i o r i t y t r a i n i n g . 

T h u s t h e m a j o r f e a t u r e s o f t h e programme w i l  
l c o n s i s t o f t h e c o n t i n u e d m o d e r n i s t t i o n o f n a v a l b a s e s a n d t r a i n i n g e s t a b l i s h m e n t s ; 
t h e A r m y ' s r e s t r u c t u r i n g a n d c o n t i n u o u s i m p r o v e m e n t o f t h e A r m y ' s e s t a t e ; 
t h e i n t r o d u c t i o n o f t h e T o r n a d o a i r c r a f t ; 
a n d t h e r a t i o n a l i s a t i o n o f t h e R &  
D e s t a b l i s h m e n t s . 

T h e r e m a i n d e r o f t h e w o r k s b u d g e t i s s p e n t on m a i n t e n a n c e i n c l u d i n g some l a r g e p r o j e c t s s u c h as a i r f i e l d p a v e m e n t r e s u r f a c i n g . 

533. 

N e x t y e a r a n a d d i t i o n a l £ 8 
m i l l i o n w i l l b e s p e n t as p a r t o G o v e r n m e n t ' s m e a s u r e s t o a s s i s t t h e c o n s t r u c t i o n i n d u s t r y . 

T h i s w i l l b e s p e n t m a i n l y on f u r t h e r p r o j e c t s t o i m p r o v e t h e A r m y ^ s l i v i n g a n d w o r k i n g a c c o m m o d a t i o n ; 
p r o j e c t s a f f e c t i n g o p e r a t i o n a l r e q u i r e m e n t s a n d s a f e t y m e a s u r e s ; 
m e a s u r e s d e s i gned t o c o n s e r v e e n e r g y ; 
8 n d a l a r g e number o f r e l a t i v e l y s m a l l b u t i m p o r t a n t j o b s t o i m p r o v e t h e c o n d i t i o n o f t h e d e f e n c e e s t a t e . 

## Energy Conservation

534. 

E n e r g y c o n s u m p t i o n d u r i n g 1976/77 h a s c o n t i n u e d t o be c l o s e l y m o n i t o r e d a n d s a v i n g s o f a p p r o x i m a t e l y 
1
0
% 
o v e r c o n s u l J
e&c t i o n o f t h e e a r l y 1970's h a v e b e e n a c h i e v e d f o r t h e t h i r d in s u c c e s s i o n . 

A t one R o y a l O r d n a n c e F a c t o r y s u b s t a n t i a l p r o g r e s s nas been made t o w a r d s a t a r g e t s a v i n g o f 25% 
i n s t e a m - r a i s i n g b y modifying c o n t r o l s y s t e m s a n d o t h e r m e a n s . 

One R &  
D 
e s t a b l i s h m e n t has been a b l e t o r e d u c e i t s f u e l b i l  
l b y some 30% 
b y c h a n g i n g t h e type of f u e l b u r n t a n d t h r e e O r d n a n c e D e p o t s i n BAOR h a v e b e t w e e n them saved n e a r l y two m i l l i o n l i t r e s o f f u r n a c e f u e l o i l i n t h e l a s t y e a r by a c o m b i n a t i o n o f g o o d h o u s e k e e p i n g , t e c h n i c a l i m p r o v e m e n t s a n d better use o f b u i l d i n g s . T h e Roy8l A i r F o r c e h a s r e p l a c e d t h e beating s y s t e m s i n t h r e e h a n g a r s a t a m a j o r o p e r a t i o n a l u n i t a n d this s h o u l d r e d u c e o p e r a t i n g c o s t s b y 60% e n a b l i n g t h e c a p i t a l cost to be r e c o v e r e d i n l e s s t h a n two y e a r s . 

## Movements

535. 

The R o y a l F l e e t A u x i l i a r y l o g i s t i c l a n d i n g s h i p s a n d o v e r s e a s store c a r r i e r s f i l  
l a m a j o r r o l e i n m e e t i n g t h e f r e i g h t i n g r e q u i r e ­
fients to and f r o m o u r S e r v i c e e s t a b l i s h m e n t s a b r o a d , i n c l u d i n g t h e i n i t i a l s t a g e s o f t h e i m p o r t a n t t a s k o f r u n n i n g down t h e M a l t a base. 

In a d d i t i o n t h e y h a v e b e e n e n g a g e d i n t h e movements t a s k s associated w i t h m i l i t a r y e x e r c i s e s . 

A l o g i s t i c l a n d i n g s h i p i s u
^ e to s t a r t a r e g u l a r s c h e d u l e e v e r y 4-5 
d a y s b e t w e e n M a r c h w o o d R i l i t a r y p o r t a n d c o n t i n e n t a l E u r o p e i n e s r l y 1
9
7
8 
a n d t h i s w i l l 
-^"ther i m p r o v e m i l i t a r y c o n t a i n e r d i s t r i b u t i o n . 

5 3 6 . 

S i m p l i f i e d a n d more e c o n o m i c a l p r o c e d u r e s f o r t h e movement o f R A F a i r a n d s u r f a c e c a r g o w e r e i n t r o d u c e d d u r i n g t h e y e a r , p r o v i d i n g s u b s t a n t i a l c o s t s a v i n g s . 

537* 
F l u c t u a t i o n s i n f o r c e l e v e l s i n N o r t h e r n I r e l a n d a n d t h e r e i n f o r c e m e n t o f B e l i z e d u r i n g 1977 
h a v e made a d d i t i o n a l c a l l s o n movement r e s o u r c e s b u t w i t h o u t d e t r i m e n t t o t h e o v e r a l l s c h e d u l e d movement o f p a s s e n g e r s a n d c a r g o b y a i r . 

## Meteorology

1 
5 3 8 . 

A l t h o u g h t h e R o y a l A i r F o r c e , C i v i l A v i a t i o n 8nd t h e g e n e r a p u b l i c r e m a i n t h e i r p r i n c i p a l c u s t o m e r s , t h e M e t e o r o l o g i c a l O f f i c e ' s s e r v i c e s h a v e b e e n e x p a n d i n g i n s e v e r a l o t h e r a r e a s n o t a b l y i n s u p p o r t o f a g r i c u l t u r e a n d t h e o f f - s h o r e o i l i n d u s t r y -
S p e c i a l p r o c e d u r e s h a v e a l s o b e e n d e v e l o p e d t o s u p p o r t t h e r o u t i o p e r a t i o n s b y C o n c o r d e a i r c r a f t . 

T h e r e v e n u e e a r n e d b y t h e M e t e o r o l o g i c a l O f f i o e f r o m a l  
l s o u r c e s now amounts t o a b o u t one t h i r d o f t h e t o t a l e x p e n d i t u r e . 

539* 
Two o c e a n w e a t h e r s h i p s h a v e b e e n e x t e n s i v e l y r e f i t t e d t o e n a b l e t h e U n i t e d K i n g d o m t o m a i n t a i n o b s e r v a t i o n s a t one 
4- N o r t k s t a t i o n i n t h e r e d u c e d f o u r - s t a t i o n n e t w o r k o f t h e p r e s e n t *' 
A t l a n t i c O c e a n S t a t i o n s c h e m e . 

0 
5 4 0 . 

 
T h e f u r t h e r d e v e l o p m e n t o f t h e s a t e l l i t e - r e c e i v i n g s t a t i f ^ 
8 
a t L a s h a m h a s c o n t i n u e d i n c o l l a b o r a t i o n w i t h t h e R o y a l A i r c ?

e 
 
,u 8   
h L
E s t a b l i s h m e n t a t F a r n b o r o u g h . 

T h e s t a t i o n i s p r o v i d i n g a va 
8
s e r v i c e f o r b o t h f o r e c a s t i n g a n d r e s e a r c h i n t h e f o r m o f d8
from e x i s t i n g m e t e o r o l o g i c a l s a t e l l i t e s , s n d w i l l b e a b l e t o receive d a t a f r o m f u t u r e s a t e l l i t e s i n c l u d i n g t h e E u r o p e a n m e t e o r o l o g i c a l s a t e l l i t e M E T E O S A T . 

541. 

R e s e a r c h a c t i v i t y d e s i g n e d t o s u p p o r t a l l t h e s e r v i c e s p r o v i d e d b y t h e M e t e o r o l o g i c a l O f f i c e , has c o n t i n u e d c o v e r i n g a l a r g e number o f s u b j e c t s and i n p a r t i c u l a r s p e c i a l a t t e n t i o n has been g i v e n t o q u e s t i o n s a f f e c t i n g a i r c r a f t s a f e t y , s u c h as w i n d shears a t l o w l e v e l s a n d t h e i c i n g o f h e l i c o p t e r s . 

## Other Support Management R E V I E W

542. 

Many o f t h e m a j o r r e c o m m e n d a t i o n s o f t h e Management R e v i e w of the M i n i s t r y o f D e f e n c e h e a d q u a r t e r s h a v e now b e e n i m p l e m e n t e d i n c l u d i n g t h e p r o p o s e d r e d u c t i o n i n t h e number o f A c c o u n t i n g Officers f r o m s i x t o two a n d t h e c l o s e r i n t e g r a t i o n o f s e v e r a l Procurement E x e c u t i v e f u n c t i o n s w i t h t h o s e o f t h e r e s t o f t h e M i n i s t r y . 543. 

I t h a s b e e n d e c i d e d n o t t o p r o c e e d w i t h t h e p r o p o s a l , announced i n l a s t y e a r ' s S t a t e m e n t on t h e D e f e n c e E s t i m a t e s , t h a t the post o f C h i e f o f P e r s o n n e l a n d L o g i s t i c s s h o u l d l a p s e . 

T h e Chief o f P e r s o n n e l a n d L o g i s t i c s w i l l , i n s t e a d , assume c e r t a i n r e s p o n s i b i l i t i e s p r e v i o u s l y d i s c h a r g e d b y t h e V i c e C h i e f o f D e f e n c e Staff. 

The p o s t w i l l b e r e - t i t l e d V i c e C h i e f o f D e f e n c e S t a f f 
(Personnel a n d L o g i s t i c s ) , a n d w i l l c a r r y m e m b e r s h i p o f t h e D e f e n c e Council. 

T h e p o s t o f V i c e C h i e f o f D e f e n c e S t a f f w i l l l a p s e , ijsnpower S a v i n g s 
5 H . 

The number o f M i n i s t r y o f D e f e n c e c i v i l i a n s f o r whom p r o v i s i o n has been made i n t h e D e f e n c e E s t i m a t e s i s 269,500 on 1 A p r i l 1978 a n d 
264,000 on 3
1 M a r c h 1979. 

I n a d d i t i o n some 23,500 a r e e m p l o y e d i n t h e 
^oyal Ordnance F a c t o r i e s ; 
t h e i r c o s t s a r e met f r o m t h e T r a d i n g F u n d . 

I n t h e p e r i o d 1964 t o 1974 
c i v i l i a n s t r e n g t h s w e r e r e d u c e d b y 114,000
b r o a d l y c o m p a r a b l e b a s i s . 

B y A p r i l 
1979 
t h e number o f c i v i l i a n s  * 
i n t h e M i n i s t r y o f D e f e n c e , i n c l u d i n g P r o p e r t y S e r v i c e s A g e n c y w o r k i n g on b e h a l f o f t h e M i n i s t r y , i s e x p e c t e d t o show a r e d u c t i o f 
4 0 , 0 0 0 o n 1974 
s t r e n g t h s a f t e r a l l o w a n c e f o r o r g a n i s a t i o n a l c h a n g e s w h i c h h a v e t a k e n p l a c e m e a n w h i l e . 

D u r i n g 1978/79 numbers a r e e x p e c t e d t o f a l l b y 
5 , 5 0 0 , i n c l u d i n g h e a d q u a r t e r s s t a f f s . 

T h i s i s t h e f i n a l st8ge i n t h e a c h i e v e m e n t o f t h e r e d u c e d c i v i l e manpower t a r g e t s s e t a s p a r t o f t h e 1974 
D e f e n c e R e v i e w a n d the s u b s e q u e n t e x p e n d i t u r e r e v i e w s i n 1975 
a n d 1976. 

T h e r u n d o w n h a v e b e e n c a r r i e d t h r o u g h w i t h t h e minimum o f c o m p u l s o r y r e d u n 
545. 

T h e c o m b i n e d S e r v i c e a n d c i v i l i a n r e d u c t i o n s i n h e a d g n s r s t a f f a r i s i n g o u t o f t h e Management a n d e x p e n d i t u r e r e v i e w s shou e r e s u l t i n s a v i n g s a p p r o a c h i n g 9 t o 1
0
% o f 1974 
h e a d q u a r t e r s n ^ b  
A p r i l 1979-The i n t e n t i o n i s t o f i n d s t i l l f u r t h e r e c o n o m i e s b y e a r l y 1980's, i n c l u d i n g s a v i n g s i n s e n i o r p o s t s . 

A p p r e n t i c e t r a i n i n g 
5 4 6 . 

T h e M i n i s t r y o f D e f e n c e c o n t i n u e s t o t r a i n s i g n i f i c a n t n u m b e r s o f c i v i l i a  
n a p p r e n t i c e s . 

T h e e n t r y f o r 1977 was about 
2,000 a n d t h e r e a r e now some 7,500 y o u n g men i n t r a i n i n g . 

M i n i s t r y t h u s h a s r o u g h l y one a p p r e n t i c e f o r e v e r y f i v e c r e i c o m p a r e d w i t h t h e r a t i o o f one t o n i n e i n i n d u s t r y g e n e r a l l y ' 
N e v e r t h e l e s s t h e p r o b l e m o f r e c r u i t i n g s k i l l e d men c o n t i n u e s ? 

1 
a r e f l e c t i o n o f t h e g e n e r a l s h o r t a g e o f s k i l l e d m e n . T h e  M
t h e r e f o r e i n t e n d s t o e x p a n d t h e a p p r e n t i c e s e n t r y i n t h e c o m i n ^ 
y e a r . 

## £Jgpersal

5^7. 
        Forward planning to 
                                   meet the 
                                               M i n i s t r y ' s commitments under  

Government-s d i s p e r s a l programme i s 
                                    going ahead. The 
                                                      programme 

Evolves the 
            d i s p e r s a l of 
                         some 
                              4,250 M i n i s t r y o f 
                                                 Defence posts 
                                                               to 

^ r d i f f by 1983/84 
                                  and 
                                          up 
                                                to 5,500 to 
                                                                       two l o c a t i o n s i n 
                                                                                                        Glasgow, 1.500 posts by 1985/84 
                                                      and 
                                                                the remainder by 1985/86 - 1987/88. 

the d i s p e r s a l s , the bulk of 
                                the 
                                    M i n i s t r y ' s procurement p o l i c y  

**k w i l l be concentrated i n 
                              the 
                                  west o f 
                                           England and south Wales,  

v h U e Glasgow w i l l become another major administrative 
                                                                                                                                                     centre. 
                                                                                                                                                                             

CP(78;12 
COPY NO 
3
1 January **1978**  
CABINET  

## The Economic Prospect And Policies

Memorandum by the Chancellor of the Exchequer 

## Introduction

1- 
In this paper I seek to give my colleagues a first and necessarily only general view of the prospect and problems before us. 

We will be able to consider these matters in more depth and detail in a few weeks, when we shall have the new economic forecasts and can assess their implications. 

That will be the time to form a judgment on the appropriate size of fiscal stimulus for the spring Budget, and to choose between the range of methods available for producing it. 

It would not be profitable at ihis stage for us to discuss precise figures (of the kind suggested by the Secretary of State for Social Services and the Minister for Sccial Security - see Annex to this P
aPer), which would have to be plucked largely out of the air. 

2 - 
This paper therefore concentrates rather on the background to the Budget and the relationship between our various objectives, and discusses some of the uncertainties which will inevitably surround the decisions we shall ultimately make. 

## Developments Since The October Measures

3 - 
The object of the October measures was to produce more jobs and 
^vestment by building on our dramatic financial recovery to promote a corresponding recovery in the real economy. 

We described the measures a s part of a programme of economic recovery spreading over 18 months. 

X  
t may be helpful, therefore, to begin by reviewing developments in the economy since October, and noting how the w e have differed from the P
r ojections which we published at that time. 

4 - 
Since October, some trends have begun to establish themselves m o  r  
e clearly, but great uncertainties remain. 

There are three areas, in Particular, where events have developed differently from what we then Projected. 

Sterling has come under greater upward pressures than we e*pected - largely as a consequence of the weak dollar - and has appreciated 
5 Per cent. 

The increase in earnings during this pay round so far has been a little above the 10 per cent guidelines. 

Though this is better than we might have feared it is still well above the rate of increase among our main competitors, who also enjoy a higher growth in productivity than we do. 

The latest figures suggest that the increase in unit labour costs this year will be increasing at between *  
J and 5 per cent in our main competitors and well over twice as fast in the United Kingdom. 

World trade has been increasing very slowly forecasts of economic growth this year have been revised downwards; and only in North America can we expect actual expansion to keep pace with the potential for growth. 

5. 

Looking ahead, there is a very good chance now that we shall see single figure inflation right through the year, if our incomes policy holds at Least as well as it has done so far, and there is no sharp fall in the sterling exchange rate. 

On the other hand, it is probably unrealistic to expect to hold the rate of inflation at this level far into 1979. if earnings continue to increase at their present rate; and we should be facing very serious dangers once again, if wage increases were to accelerate and confidence in sterling were shaken. 

*- 
Taken together, these factors probably indicate that (in the absence o* further fiscal action) we must now expect a growth rate lower than the H per cent which we projected on the assumptions of last October, but also a worse balance of payments. 

The function of the spring Budget must, therefore, be to stimulate demand in a wav which produces and sustains 
^ore domestic output, and thus produces more jobs. 

If we failed to control the inflationary pressures, which may build up as we move into 1979, we would risk cutting short the recovery in its early stages. 

This in turn has i m p l i  
c a t i o n  
s for the size of the fiscal stimulus which we can afford to give, Without prejudicing our own objectives. 

If we were to lose the confidence of the financial markets, this would bring the familiar destructive consequences f c  r our hopes of increased investment, for financing our domestic G r o w i n  
g requirement and for the value of sterling. 

So we need to keep a l i rnit on the public sector borrowing requirement and to keep control of the Monetary aggregates. 

7- 
Even with North Sea oil flowing, the balance of payments will not look a fter itself. 

To expand domestic demand at a rate which would push tho c u*rent account into deficit would itself be a severe blow to confidence. 

It 
*ould also cause major problems in another area of particular importance ­ t hat of our overseas debts. 

My objective is to spread out our debt r ePayments over a much longer period - so as to minimise what could other­
*ise be a troublesome constraint on our ability to maximise our rate of ?*Owth. 

This means undertaking a programme of new borrowing overseas, n order to finance the repayment of our existing debts as they mature. For this purpose we need to run a balance of payments surplus over the next few r s which is sufficient to maintain our credit in overseas financial Market 
8. 

In brief, we need to set the right intermediate objectives for the money supply, the public sector borrowing requirement and the balance of Payments, if we are to increase our domestic output and employment to the maximum. 

The way in which we expand domestic demand will to a significant extent determine the amount by which we can effectively expand domestic output. 

For reasons which I explain later in this note (and despite what is said in CP(78) 10) in the present situation tax cuts will help us more than a further addition to public expenditure. 

## Main Areas Of Uncertainty

9- 
There is great uncertainty, and wide disagreement among economists, not only about the course of growth, employment, and inflation in Britain over the next year or so, but also about changes that seem to be taking place m previously established economic relationships and in the effectiveness of me policy instruments available. 

1 0  - 
First, the exchange rate. 

According to a view held by many economists, an appreciation of che exchange rate will in due course bring a W 
a significant and measurable worsening in the balance of payments and 
^e level of domestic activity - though there will be a long lag before the full e^ects come through and (other things beir.g equal) after a further lag the ejects will eventually wear off as inflation comes down. 

This is the con­
v erse of the well-known J-curve resulting from depreciation. 

Such economists acknowledge that there is a great uncertainty about the length of me lags - how long it will be before the full effects come through on the domestic economy, and how long Jt will be before the effects subsequently wear off. 

As against that, quite apart from the school of monetarists wnich believes that appreciation does much more good than harm, other economists, while they accept the broad analysis described above, believe t h-t a strong domestic currency will produce benefits on inflation and irnprove confidence more generally, to a degree which may make it worth a ccepting the adverse effects of an exchange rate appreciation. 

Here again the r e is great uncertainty about the speed with which the beneficial effects will 
*7 come through, and therefore about the size and duration of the tran­
8 ltional costs - particularly in terms of unemployment and the balance of p ayments. 

11. 

£ 
In any case, there is general agreement that the power of 
^
V ernments to control the course of the exchange rate is strictly limited. 

u m
 
e g t of funds which can be moved across the exchanges is much V
o ^ 
j ^  
e a t e  r than Governments can offset for more than a short period of time. 

r a  
^ 
0 u r case the effects of North Sea oil are likely to mean that the exchange 
^ 
will be higher for the next few years than it would have been otherwise, e x c n a n  
G
g  
e
 
rate moves from its present level will depend on the j de  ^ 
V e*
0Pment of the economy as a whole, of which North Sea oil forms an Po*tant, but minor part. 

12. 

Second, unemployment. 

Over the 12 months to September 1977 
domestic output probably increased very little. 

The labour force increased by nearly J million. 

Yet employment rose by 100, 000 mainly in manufacturing industry; unemployment rose by 150, 000 (indeed only 90, 000 
over 1977 as a whole). 

Unfilled vacancies rose by 20, 000; this January they are higher than at any time since March 1975. 

No-one in or out of the Government predicted this combination of events. 

It is impossible to be sure what it implies for the future. 

If these relationships continue to apply then a growth rate of some 3 per cent would bring about a steady ana lasting fall in unemployment sooner than the traditional arithmetic would suggest. 

Alternatively, it may be that our special employment measures last year had more effect than we predicted, and that employei s for their own reasons have been holding onto a larger labour force than they need for current Production; if that were the case, it could on the contrary dampen the effect on employment of this year's acceleration in the growth rate. 

13. 

Third, investment. 

We are all agreed on the reed to see more Profitable investment in productive industry. 

But there is no such general agreement on how best to achieve this. 

What is clear is that tne readiness of industrialists to invest depends in part on their general state of confidence, in part on their belief that the demand for theii products will be sustained at a level above their existing capacity to supply thern, and In part Qn their havino a level of profitability which will provide adequate funds for 
^vestment now, and reasonable expectations of an adequate return on that 
^vestment in the future. 

In fact private manufacturing investment was 
*
3 per cent higher in the first nine months of 1977 compared with the same Period in 1976. 

## A S S E S S M E N T

W. 

Whatever view one takes of these uncertainties, one thing is certain. 

l f *e stimulate demand to a degree which seriously outstrips the ability of domestic industry to supply it - either because we are unable to expand out-
Put quickly enough, or because we are not sufficiently competitive in price or quality - then the excess demand will result in excessive imports and greater inflationary pressures. 

These in turn will drive down the exchange r^te .. possibly drastically if confidence evaporates - and any immediate b*nefi t to the current balance would be wiped out by the consequences of h i8her inflation. 

The result would be higher unemployment and a further e rosion of our manufacturing base. I 5  - 
General import controls would provide no easy escape from that da-nger. 

First, to the extent that we succeeded in keeping out imports, the 
^mediate effect could only be to increase inflation further. 

Second, m p ractice, as a large net exporter of manufactures, we could only improve 
0
U
 
r net.balance of external trade, if we avoided damaging retaliation by other e ountries. 

We would have to win the consent of our major trading partners; 
l n deed, under the Treaty of Rome we have no legal power to enforce general l r*Port controls, without the consent of the Community. 

In our present circumstances there is no prospect of gaining this consent: they have much the same unemployment problems as we do; and they would regard it as particularly provocative of us to attempt to export our unemployment to them, at a time when unlike them we are enjoying the unique benefits of North Sea oil. 

16. 

Thus, if we are to stimulate domestic demand in a way which maximises domestic output and employment - rather than imports and inflation we must do everything that we can to increase the volume and competitiveness of production in Britain. 

This depends on many factors. 

It is not just a question of earnings and the exchange rate; some of us believe that policy has in the past given undue emphasis to these aspects, m the long run, the key to competitiveness is the difference between increases in earnings and increases in productivity - we must ensure that this difference is no wider in Britain than among our major trade competitors W e can achieve this objective just as well in principle, and a great deal more profitably in practice, with high earnings and high productivity growth as with I O W earnings and low product!vity growth. 

If we cannot get the former, we must settle for the latter. 

What we cannot afford is high 
^rnings, but continuing low productivity. 

That is why we have identified Productivity as the prime objective of the industrial strategy, both in the directly industrial work being carried forward by the Sector Working Parties and in our discussion of the wider aspects (CM(77) 34th Conclusions, 27 Occober 1977). 

It must remain a central objective for the 
^hole of Government policy in the coming years. 

l 7  - 
Meanwhile, however - given the strict limits on Governments power to influence either productivity or the exchange rate, there is no escape f r  om the fact that we must reduce the rate of growth of money incomes. 

Wage costs remain the key to competitiveness in the short term. 

For the coming year, therefore, I believe that we should concentrate the room for f iscal manoeuvre which we deliberately left last autumn mainly on reductions to the burden of income tax: and this is where the Trades Union Congress 
^so have put their first p-ioritv. 

For public expenditure we ought to stick t o Plans we have just published - including the £1 billion increase which we Enounced last October. 

So we must keep any further increases we fee? are 
^ c a p a b l e within the margin provided by the contingency reserve. 

The case for concentrating on tax relief at this stage is overwhelming. 

It will n o  t only provide the steady and sustained expansion of demand, which is n eeded to supply the essential incentive for new investment, but will also 
8 tlengthen the incentives for better performance by industry and our export S ervices. 

Above all, it will create the conditions in which we can r ealistically expect working people in the next pay round to settle for e a  r n i n   increases weU within single figures. 

It will give them confidence g s t hat they can get a worthwhile increase in their living standards without demanding increase in money wages so high as to send prices and 
^employment shooting up again. 

D **W H**  
reasury **Chambers**  
January **1978** 
 

## Economic Outlook: Case Tor Reflation And Increase In Public Expenditure - " M E M O R A N D U M By The Secretary Of State For Soctal Services And By The Minister For Social **Security**

Since o r i g i n a l l y d r a f t i n g t h i s note, I have seen 

the paper b y 
              the 
                   Secretary of 
                                  State f o r S o c i a l Services 

(CP(78)10). We can 
                  discuss h i s d e t a i l e d 
                                      expenditure 

Proposals at 
             the proper time. 
                                 However, i t 
                                             may be h e l p f u l 

i f I 
         make three general comments 
                                                                    now. 

2. 
      F i r s t , the Secretary of 
                                      State does not 
                                                          e x p l a i n 
                                                                    the oasis on 
         which he 
                   has 
                        chosen £3 b i l l i o n as 
                                               the correct  

f i s c a l stimulus i n 
                                      my spring Budget. As 
                                                                                    I have explained  

above, t h i s i s not 
                                                           a f i g u r e which we can 
                                                                                                                                 pluck out 
                                                                                                                                                                 of the  

a i r . 
           i t must take account of 
                                                             the 
                                                                      i m p l i c a t i o n s for domestic output, f o r i n f l a t i o n and 
                               the monetary aggregates, and 
                                                                   f o r 
                                                                        

the balance of 
               payments. I t 
                               thus requires a major economic  

ahd p o l i t i c a l judgement which can 
                                                                                                                        be 
                                                                                                                                  made only a f t e r we  

ha-ve had 
                         the 
                                    best a v a i l a b l e p i c t u r e of 
                                                                                                               the economic Prospect i n c l u d i n g the new short term f o r e c a s t , the l a t e s t 
                                                                                  

i n d i c a t i o n of 
                           pay 
                                    settlements over the round, and 
                                                                                                     some idea o
  f  what i s happening to 
                                                                                    the 
                                                                                                  savings r a t i o .  

3­ 
                Second, the Secretary of 
                                                                                                            State makes much of ^unplanned  

d
   e  f l a t i on

1 i n 
                  1977

!due 
           t o 
                   massive s h o r t f a l l i n p u b l i c  

sPending'. 
                                      C e r t a i n l y there seems l i k e l y t o 
                                                                                                                                                be 
                                                                                                                                                          an undesirably  

b i G 
              s h o r t f a l l i n 
                                                             1977/78 i n 
                                                                                                    our 
                                                                                                                   spending programmes, 
                                                                                                                                                                                              as 
                                                                                                                                                                                                          

C o n v e n t i o n a l l y measured ( i n survey p r i c e s ) i n 
                                                                                                                                                                           the 
                                                                                                                                                                                          P u b l i c 
                                                                                                                                                                                                                  

E x P e n d i t u r e White Paper. However, i t i s 
                                                                                                                                                          important to 
                                                                                                                                                                                                           keep 
                                                                                                                                                                                                                             

t
   h i s i n 
                                  proportion. 
                                                                                            S h o r t f a l l i s not 
                                                                                                                                                                        a 
                                                                                                                                                                                 new phenomenon 
                                                                                                                                                                                                                                                 and 
                                                                                                                                                                                                                                                                    

i t 
      h a s 
                 t h e r e f o r e 
                                         c o n s i s t e n t l y 
                                                                         b e e n 
                                                                                      p r o v i d e d f o r i n 
                                                                                                                              o u r 

e c o n o m i c 
                  a n d B u d g e t p l a n n i n g , as 
                                                                   r e f l e c t e d 
                                                                                        ( f o r 
                                                                                                   e x a m p l e ) 

i n 
      t h e 
              a n n u a l F i n a n c i a l 
                                                  S t a t e m e n t 
                                                                       a n d B u d g e t 
                                                                                               R e p o r t 

( F S B R ) . 
                  I n t h e 
                                 l a t e s t 
                                                y e a r 
                                                          f o r w h i c h we h a v e 
                                                                                                 f i r m 
                                                                                                           f i g u r e s 
                                                                                                                             ­
1976/77 - 
                    t h e 
                             t o t a l 
                                          c a s h o u t t u r n on p u b l i c e x p e n d i t u r e 
                                                                                                                    was 

w i t h i n some £100 
                                 m i l l i o n o f 
                                                       t h e 
                                                               t o t a l 
                                                                           p r o v i d e d f o r 
                                                                                                     on 
                                                                                                           t h i s 

b a s i s 
            i n t h e 
                           1976 
                                      F S B R , 
                                                   a n d r e f l e c t e d 
                                                                                 i n t h e 
                                                                                                e s t i m a t e s 
                                                                                                                      o f 

t h e 
        p u b l i c s e c t o r 
                                       b o r r o w i n g r e q u i r e m e n t w h i c h we 
                                                                                                            p u b l i s h e d 

at 
    t h e 
           t i m e 
                    o f 
                         t h e 
                                1976 
                                        B u d g e t . 
                                                        We do n o t 
                                                                         y e t 
                                                                                h a v e 
                                                                                        a 
                                                                                             f i r m 

e s t i m a t e 
                  f o r t h i s 
                                    y e a r

! s 
                o u t t u r n (1977/78). 
                                                                                                                                      H o w e v e r , 
                                                                                                                                                                                              t h e 

l a t e s t 
              i n d i c a t i o n s 
                                       a r e 
                                                t h a t , 
                                                            d i s c o u n t i n g t h e 
                                                                                              c h a n g e s 
                                                                                                               i n 

e x p o r t 
              c r e d i t 
                             f i n a n c i n g , w h i c h do n o t 
                                                                               r e f l e c t 
                                                                                                c h a n g e s 
                                                                                                                 i n 

r e a l 
          a c t i v i t y , 
                              t h e 
                                       s h o r t f a l l on t h i s 
                                                                            b a s i s 
                                                                                        i s 
                                                                                               l i k e l y 
                                                                                                              t o 

come o u t 
            a t 
                s o m e t h i n g 
                               u n d e r £500 m i l l i o n - 
                                                             o r w e l l 
                                                                        u n d e r 

1 p e r c e n t . ' f*. 
          T h i r d , 
                          t h e 
                                  S e c r e t a r y o f 
                                                               S t a t e 
                                                                            s u g g e s t s 
                                                                                                t h a t 
                                                                                                           some 
                                                                                                                       f o r m s 

Q f 
        p u b l i c e x p e n d i t u r e 
                                                               h a v e 
                                                                              t h e 
                                                                                          same 
                                                                                                        b r o a d 
                                                                                                                          e c o n o m i c 
                                                                                                                                                     e f f e c t s 

&8 t a x 
       c u t s . 
               T h i s 
                     i s 
                        t r u e 
                              o n l y o f 
                                       some f o r m s 
                                                    o f 
                                                        e x p e n d i t u r e , 

and t h e n o n l y t o 
                   a l i m i t e d e x t e n t . 
                                         T h u s , 
                                                i n c r e a s e s 
                                                           i n 
                                                               c h i l d b e n e f i t s 
                   c a n c e r t a i n l y 
                                                 s t i m u l a t e 
                                                                       demand a n d h a v e 
                                                                                                           some 

h e l p f u l 
                e f f e c t 
                              on i n c e n t i v e s 
                                                           i n t h e 
                                                                          a r e a o f 
                                                                                          t h e 
                                                                                                   p o v e r t y 

t
   r
        a p , 
                                    s i m i l a r t o 
                                                                                                       i n c r e a s e s 
                                                                                                                                                                    i n t a x 
                                                                                                                                                                                                               t h r e s h o l d s . 
                                                                                                                                                                                                                                                                                               H o w e v e r , 

t h e y 
          a r e 
                   u n l i k e l y t o 
                                             make t h e 
                                                                 same 
                                                                            c o n t r i b u t i o n t o 
                                                                                                                o u r 
                                                                                                                         p a y 

a r * d c o u n t e r - i n f l a t i o n p o l i c i e s , 
                                                                                                                                                  by b u t t r e s s i n g 
                                                                                                                                                                                                                        t h e 
                                                                                                                                                                                                                                          r e a l 
                                                                                                                                                                                                                                                                   t a k e 

home p a y o f t h o s e 
                       a t w o r k . 
                                     I n d e e d , 
                                                t h e w h o l e 
                                                             p o i n t 
                                                                     o f 
                                                                          t a k i n g 

c h i l d 
                                   t a x 
                                                           a l l o w a n c e s 
                                                                                                                              away 
                                                                                                                                                             f r o m f a t h e r s , 
                                                                                                                                                                                                                                                  a n d s u b s t i t u t i n g 
                                                                                                                                                                                                                                                                                                                                                           a c h i l d 
                                  b e n e f i t 
                                                                                   p a y a b l e 
                                                                                                                                    t o 
                                                                                                                                                      m o t h e r s , 
                                                                                                                                                                                                             i s 
                                                                                                                                                                                                                                t h a t 
                                                                                                                                                                                                                                                               i n many 
                                                                                                                                                                                                                                                                                                                   f a m i l i e s 

h u s b a n d a n d w i f e 
                                 do n o t 
                                               s h a r e 
                                                           a n d s h a r e 
                                                                               a l i k e 
                                                                                           t h e i r 
                                                                                                       s e v e r a l 

i n c o m e s ; 
                    a n d t h i s 
                                        i s 
                                              p r e c i s e l y 
                                                                   t h e 
                                                                           p o i n t 
                                                                                        w h i c h 
                                                                                                      o r i g i n a l l y 

W o r r i e d t h e 
                       TUC a n d p e r s u a d e d us 
                                                                  t o 
                                                                        p h a s e 
                                                                                    i n 
                                                                                          c h i l d 
                                                                                                       b e n e f i t s 

e v e r 
          a p e r i o d o f 
                                    t i m e . 

COPY NO \: 
CP(78) 13  
3 February 1978  

## Cabinet Draft White Paper On T H E Nationalised Industries

# Note By The Chancellor Of The Exchequer

** 
I attach a draft White Paper on the nationalised industries. 

It replies to the highly critical report which the National Economic Development Office published in November 1976 and to the National Consumer Councils report of August 1976 on "Consumers and the Nationalised Industries". 

Following discussion by the Ministerial Committee on Economic Strategy (EY), paragraph 54 on future price increases has been amended, 
^  
d a reference to the work of the Select Committee on Procedure has been added to the end of paragraph 93. 

Apart from these two points E Y approved the draft. 

This draft now includes, in paragraph 29, a brief reference to the industrial democracy White Paper and, at the end of paragraph 20, a r e*erence to the fact that the Electricity and Nuclear Materials Bill includes f
" Provision to enable specific directions to be given to the electricity supply industry. 

With the other Ministers concerned, I discussed the main proposals 
*n July with the Nationalised Industries' Chairmen's Group. 

Since then some ideas have been introduced and I recommend that, before the White aper is published, each sponsoring Minister should send the chairmen of 
8 industries a summary of the main pointr. 

I will arrange for the hcial Committee on Nationalised Industry Policy to prepare this. 

4 
I invite the Cabinet to agree that the White Paper should be published 
^
n March, after the chairmen of the industries have had an opportunity to see e summary and with any minor amendments necessary to keep it up to date. 

D W H 
r ea 8ury Chambers 
2 February 1978 

## I N T R O D U C T I O N ^Titutiokal **Aktiakgements**

B o a r d s t r u c t u r e : 
r e j e c t s t h e N E D O ' s p r o p o s e d P o l i c y C o u n c i l s a n d C o r p o r a t i o n B o a r d s 
20­2 2 
New powers t o g i v e s p e c i f i c d i r e c t i o n s , a n d c o m p e n s a t i o n when n e c e s s a r y 
2 3 - 5 5 
P a y a n d a p p o i n t m e n t s o f B o a r d Members 
26-^ 
C o m p o s i t i o n o f b o a r d s , i n c l u d i n g c i v i l s e r v a n t members 
25.29 
I n d u s t r i a l d e m o c r a c y C o n s u m e r c o u n c i l s M
S 
O t h e r c o n s u l t a t i v e a r r a n g r a e n t s e g E n e r g y C o m m i s s i o n R e l a t i o n s w i t h s u p p l i e r s C o r p o r a t e p l a n s a n d i n v e s t m e n t a n d f i n a n c i n g r e v i e w s M o n i t o r i n g 
^ A f t C l A L AND ECONOMIC FRAMEWORK 
G e n e r a l 
*
5  
I n v e s t m e n t a n d t h e o p p o r t u n i t y c o s t o f c a p i t a l :  
i n t r o d u c e s t h e 
5% R e q u i r e d R a t e o f R e t u r n ( s e e a l s o 
 
5r A p p e n d i x I )  
G j ^ 
P r i c i n g p o l i c y  
v F i n a n c i a l t a r g e t s 
 
% 
P e r f o r m a n c e i n d i c a t o r s 
 
to  
' 
C a s h l i m i t s  
m Q
c C a p i t a l s t r u c t u r e a n d s o u r c e s o f f i n a n c e : 
g e n e r a l p o i n t P u b l i c d i v i d e n d c a p i t a l F i n a n c i n g t h e B r i t i s h N a t i o n a l O i l C o r p o r a t i o n 
% 
L o a n s f r o m t h e N L F  
C o n c l u s i o n s  
I 
The **RRR:** 1-1? 

d i s c u s s t h e s y s t e m ; 
13-19 
t h e 
5
% n u m b e r II 
L i s t o f f i n a n c i a l t a r g e t s a l r e a d y s e t Hi E x p l a n a t o r y s e c t i o n o n N L F a n d f o r e i g n c u r r e n c y b o r r o v / i n g 

## I Introduction

^* 
T h i s W h i t e P a p e r r e p l i e s t o t h e r e c o m m e n d a t i o n s i n t h e r e p o r t of N o **v e m b e r** 
1976 
by t h e N a t i o n a l E c o n o m i c D e v e l o p m e n t O f f i c e , 
"A s t u d y o f UK N a t i o n a l i s e d I n d u s t r i e s : 
t h e i r r o l e i n t h e economy and c o n t r o l l n
 
t n e f u t u r e . " 
I t t a k e s i n t o a c c o u n t t h e G o v e r n m e n t ' s p r o p o s a l s f o r e v e l o p i g i n d u s t r i a l d e m o c r a c y i n t h e n a t i o n a l i s e d i n d u s t r i e s , and n 
^
1 
e x P l a i n s t h e G o v e r n m e n t s m a i n p r o p o s a l s i n r e s p o n s e t o t h e r o P o r t o f A u g u s t 
1976 
by t h e N a t i o n a l C o n s u m e r C o u n c i l on 
" C o n s u m e r s a n d the N a t i o n a l i s e d I n d u s t r i e s " . 

2 
The W h i t e P a p e r i s a b o u t the c o n t r o l o f t h e n a t i o n a l i s e d i n d u s t r i e s , 
* *
e *
r f i n a n c i a l and e c o n o m i c o b j e c t i v e s , and t h e i r r e l a t i o n s w i t h 
* *
0 V e r n m e n t . 

I t s e t s o u t p r o p o s a l s d e s i g n e d t o r e c o n c i l e t h e p u r p o s e s Of P u b l i c o w n e r s h i p w i t h t h e i n d e p e n d e n c e n e e d e d f o r v i g o r o u s and 
6 fjt e r P r i s i n g management; 
and t o e n s u r e t h a t t h e n a t i o n a l i s e d n ( i U s t r i e s e m p l o y r e s o u r c e s e f f i c i e n t l y t o t h e b e n e f i t of t h e w h o l e 
^ u n i t y . 

S e c t i o n I I 
d e s c r i b e s a number o f i n s t i t u t i o n a l c h a n g e s n t e n d e d t o i m p r o v e the r e l a t i o n s h i p b e t w e e n the n a t i o n a l i s e d 
*tU!iiftt 
­
l p i e s a n d G o v e r n m e n t , u n i o n s , c u s t o m e r s and s u p p l i e r s . 

I t a * n s how i n f o r m a t i o n on t h e i n d u s t r i e s
1 
m a i n o b j e c t i v e s , a g r e e d a f t e
 
H ­
r a J  
. s c u s s i o n b e t w e e n t h e G o v e r n m e n t and the b o a r d s , and on t h e i r r fnance w i l l be p u b l i s h e d . 

S e c t i o n I I I 
d i s c u s s e s t h e f i n a n c i a l a r u i eo C Q n o m i c f r a m e w o r k w i t h i n w h i c h t h e i n d u s t r i e s w i l l o p e r a t e , a n d i n n P a r t i c u l a r t h e r o l e o f t h e f i n a n c i a l t a r g e t s w h i c h w i l l be 
 
sned f o r a l l t h e i n d u s t r i e s and u s e d as a m e a s u r e o f t h e i r 
 
" ^ S S . 

. . . 

. 

 
l e c e n t r a l p r o b l e m i n e v o l v i n g an a c c e p t a b l e r e l a t i o n s h i p 
 
e **H e o**  
t u n
^ne G o v e r n m e n t and t h e n a t i o n a l i s e d i n d u s t r i e s has a l w a y s h o w b e s t to r e c o n c i l e t h e b o a r d s
1 
need f o r s u f f i c i e n t f r e e d o m t o manage t h e i n d u s t r i e s w i t h t h e G o v e r n m e n t s l e g i t i m a t e i n t e r e s t s i n t h e m . 

The Government must be c o n c e r n e d i n t h e s t r a t e g i e s , and o p e r a t i o n a l decisions o f p u b l i c i m p o r t a n c e , o f i n d u s t r i e s w h i c h a r e b a s i c t o t h e national economy; 
i n s e e i n g t h a t t h e s e i n d u s t r i e s , w h i c h a r e n o t subject t o t h e p r i v a t e s e c t o r d i s c i p l i n e o f the t h r e a t o f b a n k r u p t c y , and are i n some c a s e s r e l a t i v e l y f r e e f r o m m a r k e t p r e s s u r e s , a r e e f f i c i e n t ; 
and i n e n s u r i n g t h a t t h e r e i s an a c c e p t a b l e r e t u r n on t h e public c a p i t a l i n v e s t e d i n t h e m . 

4. 

The l a s t g e n e r a l r e v i e w o f t h e e c o n o m i c a n d f i n a n c i a l p r i n c i p l e s common t o a l l n a t i o n a l i s e d i n d u s t r i e s w a s t h e W h i t e P a p e r o f 1 9 6 7 , 
" N a t i o n a l i s e d I n d u s t r i e s : 
a r e v i e w o f e c o n o m i c a n d f i n a n c i a l o b j e c t ­
ives," **Cmnd** 3 4 3 7 . 

That W h i t e P a p e r was i n t e n d e d t o show how i n v e s t m e n t , p r i c i n g and e f f i c i e n c y p o l i c i e s w o u l d be t a k e n i n t o a c c o u n t i n s e t t i n g f i n a n c i a l o b j e c t i v e s , r a t h e r t h a n t o make any c h a n g e i n t he b a s i c r e l a t i o n s h i p b e t w e e n the G o v e r n m e n t and t h e n a t i o n a l i s e d i n d u s t r i e s . 

It e x p l a i n e d t h a t , s u b j e c t t o a l l o w a n c e where n e c e s s a r y f o r s o c i a l objectives o r f o r m e e t i n g s t a t u t o r y o b l i g a t i o n s , i t was t h e G o v e r n m e n t s policy t o t r e a t the n a t i o n a l i s e d i n d u s t r i e s as c o m m e r c i a l b o d i e s so far as the e x p e c t e d r e t u r n o n i n v e s t m e n t was c o n c e r n e d . 

I t s e t o u t c r i t e r i a f o r i n v e s t m e n t a p p r a i s a l a n d p r i c i n g p o l i c y , w h i c h were intended t o e n s u r e t h a t t h e n a t i o n a l i s e d i n d u s t r i e s d i d n o t c l a i m resources w h i c h c o u l d have b e e n p u t t o b e t t e r use i n o t h e r p a r t s o f the economy. 

I t s t r e s s e d t h e i m p o r t a n c e o f s e t t i n g t h e i n d u s t r i e s clear f i n a n c i a l t a r g e t s w h i c h w o u l d s e r v e b o t h as an i n c e n t i v e t o management and a s one o f t h e s t a n d a r d s by w h i c h s u c c e s s o r f a i l u r e 
*ould be j u d g e d . 

T h e s e p r i n c i p l e s wore e n d o r s e d by t h e S e l e c t C o m m i t t e e on N a t i o n a l i s e d I n d u s t r i e s and g e n e r a l l y a c c e p t e d a s s e t t i n g a sound D a s i s f o r f u t u r e r e l a t i o n s a n d c o n t r o l . 

I n p r a c t i c e , h o w e v e r , t h e n e  w a p p r o a c h d i d rot l a s t , and i n the f i r s t h a l f o f t h e 
1 9 7 0 s t h e N a t i o n s b e t w e e n g o v e r n m e n t s and t h e i n d u s t r i e s d e t e r i o r a t e d , 
^ i s a r o s e i n p a r t b e c a u s e o f d i s a g r e e m e n t s and u n c e r t a i n t y o v e r t ^
e P l a n s o f p a r t i c u l a r i n d u s t r i e s . 

But-, t h e m a i n s i n g l e f a c t o r 
?j"ich u n d e r m i n e d t h e p r i n c i p l e s i n t h e 
1 9 6 7 W h i t e P a p e r was t h e P
r i c e r e s t r a i n t p o l i c i e s o f the e a r l y 
1 9 7 0 s . 

T h e P o s t O f f i c e and gas and e l e c t r i c i t y i n d u s t r i e s were f o r c e d i n t o d e f i c i t and f o r t n  
e f i r s t t i m e e v e r had t o be s u b s i d i s e d t o c o v e r t h e i r l o s s e s , t o t a l l e d 
£ 1 1 8 2 m i l l i o n o v e r t h e p e r i o d . 

T h e g r a n t s w h i c h were 
?

p e a d y b e i n g p a i d t o B r i t i s h R a i l e s c a l a t e d as t h e i r f a r e s and c ^
a r  g e s were h e l d down and t h e i r d e f i c i t i n c r e a s e d . 

A s a r e s u l t of these p o l i c i e s , the f i n a n c i a l t a r g e t s o f m o s t o f t h e n a t i o n a l i s e d l n Q , u s t r i e s had t o be a b a n d o n e d and t h e r e was l i t t l e c h a n c e t o put 
^
e 
1 9 6 7 p r i n c i p l e s t o t h e t e s t . 

6. 

T 
*n i t s r e p o r t o f D e c e m b e r 
1 9 7 3 ? 

" C a p i t a l I n v e s t m e n t P r o c e d u r e s " , 

^
e 
SCNl 
c o n c l u d e d 
t h a t 
g o v e r n m e n t 
had f a i l e d 
t o meet i t s 
o b j e c t i v e 
e x e r c i s i n g 
i t s 
c o n t r o l p u b l i c l y and a c c o r d i n g t o 
w e l l - d e f i n e d 
r u l e s , 
w i t h o u t 
i n t e r f e r i n g w i t h t h e 
management 
f u n c t i o n s 
o f 
ftdustries t h e m s e l v e s " . 

The C o m m i t t e e a c c o r d i n g l y recommended the G o v e r n m e n t s h o u l d a r r a n g e f o r 
"a d e t a i l e d s t u d y o f the U l t h e n a t i o n a l i s e d i n d u s t r i e s i n t h e economy and o f t h e way n i c h t h e y a r e t o be c o n t r o l l e d i n t h e f u t u r e " . 

n dune 
1 9 7 5 , i n i t s r e p l y t o t h e S C N I
1 s r e p o r t , the G o v e r n m e n t n 0 u n c e d t h a t i t had a s k e d t h e NEDO t o u n d e r t a k e t h i s e n q u i r y . 

*e NEDO p u b l i s h e d t h e i r r e p o r t on 18 **November** 
1 9 7 6 . 

I t i s a s e a r c h i n g and h i g h l y c r i t i c a l e x a m i n a t i o n o f t h e r e l a t i o n s b e t w e e n t h e i n d u s t r i e s and g o v e r n m e n t s . 

I n h i s i n t r o d u c t i o n t o t h e r e p o r t , t h e D i r e c t o r c n e r a i of the? NEDO 
w r i t e s : ­
'Our e n q u i r y h a s l e f t us i n no d o u b t t h a t t h e e x i s t i n g f r a m e w o r k of r e l a t i o n s h i p s , d e v e l o p e d u n d e r g o v e r n m e n t s o f b o t h m a i n p o l i t i c a l p a r t i e s , i s u n s a t i s f a c t o r y and i n n e e d o f r a d i c a l c h a n g e " . 

8. 

Many o f t h e i n d u s t r i e s , i n t h e i r w r i t t e n e v i d e n c e t o t h e S e l e c t C o m ' n i t t e c on N a t i o n a l i s e d I n d u s t r i e s , * 
g e n e r a l l y a g r e e w i t h t h e N E D O ' s anaix h o w e v e r , 
*
x y s i s o f t h e p r o b l e m s . S o m e , / c o m m e n t t h a t t h e i r r e l a t i o n s w i t h t h e i r s p o n s o r i n g d e p a r t m e n t s have a l w a y s b e e n g e n e r a l l y g o o d and o t h e r s aSree t h a t t h e y have r e c e n t l y i m p r o v e d . 

I n d e e d t h e NEDO 
a c k n o w l e d g e t h e i r c r i t i c i s m s do n o t a p p l y t o r e l a t i o n s h i p s w i t h a l l t h e 
^ t " 
- t o n a l i s e d i n d u s t r i e s o r f o r a l l t h e t i m e t o p a r t i c u l a r i n d u s t r i e s , overnment a g r e e s , n e v e r t h e l e s s , w i t h t h e i r g e n e r a l c o n c l u s i o n r e l a t i o n s h a d d e t e r i o r a t e d i n t h e p e r i o d up t o the m i d - 1 9 7 0 s n c e d e d t o be i m p r o v e d . 

The NEDO p r e s e n t a p e r c e p t i v e a n d t h o u g h t ­
n a l y s i s o f the p r o b l e m s a n d , w h i l e t h e G o v e r n m e n t d o e s n o t a c c e p t n i
 
.

t h n e i  
r p r o p o s a l s , i t w e l c o m e s t h e i r report as o f f e r i n g a b a s i s on h o t h t h e G o v e r n m e n t and tie i n d u s t r i e s c a n now b u i l d . 

the
    
     G
      n 

- S y ^ r n m c n t

f s 
               g e n e r a l 
                                                               a p p r o a c h 

n  
       197^i 
                           t h e 
                                           G o v e r n m e n t s e t 
                                                                                                          out 
                                                                                                                           t o 
                                                                                                                                       p u t 
                                                                                                                                                        t h e 
                                                                                                                                                                         n a t i o n a l i s e d 
                                                                                                                                                                                                                                 i n d u s t r i e s 

n 
       t o 
                    a s o u n d e c o n o m i c 
                                                                                           and f i n a n c i a l f o o t i n g . 
                                                                                                                                                                                               T h i s 
                                                                                                                                                                                                                     r e q u i r e d 

S u b s t 

a n t i a l 
              p r i c e 
                           i n c r e a s e s 
                                                t o 
                                                       p h a s e 
                                                                    o u t 
                                                                             t h e 
                                                                                     s u b s i d i e s 
                                                                                                             n e c e s s i t a t e d 

r e s t r a i n t , 
                      d e s c r i b e d 
                                            i n p a r a g r a p h 5 
                                                                              a b o v e . 

^

, , c
                                     d
                                           
                                              b
                                                    y
                                                           
                                                              t
                                                                    h
                                                                          e
                                                                                
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           3 / ? \

0 
                                                                                                                                      S
                                                                                                                                          e c o n d 
                                                                                                                                                                                S p e c i a l R e p o r t o f 
                                                                                                                                                                                                                                                                                               1 9 7 6 - 7 7 , 
          "Comments by N a t i o n a l i s e d I n d u s t r i e s 
                                                                                                                                                                                                                                        on t h e 
                                                                                                                                                                                                                                                                                  NEDO R e p o r t . " 

i n d u s t r i e s 

A
s a r e s u J t , 
           t h e / 
                are 
                    g e n e r a l l y 
                             i n 
                                a much s t r o n g e r 
                                                f i n a n c i a l 
                                                          p o s i t i o n 

than they have been f o r 
                               a number o f 
                                               y e a r s . 
                                                          T h e p e r i o d 
                                                                          o f 
                                                                              r a p i d 
                                                                                      p r i c e 

increases needed t o 
                      d e a l 
                            w i t h the d e f i c i t s 
                                                   due t o 
                                                           p r i c e 
                                                                   r e s t r a i n t 
                                                                               i n 

the e a r l y 
               1 9 7 0 s 
                          i s 
                               o v e r . 
                                            A more 
                                                        s t a b l e , 
                                                                       and 
                                                                              b e t t e r , 
                                                                                            c l i m a t e 
                                                                                                           o f 

r e l a t i o n s h i p has been e s t a b l i s h e d 
                                                                          and i t 
                                                                                          i s , 
                                                                                                   t h e r e f o r e , 
                                                                                                                            now t i m e l y 
                                                                                                                                                      t o 

review, aid where 
                  n e c e s s a r y 
                               d e v e l o p , 
                                          the 
                                              p r i n c i p l e s 
                                                            i n t he 
                                                                    1 9 6 7 W h i t e 

Paper. 
        The G o v e r n m e n t c o n s i d e r s 
                                          that 
                                                 t h i s 
                                                        r e v i e w , 
                                                                  t o g e t h e r w i t h 
                                                                                      the 

other m e a s u r e s d i s c u s s e d 
                                i n t h i s W h i t e 
                                                    P a p e r , 
                                                              w i l  
                                                                  l 
                                                                     l a y 
                                                                          the 
                                                                                 f o u n d a t i o n s 

for f u r t h e r 
                    i m p r o v e m e n t . 

10. 
      - 
          An i m p o r t a n t 
                                  p o i n t 
                                            w h i c h must 
                                                               be e m p h a s i s e d 
                                                                                        f r o m 
                                                                                                  t h e 

beginning 
            i s 
                t h a t 
                       a p a r t 
                              f r o m 
                                     t h e 

fact 
     of p u b l i c 
                     o w n e r s h i p 
                                     and c o n t r o l 
                                                        many o f 
                                                                    t h e 
                                                                           n a t i o n a l i s e d 
                                                                                                i n d u s t r i e s 
                                                                            c o m p e t i t i v e 
                                                                                                p o s i t i o n , 
have l i t t l e 
                i n 
                     common. 
                                   T h e y v a r y i n 
                                                        s i z e , 
                                                                 o b j e c t i v e s / m a r k e t s , 
                                                                                                   f i n a n c i a l 

                                                                                                                                                                                                                                                                                 a
                                                                                                                                                                                                                                                                                     n
strength, 
                                         and s o c i a l 
                                                                                              s i g n i f i c a n c e . 
                                                                                                                                                                      T h e i n d i v i d u a l energ3
                                                                                                                                                                                                                                                                                         d 
                                                                                                                                                                                                                                                                                                      t r a n s p o r t 

'

i n d u s t r i e s 
                      a r e 
                                s u b j e c t 
                                                   t o 
                                                          o v e r a l l 
                                                                              p o l i c i e s 
                                                                                                    f o r 
                                                                                                             t h e 
                                                                                                                       s e c t o r s 
                                                                                                                                          i n 
                                                                                                                                                  w h i c h 

they o p e r a t e . 
                  The f o r m a t i o n 
                                     o f 
                                         tlie 
                                              two new m a n u f a c t u r i n g 
                                                                            c o r p o r a t i o n s , 

B r i t i s h A e r o s p a c e 
                                        a n d B r i t i s h 
                                                                     S h i p b u i l d e r s , 
                                                                                                        b r i n g s 
                                                                                                                         a b o u t 
                                                                                                                                        a 
                                                                                                                                             f u r t h e r 

s i g n i f i c a n t 
                         s h i f t 
                                        in 
                                               t h e 
                                                         b a l a n c e 
                                                                             o f 
                                                                                    t h e 
                                                                                              n a t i o n a l i s e d 
                                                                                                                               i n d u s t r i e s 
                                                                                                                                                           away 

from the h i s t o r i c a l 
                         p r e d o m i n a n c e 
                                           o f 
                                               t h e 
                                                    p u b l i c 
                                                              u t i l i t i e s 
                                                                            s e r v i n g 
                                                                                       a B r i t i s h m a r k e t . 
                                      The t h r e e 
                                                              m a n u f a c t u r i n g i n d u s t r i e s 
                                                                                                                             - 
                                                                                                                                  S t e e l , 
                                                                                                                                                    A e r o s p a c e 

and S h i p b u i l d i n g - 
                         t o g e t h e r 
                                      w i t h 
                                             B r i t i s h A i r w a y s and t h e 
                                                                                 B r i t i s h 

National O i l C o r p o r a t i o n 
                              a l l 
                                   o p e r a t e 
                                             i n 
                                                 h i g h l y 
                                                          c o m p e t i t i v e 
                                                                          i n t e r n a t i o n a l 

Markets w i t h t h e i r 
                      p r i c e s 
                               l a r g e l y 
                                         s e t 
                                              by i n t e r n a t i o n a l 
                                                                    t r a d i n g 
                                                                               c o n d i t i o n s . 

U is i m p o r t a n t 
                t h a t 
                      t h e s e 
                             i n d u s t r i e s , 
                                           a n d i n d e e d 
                                                        t h o s e w h i c h 
                                                                      a r e 

competing i n d o m e s t i c 
                                m a r k e t s , 
                                              a r e a b l e 
                                                            t o 
                                                                 r e s p o n d q u i c k l y 
                                                                                            t o 

0 P p o r t u n i t i e s 
                                                and c o m p e t i t i v e 
                                                                                                                f o r c e s 
                                                                                                                                            and t h a t 
                                                                                                                                                                                t h e 
                                                                                                                                                                                               G o v e r n m e n t s 
                                                                                                                                                                                                                                                     a r r a n g e ­

ments w i t h t h e m s h o u l d 
                             r e c o g n i s e 
                                           t h i s . 
                                                    I t 
                                                        f o l l o w s 
                                                                    t h a t , 
                                                                           w h i l e 
                                                                                     t h e r e 

8 r  e a number o f 
                                                                            i m p o r t a n t 
                                                                                                                                   p r i n c i p l e s 
                                                                                                                                                                                              o f wide 
                                                                                                                                                                                                                                          a p p l i c a t i o n , i t 
                                                                                                                                                                                                                                                                                                                                    i s 

e s s e n t i a l 
                                   t h r o u g h o u t 
                                                                                   t o 
                                                                                                t a k e 
                                                                                                                       a c c o u n t 
                                                                                                                                                          o f 
                                                                                                                                                                        the 
                                                                                                                                                                                        v a r y i n g c i r c u m s t a n c e s 
                                                                                                                                                                                                                                                                                          o f 
                                                                                                                                                                                                                                                                                                  work 
the d i f f e r e n t 
                                                         i n d u s t r i e s 
                                                                                                          and to 
                                                                                                                                         be r e a d y 
                                                                                                                                                                                t o 
                                                                                                                                                                                             f i n d 
                                                                                                                                                                                                                   s o l u t i o n s 
                                                                                                                                                                                                                                                               and a 
                                                                                                                                                                                                                                                                                           f r a m e - / 

0 f . c o n t r o l a p p r o p r i a t e t o the p a r t i c u l a r needs and market **s i t u a t i o n s**  
0 f each of thorn.

 
T h i s need f o r a f l e x i b l e approach t o match c i r c u m ­
st-ances i s r e c o g n i s e d by the NEDO. 

 
1 1  . The NEDO d i s c u s s i n some d e t a i l the c r u c i a l q u e s t i o n **whether**  

the Government s h o u l d aim 
                                   t o s t a n d back f r o m t h e i n d u s t r i e s , 
                                                                                  and 
                                                                                         

operate an " a r m s - l e n g t h " r e l a t i o n s h i p , or whether i  
                                                           t 
                                                             s h o u l d be  

involved more c l o s e l y . 
                           T h e i r c o n c l u s i o n s on t h i s are 
                                                              worth 
                                                                      q u o t i n g : ­

" I t seems t o us t h a t the t h i n k i n g behind the w h o l l y arm's  

l e n g t h approach i s 
                                      based on a f a l s e a n a l o g y w i t h t h e p r i v a t e  

s e c t o r . 
                 The f i n a n c i a l s t r u c t u r e s and d i s p l i n e s i n 
                                                                                                     the p u b l i c  

and 
     p r i v a t e s e c t o r s are 
                               v e r y 
                                      d i f f e r e n t - not l e a s t because  

the u l t i m a t e s a n c t i o n of l i q u i d a t i o n i s 
                                                                    i n p r a c t i c e absent i n the 
             major n a t i o n a l i s e d i n d u s t r i e s . Moreover, 
                                                                                                t h e i r  

importance as e m p l o y e r s , s u p p l i e r s and c u s t o m e r s , and 
                                                         t h e 
                                                             

economic and s o c i a l i m p l i c a t i o n s of t h e i r a c t i o n s make i t 
                                                              

r i g h t as w e l l as i n e v i t a b l e t h a t government s h o u l d take a c l o s e i n t e r e s t i n t h e i r s t r a t e g i e s . The i s s u e s o f p u b l i c  

p o l i c y i n v o l v e d a r e 
                                       so l a r g e and p o l i t i c a l l y s e n s i t i v e  

t h a t i t 
                i s 
                      n o t r e a l i s t i c t o 
                                                        suppose t h a t they would ever be  

l e f t f o r 
                  l o n g 
                               t o 
                                     management alone t o d e t e r m i n e , s u b j e c t 
                                                                                                                       o n l y 
                                                                                                                                   

t o p e r i o d i c checks on t h e i r f i n a n c i a l performance."  

## The

government agrees w i t h t h i s . 

The q u e s t i o n i s how **best**  
c o n s t r u c t w i t h each i n d u s t r y a r e l a t i o n s h i p which i s **s u f f i c i e n t l y**  

0
  s
    e * 
           but 
                              i n 
                                       which the r e s p o n s i b i l i t i e s and o b j e c t i v e s of both the 
                                                                                                                                                                                                                                   

i riment and the i n d u s t r y are 
w e l l d e f i n e d and w e l l **u n d e r s t o o d .**  

## Ssamtructurc

'2. 

The NEDO recommend a r a d i c a l c h a n g e i n t h e c u r r e n t i n s t i t u t i o n a l 
^ a n g e m e n t s . 

A s a g e n e r a l a p p r o a c h , b u t w i t h m o d i f i c a t i o n s t o s u i t 
^ s t a n c e s  
, t h e y p r o p o s e t h a t e a c h n a t i o n a l i s e d i n d u s t r y s h o u l d be r u
 " by a P o l i c y C o u n c i l r e s p o n s i b l e f o r s t r a t e g y and a C o r p o r a t i o n 
^ 
a c t i n g a s t h e e x e c u t i v e a u t h o r i t y . 

The P o l i c y C o u n c i l w o u l d he 
"ndcr a P r e s i d e n t o f h i g h p e r s o n a l s t a n d i n g , ' and p r e f e r a b l y a p a r t ­
^
r
 
. 

I t w o u l d i n c l u d e t h e C h a i r m a n a n d some members o f t h e orp 
0 r P o r a t i o n B o a r d , r e p r e s e n t a t i v e s o f t h e m a i n i n t e r e s t g r o u p s c o n c e r n e d t h e i n d u s t r y - 
G o v e r n m e n t D e p a r t m e n t s , t r a d e u n i o n s , a n d c u s t o m e r s a n d a l s o members r e f l e c t i n g o t h e r i n d e p e n d e n t v i e w p o i n t s . 

I t w o u l d s  
u P p o r t e d by a s m a l l s t a f f s e c o n d e d f r o m d e p a r t m e n t s , the C o r p o r a ­
0 
n and t r a d e u n i o n s . 

I t s m a i n f u n c t i o n s w o u l d be t o a g r e e c o r p o r a t e 
^
e c t i v e s a n d t h e s t r a t e g i e s t o a c h i e v e t h e m ; 
t o c s t a b l i s h p e r f o r m ­
a^ce c r i t e r i a  
; 
t o a i d o r s e c o r p o r a t e p l a n s ; 
a n d t o m o n i t o r p e r f o r m a n c e . 

The C o r p o r a t i o n B o a r d w o u l d manage the i n d u s t r y w i t h i n t h e f r a m e ­
of t h e s e o b j e c t i v e s , s t r a t e g i e s and c r i t e r i a . 

One o f the m a i n 
0 
1 
the P r e s i d e n t o f t h e P o l i c y C o u n c i l w o u l d be t o p r o t e c t t h e 
^ r a t i o n B o a r d , w h i c h w o u l d have a s e p a r a t e C h a i r m a n , f r o m i n t e r ­
v '
e n t i c n by G o v e r n m e n t i n c a r r y i n g o u t i t s r e s p o n s i b i l i t i e s . 

T h e P o l i c y C o U n C i i 
* w o u l d a p p o i n t t h e C h a i r m a n and members o f t h e B o a r d . 

M . 

T 
, e G o v e r n m e n t a g r e e s t h a t , i n d e a l i n g w i t h t h e n a t i o n a l i s e d i e s , i t s m a i n c o n c e r n s h o u l d he w i t h s t r a t e g i c a n d m a j o r i s s u e s L tian w i t h day t o d a y management. 

I t a l s o g e n e r a l l y a c c e p t s a r g u m c n t t h a t t h e e v o l u t i o n o f s t r a t e g i c p l a n s f o r n a t i o n a l i s e d n ( 1 U s t j c o n s u l t a t i o n b e t w e e n r g f s h o u l d be a c o m b i n e d o p e r a t i o n , i n v o l v i n g / t h e i n t e r e s t w h i c h a r e c l o s e l y c o n c e r n e d w i t h t h e i r c o n t e n t and i m p l e m e n t a t i o n C 
n o f t e n have t h e power t o f r u s t r a t e t h e m i  
f t h e y w i s h . 

H o w e v e r , ho G o v e r n m e n t does n o t a c c e p t t h a t N E D O ' s p r o p o s a l f o r P o l i c y C o u n c i l a n d C o r p o r a t i o n B o a r d s i s the b e s t way o f a c h i e v i n g t h e s e o b j e c t i v e s a n
 
d of i m p r o v i n g i t s r e l a t i o n s w i t h t h e i n d u s t r i e s . 

1
j * 
B e f o r e r e a c h i n g t h i s c o n c l u s i o n t h e G o v e r n m e n t d i s c u s s e d t h e 
^
r o P o s a l w i t h t h e n a t i o n a l i s e d i n d u s t r i e s , and t o o k a c c o u n t o f t h e C o m m e n t s i n t h e i r p u b l i s h e d e v i d e n c e t o the S C N I . 

None of t h e n d u s t r i e s f a v o u r s 
- 
and some r e j e c t i n v e r y , s t r o n g terjns 
- 
the 
^
r o P o s a l f o r a P o l i c y C o u n c i l s t a n d i n g i n l i n e o f command b e t w e e n 
? - M i n i s t e r and an e x e c u t i v e B o a r d w h i c h r u n s t h e i n d u s t r y . 

T h e y S
o U
f n e t h a t M i n i s t e r s w o u l d n o t d e l e g a t e t h e i r p r e s e n t p o w e r s , o r 
0 n c c r n w i t h m a t t e r s o f m a j o r i m p o r t a n c e , t o t h e P o l i c y C o u n c i l 
( a n d 
 
a P j ; e a r s t o be i m p l i c i t i n t h e N E D O ' s p r o p o s a l i f i t were t o 
 
C n i e v e t h e d e s i r e d o b j e c t i v e o f l i m i t i n g M i n i s t e r i a l i n t e r v e n t i o n ) . 

 
T h i  * 
s a s s u m p t i o n i s r i g h t . 

T h e G o v e r n m e n t i s the s o l e s h a r e h o l d e r o f e h a t i o n a J i s e d i n d u s t r i e s , a n d t h e i r p r i n c i p a l b a n k e r ; 
a n d , as t h e NEDo a c k n o w l e d g e , t h e i n d u s t r i e s s t r a t e g i e s and m a i n p o l i c y d e c i s i o n s A
V
e q u e s t i o n s o f m a j o r p o l i t i c a l and p u b l i c i m p o r t a n c e w i t h w h i c h the r 
0 v e r n m e n t must be c o n c e r n e d . 

i r*e G o v e r n m e n t b e l i e v e s t h a t , c o n t r a r y t o t h e NEDO s o b j e c t i v e s , 
^hese a r r a n g e m e n t s w o u l d s l o w down t h e p r o c e s s o f d e c i s i o n m a k i n g a n d 
*
0*Ud c o n f u s e r e s p o n s i b i l i t y and a c c o u n t a b i l i t y . 

The M i n i s t e r and the v
*
C  
C o u n c i l w o u l d b o t h be c o n c e r n e d w i t h s t r a t e g i c and m a j o r i s s u e s u n c t i o n s of t h e P o l i c y C o u n c i l and t h e C o r p o r a t i o n B o a r d / w o u l d 
0 V e r  
l d P 
b e c a u s e , as many o f t h e i n d u s t r i e s have p o i n t e d o u t , t h e 

i
n
c t i o n 
b e t w e e n s t r a t e g i c 
and e x e c u t i v e 
d e c i s i o n s 
i s 
n o t 
i n 
i c e 
a l w a y s 
as 
s h a r p and a s 
c l e a r 
c u t 
as 
N E D O ' s 
p r o p o s a l s 
i m p l y . 
Thu s 

1
L h e G o v e r n m e n t , the P o l i c y C o u n c i l and t h e C o r p o r a t i o n B o a r d 
"
l i be c o n c e r n e d w i t h s t r a t e g i c a n d m a j o r i s s u e s , a n d i n s t e a d Of 
* a r i f y i n g r e s p o n s i b i l i t i e s and s t r e a m l i n i n g d e c i s i o n s , t h e N E D O ' s p r o P o s a l s w o u l d add an a d d i t i o n a l l a y e r o f a u t h o r i t y , e x p r e s s e d i n e 8 i s l a t i o n , i n a P o l i c y C o u n c i l whose own r e s p o n s i b i l i t i e s w o u l d i n P r a c t i c e have u n c l e a r d e m a r c a t i o n l i n e s . 

A 
1
7
* 
A number o f the n a t i o n a l i s e d i n d u s t r i e s have a l s o p o i n t e d o u t t h e i r p r e s e n t b o a r d s a r e s u p p o r t e d by management c o m m i t t e e s w h i c h deal w i t h many of t h e d a y t o day i s s u e s i n v o l v e d i n t h e r u n n i n g o f 
1  
0 b u s i n e s s . 

T h e s e a r r a n g e m e n t s a r e f l e x i b l e and t a i l o r e d t o t h e e ( I u i r e m e n t s o f t h e p a r t i c u l a r i n d u s t r y whose C h a i r m a n c a n r e a d i l y Modify them i f n e c e s s a r y . 

T h e y a r e , h o w e v e r , f u n d a m e n t a l l y d i f f e r e n t a s t a t u t o r y two t i e r s t r u c t u r e , w i t h t h e p o w e r s and f u n c t i o n s of
, t e s e n i o r b o a r d " e x p l i c i t l y and f o r m a l l y d i s t i n g u i s h e d f r o m t h o s e X e  c u t i v e management," 
as p r o p o s e d by N E D O . 

,
& . 

T 
A n t h e i r p a p e r o f November 
1 9 7 7 t o t h e S C N I , t h e NEDO 
have l c i s e d t h e i n d u s t r i e s ' 
r e a c t i o n s t o t h e i r p r o p o s a l f o r P o l i c y 
 
T h e y a r g u e t h a t i t i s u n a c c e p t a b l e r fo Is and C o r p o r a t i o n B o a r d s .

the i n d u s t r i e s t o a g r e e g e n e r a l l y w i t h t h e i r a n a l y s i s o f the n S s o f t h e a r r a n g e m e n t s i n the p a s t b u t t o r e j e c t any p r o p o s a l s f o
 
p str. 

w u c t u r a  
l o r o t h e r c h a n g e s t o e n s u r e a b e t t e r and more s t a b l e r e i a t . 

i Q n s h i p i n f u t u r e . 

W h i l e t h e G o v e r n m e n t r e c o g n i s e s t h e d e f i c i e n c ­
l c h l e d the NEDO t o make t h e i r r e c o m m e n d a t i o n s , many have b e e n 
0 v 0 r c 
0
r n e s i n c e NEDO c o n d u c t e d t h e i r s t u d y and the G o v e r n m e n t d o e s n o t a g ree t n a t i t f o l l o w s t h a t m a j o r s t r u c t u r a l c h a n g e s i n the b o a r d s a*e a n e  c e s s a r y c o n d i t i o n o f m a i n t a i n i n g t h e r e c e n t i m p r o v e m e n t i n U
o * s h i p  .

s Th ne f a c t t h a t t h e G o v e r n m e n t d o e s n o t i n t e n d t o i n t r o d u c e P o l i c y s
^
 
and C o r p o r a t i o n B o a r d s d o e s n o t m e a n , h o w e v e r , t h a t i t r e j e c t s a rSurnent t h a t c h a n g e s a r e n e c e s s a r y t o b r i n g a b o u t f u r t h e r i m p r o v e ­
n e n t s ri
' 
The G o v e r n m e n t i s a l r e a d y V o l o p l n g a number o f new a r r a n g e m e n t s on t h e l i n e s p r o p o s e d by NEDO, and i t w i l l now i n t r o d u c e o t h e r s . 

L a t e r p a r t s o f t h i s S e c t i o n e x p l a i n t h e v a r i o u s ways i n w h i c h t h e m a i n i n t e r e s t g r o u p s c o n c e r n e d w i t h t h e i n d u s t r i e s w i l l be more i n v o l v e d i n t h e f o r m u l a t i o n o f t h e i r p o l i c i e s , e i t h e r by b o a r d m e m b e r s h i p o r by i m p r o v e d c o n s u l t a t i v e and p a r t i c i p a t i v e a r r a n g e m e n t s . 

T h e p r o c e d u r e s f o r the d i s c u s s i o n o f c o r p o r a t e p l a n s a r e b e i n g d e v e l o p e d w i t h t h? 

a i m o f g i v i n g t h e m a c e n t r a l p l a c e i n t h e r e l a t i o n s h i p b e t w e e n t h e n a t i o n a l i s e d i n d u s t r i e s and the s p o n s o r i n g d e p a r t m e n t s , a n d o f p r o v i d i n g a s y s t e m a t i c f r a m e w o r k f o r r e a c h i n g a g r e e m e n t on l o n g t e r m o b j e c t i v e s a n d s t r a t e g i e s . 

I n f o r m a t i o n on t h e s e p l a n s , on f i n a n c i a l t a r g e t s and a n y s e c t o r a l o r s o c i a l o b j e c t i v e s s e t t o the i n d u s t r i e s , On c a s h l i m i t s , and on p e r f o r m a n c e a n d s e r v i c e i n d i c a t o r s and aims w i l l be p u b l i s h e d i n t h e i n d u s t r i e s and a c c o u n t s . 

T h e s e a r r a n g e m e n t s , a n d t h e p r o p o s e d new power t o g i v e s p e c i f i c d i r e c t i o n s where n e c e s s a r y , w i l l h e l p t o c l a r i f y t h e r e s p e c t i v e r o l e s o f t h e B o a r d s a n d / t h e G o v e r n m e n t , and t h e y w i l  
l p r o v i d e a b e t t e r b a s i s f o r P a r l i a m e n t a n d t h e p u b l i c t o j u d g e t h e p e r f o r m a n c e o f t h e i n d u s t r i e s and t h e r o l e o f t h e G o v e r n m e n t i n t h e i r o p e r a t i o n s . 

1 
a n n u a l r e p o r t s o f New Powers t o i s s u e s p e c i f i c d i r e c t i o n s t o **Boards**  
20 
The p r e s e n t s t a t u t e s empower **the S e c r e t a r y of S t a t e t o g i v e**  
the Boards d i r e c t i o n s of "a g e n e r a l c h a r a c t e r " on m a t t e r s **which**  
appear to him to a f f e c t the n a t i o n a l i n t e r e s t and, i n some **c a s e s ,**  
d i r e c t i o n s on p a r t i c u l a r s u b j e c t s which are s p e c i f i e d **i n t h e s t a t u t e s .**  
However, the power t o g i v e g e n e r a l d i r e c t i o n s does not a l l o w the  
Secretary of S t a t e to d i r e c t an i n d i v i d u a l i n d u s t r y on a **p a r t i c u l a r**  
matter, however i m p o r t a n t , u n l e s s t h a t p a r t i c u l a r power of d i r e c t i o n  

is s p e c i f i e d i n the s t a t u t e s . 
                                             I n the absence of powers t o g i v e 
                                                                                               s p e c i f i c 
                                                                                                              

d i r e c t i o n s , governments have had to r e l y on a p r o c e s s of 
                                                                                                                            p e r s u a s i o n .  

Because t h i s has been i n f o r m a l , a c c o u n t a b i l i t y f o r 
                                                                 d e c i s i o n s has  

on occasions been b l u r r e d and t h i s has c a u s e d f r i c t i o n and 
                                                                    resentment.  

The Government c o n s i d e r s t h a t t h i s s i t u a t i o n s h o u l d be avoided, and  

that i t i s wrong i n p r i n c i p l e t h a t a M i n i s t e r cannot 
                                                                        s t a t u t o r i l y  

                        of major importance  
intervene i n s p e c i f i c m a t t e r s / s u b j e c t 
                                              to t h e a p p r o v a l of 
                                                                       P a r l i a m e n t . 
                                                                                       

^t agrees, t h e r e f o r e , w i t h NEDO t h a t the p r e s e n t powers s h o u l d 
                                                                                                be extendcd t o remedy t h i s d e f i c i e n c y by e n a b l i n g the M i n i s t e r t o g i v e a Board c i t h e r g e n e r a l or s p e c i f i c d i r e c t i o n s on m a t t e r s which a p p e a r e d  

t
  o  him t o a f f e c t the n a t i o n a l i n t e r e s t . 
                                                                                                                                                            An important 
                                                                                                                                                                                                                advantage of the new 
     power would be t h a t when a d i r e c t i o n was g i v e n i t would c l a r i f y  

A c c o u n t a b i l i t y by i n d i c a t i n g f o r m a l l y and p u b l i c l y where the Govern­

mcnt had d e c i d e d 
                    t o o v e r r u l e a Board's judgement or t o d i r e c t i t t o  

^

   0  something i n the n a t i o n a l i n t e r e s t . 
                                                                                                                                                        The Government w i l l put 
                                                                                                                                                                                                                                                          f o r w a r d 
                                                                                                                                                                                                                                                                                           
                                                                                                                                                                       and i n the case of the  
Proposals a c c o r d i n g l y f o r amendment of the s t a t u t e s , / e l e c t r i c i t y  

ffPply 
        i n d u s t r y i t has i n c l u d e d a p r o v i s i o n i n the E l e c t r i c i t y 
                                                                                             and 
                                                                                                    
^Vciear M a t e r i a l s B i l l i n t r o d u c e d i n F e b r u a r y .  

* 'lhese l e g i s l a t i v e p r o p o s a l s w i l J include a number of 
                                                                      s a f e g u a r d s . 
                                                                                       

^ M i n i s t e r would not be a b l e to i s s u e a s p e c i f i c d i r e c t i o n b e f o r e 
                                                                                                                                  he 
                                                                                                                                          

^

as consulted the i n d u s t r y i n q u e s t i o n . 
                                                                                                                                                        The d i r e c t i o n would be i n the  

0rm 
           of a s t a t u t o r y i n s t r u m e n t , 
                                                                                                                s u b j e c t t o P a r l i a m e n t a r y 
                                                                                                                                                                                                                  p r o c e d u r e s . 
                                                                                                                                                                                                                                                                  

Th e . M i n i s t e r w o u l d be r e q u i r e d t o p u b l i s h , when t h e s t a t u t o r y n s t r u m e n t was p r e s e n t e d , an e s t i m a t e o f t h e e x t r a c o s t i f any t o t h e l n d u s t r y o f i m p l e m e n t i n g t h e d i r e c t i o n . 

I f t h e i n d u s t r y d i d not a g r e e 
^vj-th . , . 

t h i s , t h e i r e s t i m a t e w o u l d be p u b l i s h e d w i t h the G o v e r n m e n t s C o m m P n  
f where a p p r o p r i a t e c
, i t s on i t . 

C o m p e n s a t i o n w o u l d be p a i d / t o c o v e r t h e e x t r a c o s t a n d ti t n e l e g i s l a t i o n w o u l d p r o v i d e f o r t h i s . 

T h e r e w o u l d a l s o be s to o v e r r i d e , where n e c e s s a r y and s u b j e c t t o E u r o p e a n C o m m u n i t y 
^ g a t i o n s , any o t h e r s t a t u t o r y d u t i e s w i t h w h i c h t h e s p e c i f i c direct- i C
i o n m i g h t c o n f l i c t . 

I t w o u l d n o t be p o s s i b l e t o make a s p e c i f i c directi O
i o n w h i c h w o u l d have t h e e f f e c t o f e x t e n d i n g o r r e s t r i c t i n g t h e 
^hg s t a t u t o r y p o w e r s o f an i n d u s t r y ; 
t h a t w o u l d be a m a t t e r f o r 
'
) r i m a r y l e g i s l a t i o n . 

22. 

P a r l i a m e n t a p p r o v e s t h e s e p o w e r s t h e G o v e r n m e n t i n t e n d s to use 
^
 
s P a r i n g i y . 

One o f t h e themes r u n n i n g t h r o u g h t h i s W h i t e P a p e r is  t n a t the r e l a t i o n s h i p b e t w e e n g o v e r n m e n t s a n d n a t i o n a l i s e d i n d u s t r i e s is 
0
s e J 
and t h e r e w i l l c o n t i n u e t o be many i s s u e s on w h i c h t h e i e s and t h e G o v e r n m e n t w i l l r e a c h a g r e e m e n t w i t h o u t t h e i s s u e C
i f i c d i r e c t i o n s and w i t h o u t any c o n f u s i o n o f r e s p o n s i b i l i t y 
0
u h t a b i l i t y . 

M o r e o v e r , M i n i s t e r s do n o t i n t e n d t h a t , as a 
0 
r the a v a i l a b i l i t y o f t h i s p o w e r , t h e y s h o u l d be d r a w n i n t o i n t e r v e n t i o n o r P a r l i a m e n t a r y d i s c u s s i o n o f a m u l t i t u d e of Q f day t o d a y management, w h i c h s h o u l d i n p r i n c i p l e , and must 
^ t e r  
s P r a c t i in L A c e , be l e f t t o t h o s e r e s p o n s i b l e f o r m a n a g i n g and r u n n i n g se £ 
. 

U
s t r i e s w i t h o u t t h e i n t e r v e n t i o n of M i n i s t e r s o r P a r l i a m e n t . 

£^Lii^nd a p p o i n t m e n t o f h o a r d members 
2 3 . 

When the R e v i e w B o d y on T o p S a l a r i e s i n t h e i r S i x t h R e p o r t r ecommcnded r e v i s e d s a l a r i e s f o r n a t i o n a l i s e d i n d u s t r y B o a r d Members a r u l C h a i r m e n **f o r** 
1 **J a n u a r y** 
1 9 7 5 t h e G o v e r n m e n t d e f e r r e d a d e c i s i o n n the r e c o m m e n d a t i o n s f o r w i d e r p o l i c y r e a s o n s . 

A s a r e s u l t t h e p a v of B o a r d Members and C h a i r m e n has f a l l e n s h a r p l y i n r e a l t e r m s , far more s o r e l a t i v e l y t h a n t h a t o f most o t h e r p e o p l e , a n d t h e r e a r e a n o m a l i c s i n t h e pay s t r u c t u r e i n many o f t h e i n d u s t r i e s w i t h b o a r d 
^"ibers e a r n i n g l e s s t h a n some s e n i o r s t a f f w o r k i n g f o r t h e m . 

2/ 
^ 
-
­
* 
un 15 D e c e m b e r t h e G o v e r n m e n t a n n o u n c e d t h a t t h e most t h a t C o u l c l be a l l o w e d a t t h e p r e s e n t t i m e was a 5% g e n e r a l i n c r e a s e f r o m 
1  
J **a n u a r y** 1 9 7 S , w i t h up t o W% f o r t h e l e s s w e l l p a i d b o a r d members t a P e r e d t o e n s u r e t h a t t h e 
5% a p p l i e d above 
£ 1 3 , 0 0 0 
a y e a r . 

I n G
a c h i n g t h i s d e c i s i o n the G o v e r n m e n t h a d r e g a r d t o t h e m e a s u r e s 
. ^ 1 
b e i n g t a k e n i n t h e n a t i o n a l i n t e r e s t t o c o n t r o l i n f l a t i o n w h i c h 
0 n t i n u e t o demand c o n s i d e r a b l e r e s t r a i n t f r o m a l l s e c t i o n s o f t h e 
0
n U
n u n A
 t y . 

The G o v e r n m e n t r e c o g n i s e d t h a t t h i s s t i l l l e a v e s t a o n a l i s e d i n d u s t r y b o a r d members s i g n i f i c a n t l y o u t o f l i n e w i t h 
 
c o u n t e r p a r t s , and i t w i l l l o o k a g a i n a t t h e way f o r w a r d when  
the j) . .  
p e v i e w B o d y on T o p S a l a r i e s makes i t s n e x t r e c o m m e n d a t i o n s f o r A
p r i i 
1978. 

2 5 . 

A l  
l a p p o i n t m e n t s t o B o a r d s w i l  
l c o n t i n u e t o be made by t h e r e s p o n s i b l e M i n i s t e r who w i l l c o n s u l t the C h a i r m a n o f the i n d u s t r y c o n c e r n e d on e a c h a p p o i n t m e n t , a n d c a l l on t h e P u b l i c A p p o i n t m e n t s U
n i t i n the C i v i l S e r v i c e D e p a r t m e n t when a p p r o p r i a t e . 

A number o f the i n d u s t r i e s have b e e n c r i t i c a l o f d e l a y s i n f i l l i n g v a c a n c i e s 
0 
n the b o a r d s . 

T h i s i s s o m e t i m e s u n a v o i d a b l e b u t t h e G o v e r n m e n t p e a d i l y a c c e p t s t h a t t h e a i m m u s t be t o a v o i d d e l a y s w h e r e v e r p o s s i b l e . 

- ^ ^ c o m p o s i t i o n o f b o a r d s 
2 
6 - 
The c o m p o s i t i o n o f e a c h b o a r d w i l l be s e t t l e d on a n i n d u s t r y b * i n d u s t r y b a s i s by t h e M i n i s t e r s c o n c e r n e d a f t e r d i s c u s s i o n w i t h t h * C h a i r m e n . 

T h e G o v e r n m e n t s p r o p o s a l s f o r t h e a p p o i n t m e n t o f employee r e p r e s e n t a t i v e s a r e e x p l a i n e d i n p a r a g r a p h s 28 
and 29 
on i n d u s t r i a l d e m o c r a c y ; 
a n d , as p o i n t e d o u t i n paragrajh 
30, c o n s u m e r tot eRibers w i l l be a p p o i n t e d t o some b o a r d s . 

The G o v e r n m e n t w i l l c o n t i n u e a P P o i n t p a r t - t i m e n o n - e x e c u t i v e m e m b e r s who are n o t r e p r e s e n t a t i v e of ­
i n t e r e s t g r o u p s but who have t h e e x p e r i e n c e t o make an i m p o r t a n t C
O
n t r i b u t i o n to t h e r u n n i n g o f the i n d u s t r i e s . 

*ne G o v e r n m e n t h a s a l s o d e c i d e d t h a t i n some i n d u s t r i e s a c i v i l ant f r o m t h e s p o n s o r i n g d e p a r t m e n t , and i n a few c a s e s f r o m t h e S
U
r y t o o , w i l  
l be a p p o i n t e d t o b o a r d s a f t e r c o n s u l t a t i o n w i t h the a i r m e n c o n c e r n e d . 

The p u r p o s e i s t o g i v e t h e d e p a r t m e n t a c l e a r e r l e r s t a n d i n g o f t h e i n d u s t r y , a n d a b e t t e r i n s i g h t i n t o i t s p r o b l e m s , b u t  
t h^ G o v e r n m e n t a l s o r e c o g n i s e s t h a t i n t h e d i f f e r e n t c i r c u m s t a n c e s Of t h v a r i o u s i n d u s t r i e s a p p o i n t m e n t o f c i v i l s e r v a n t s t o t h e b o a r d s l o t n e c e s s a r i l y be t h e b e s t way o f s e c u r i n g t h i s r e s u l t i n e v e r y 
 
i n**f3ust**  
r v . 

I t w i l l , h o w e v e r , be w o r t h w h i l e where i t means t h a t t h e 
 
Go V e r r ment c a n be aware a t an e a r l i e r s t a g e t h a n now o f t h e t h i n k i n g n e b o a r d s a n d , f o r t h e i r p a r t , t h e b o a r d s c a n have a c l e a r e r a t
'
 
a f o r m a t i v e s t a g e o f t h e i r p l a n n i n g , o f the w i d e r o b j e c t i v e s P l i c a t i o n s o f G o v e r n m e n t p o l i c y . 

T h e r e i s a p o t e n t i a l 
* U f f  
i l ,-*ty a r i s i n g f r o m t h e d u a l a l l e g i a n c e w h i c h a c i v i l s e r v a n t a v  e t o h i s M i n i s t e r on t h e one h a n d and as a b o a r d member 
^ uie c o r p o r a t e r e s p o n s i b i l i t y o f the B o a r d on t h e o t h e r h a n d . 

G  
a s t h i s d u a l i t y d o e s n o t i n p r a c t i c e p r o d u c e i r r e c o n c i l a b l e C J 
i t p r e s e n t s no o b s t a c l e t o a d o p t i n g t h e a r r a n g e m e n t . 

T h e r e a l r eady c i v i l s e r v a n t s on t h e b o a r d s o f t h e B r i t i s h N a t i o n a l O i l L i o n a n d o f t h e A t o m i c E n e r g y A u t h o r i t y . 

T h i s has w o r k e d w e l l a n  d t h e i r presence has proved u s e f u l both f o r the Government and f o r he two C o r p o r a t i o n s . The p r a c t i c a l c o u r s e i s to experiment w i t h the arrangenent i n o t h e r c a s e s a l s o where i t i s e x p e c t e d t o be h e l p f u l . 

i n d u s t r i a l Democracy 
28.- 
Management' and t h e u n i o n s i n t h o n a t i o n a l i s e d i n d u s t r i e s a r e a l r e a d y m a k i n g p r o g r e s s i n d e v e l o p i n g new a r r a n g e m e n t s f o r c o n s u l t ­
a t i o n and p a r t i c i p a t i o n . 

I n t h e P o s t O f f i c e t h e y have a g r e e d on an e x p e r i m e n t , l a s t i n g f o r two y e a r s , f o r a new B o a r d w i t h , i n E d i t i o n t o the C h a i r m e n , s e v e n management and s e v e n u n i o n members, and f i v e i n d e p e n d e n t m e m b e r s . 

I n some o f the o t h e r i n d u s t r i e s , t h e management a n d t h e u n i o n s have c h o s e n t o p u t t h e e m p h a s i s on t h e improvement o f t h e i r e x i s t i n g c o n s u l t a t i v e p r o c e d u r e s r a t h e r t h a n 
0 n i n v o l v e m e n t a t B o a r d l e v e l . 

The G o v e r n m e n t w e l c o m e s t h e s e i n i t i a t i v e s , a n d i n t e n d s t o e n c o u r a g e p r o g r e s s i n i n t r o d u c i n g and i m p r o v i n g schemes o f i n d u s t r i a l d e m o c r a c y a t a l l l e v e l s i n t h e n a t i o n a l i s e d i n d u s t r i e s . 

I t h a s a c c o r d i n g l y a s k e d t h e C h a i r m e n o f the n a t i o n a l i s e d i n d u s t r i e s t o c o n s u l t w i t h t h e u n i o n s i n e a c h i n d u s t r y , where t h e y a r e n o t a l r e a d y d o i n g s o , a n d t o make J o i n t P
r o p  
0
s a l
 
s
 
f o r r u r t h e r i m p r o v e m e n t s i n c o n s u l t a t i o n and p a r t i c i p a t i o n . 

T ,'e G o v e r n m e n t has a s k e d t h e C h a i r m e n t o p u t f o r w a r d t h e i r p r o p o s a l s b * A u g u s t 
1 9 7 8 . 

T h e y m i g h t r a n g e f r o m w o r k e r r e p r e s e n t a t i o n a t B
o a r d and l o w e r l e v e l s t o f u r t h e r d e v e l o p m e n t s i n c o n s u l t a t i v e a n d 
 
P a r t i c i p a t i v e p r o c e d u r e s . 

I t i s l i k e l y t h a t a n y p r o p o s a l s 
*
h t c h emerge c a n g o a h e a d q u i c k l y u n d e r p r e s e n t l e g i s l a t i o n . 

Hoover, i f i n any n a t i o n a l i s e d i n d u s t r i e s i t i s n e c e s s a r y t o amend t h e s t a t u t e s t o a l l o w f o r an e x p e r i m e n t , o r f o r new a r r a n g e m e n t s , t h e G o v e r n m e n t w i l l i n t r o d u c e t h e n e c e s s a r y l e g i s l a t i o n , a s i t d i d 
0 
r the P o s t O f f i c e e x p e r i m e n t . 

^' 
Fhe G o v e r n m e n t w i l  
l p u b l i s h a W h i t e P a p e r on i t s v i e w s on n e Way f o r w a r d i n i n d u s t r i a l d e m o c r a c y i n t h e p r i v a t e s e c t o r as a s t h e n a t i o n a l i s e d i n d u s t r i e s . 

30. 
       In 
           A p r i l 1975 
                             the Government asked the National Consumer 

Council (NCC) t o 
                  review the arrangements f o r consumer r e p r e s e n t e d 

in the nationalised i n d u s t r i e s . The 
                                                 recommendations i n the KCC

fs 

thorough and 
             d e t a i l e d report" were not concerned with the manu­

facturing i n d u s t r i e s such as the B r i t i s h S t e e l

 
    C o r p o r a t i o i v e b x ^ c 

only with those i n d u s t r i e s which impinge d i r e c t l y on the/consumer, It was published i n August 1976 
                                           and 
                                                the Government has 
                                                                           had 
                                                                                wide­

ranging c o n s u l t a t i o n s on i t s recommendations, some o f 
                                                          when i t has 

already implemented. 
                         The- Government sees an important 
                                                                continuing 

role f o r the n a t i o n a l i s e d industry 
                                         consumer c o u n c i l s as spokesmen 

and guardians o f 
                       the consumer i n t e r e s t , working i n c l o s e a s s o c i a t i c : 

with the NCC 
              a t 
                  n a t i o n a l , and 
                                  v/ith l o c a l a u t h o r i t y and other 

advisory s e r v i c e s a t 
                              l o c a l , l e v e l . I t 
                                                         a l s o sees a r o l e for 
                                                                                         consunes 

members on 
           some n a t i o n a l i s e d i n d u s t r y boards. 

31, 
      Power? o f consiv^/T c o u n c i l s . The 
                                                      NCC'were concerned that 

nationalised i n d u s t r i e s should give more weight t o 
                                                                        the views 
                                                                                      o f 

their consumer c o u n c i l s , and 
                                 recommended i n p a r t i c u l a r t h a t 
                                                                    the Government should have a power t o issue d i r e c t i o n s t o 
                                                         an i n d u s t r y 

following consupier c o u n c i l recommendations; such powers already 

exist i n respect o f 
                       s e v e r a l o f 
                                   the n a t i o n a l i s e d i n d u s t r i e s concern; 

but there are some important exceptions. 
                                             For the most p a r t , norm?l relations between consumer c o u n c i l s and 
                                           t h e i r i n d u s t r i e s w i l l make 

Government i n t e r v e n t i o n o f 
                            t h i s kind unnecessary. In 
                                                         most cases 
                                                                    i n 

which a consumer c o u n c i l makes a recommendation, 

the i n d u s t r y and 
                            ccuncilshouldbe 
                                                      able t o 
                                                                   reach agree­

nent between themselves on the necessary a c t i o n . The 
                                                                same w i l l be 

true also o f 
             d i s c u s s i o n s on the amount o f 
                                              information which the 

industries should d i s c l o s e t o 
                                the c o u n c i l s and 
                                                    the minimum period 

of notice which they should give t o 
                                        them before implementing 
                                                                    the 

rcajor proposals. 
                    In 
                       cases o f 
                                  disagreement i t would be open to 
                                                                         a consumer c o u n c i l t o 
                     make representations t o 
                                               the Government, -which 

would decide whether t o give the industry a s p e c i f i c d i r e c t i o n , 

using, where necessary, the new powers discussed i n paragraphs 
20-22 above, and 
                    subject, as 
                                  noted there, t o 
                                                      any 
                                                           c o n f l i c t with our-

Treaty o f 
           P a r i s obligations. Tha 
                                         NCC has 
                                                    a l s o proposed t h a t , 

^Consumers *nd 
               the n a t i o n a l i s e d i n d u s t r i e s 
                                             jj^ESport by/National Consumer Council to the Secretary o f 
                                        State£ 
                                               P r i c e s end 
                                                           Consumer Protection." HMSO  

whenever an i n d u s t r y f a i l e d to a c t on a recommendation from **i t s**  
consumer c o u n c i l the Secretary of State should be r e q u i r e d t o 
 
issue a d i r e c t i o n unless both Houses of Parliament, by Order, **spec!**  
£ically agreed t h a t he should not. 

Tte Government does not **accept**  
t h i s viev;: i t considers t h a t e x i s t i n g procedures are adequate'to 
 
ensure t h a t Parliament has an opportunity to challenge M i n i s t e r i a l  
d e c i s i o n s . 

The Government, hov/ever, v/elcomes the proposal that  
research r e p o r t s by the c o u n c i l s should be a v a i l a b l e to the 
 
S e l e c t Committee on N a t i o n a l i s e d I n d u s t r i e s , and **notes**  
t n a t the S e l e c t Committee already r e c e i v e s evidence from **them.**  

Energy. 
         In 
            the l i g h t of 
                         the 
                             recommendatxns of 
                                               the 
                                                    MCC and 
                                                            

0 * the 
                        Plov/den Committee, the 
                                                                                                              Government has e s t a b l i s h e d an  

E l e c t r i c i t y Consumers

1 C o u n c i l (ECC) 
                                                 f o r England and Wales,  

i n i t i a l l y on a non-statutory b a s i s . The C o u n c i l w i l l 
                                                                                                               f i l l an important gap i n 
                 previous arrangements by g i v i n g E n g l i s h and  

*

, e l s h e l e c t r i c i t y consumers an e f f e c t i v e v o i c e at n a t i o n a l , as  

'

e H as r e g i o n a l , l e v e l , where i t w i l l operate alongside the 

^ t i o n a l Gas and Domestic Coal Consumers' C o u n c i l s . 
                                                                                              The 
                                                                                                         Goverr-^rA 

has introduced 
                l e g i s l a t i o n t o 
                                make the 
                                         ECC 
                                              

statutory and to give i t r e s p o n s i b i l i t y f o r c o - o r d i n a t i n g regienr."  

e l e c t r i c i t y consumer r e p r e s e n t a t i o n . 
                                                                             The National Gas Consumers

C o u n c i i (MGCC) w i l l continue to guide and co-ordinate the a c t i v i t i e  

0 ^ the r e g i o n a l c o u n c i l s to ensure t h a t gas consumers

Siven coherent and a u t h o r i t a t i v e expression. 
                                                       /The 
                                                             Government a l s r  

ntends to introduce l e g i s l a t i o n g i v i n g the 
                                                                                                                                                Domestic Coal Consur.c-rr 

0 ^ i i c i l a s t a t u t o r y r i g h t to 
                                                                                                                                                            be informed by the 
                                                                                                                                                                                                                                                                       Natbnal Coal 3oarn  

of * 

0

  l"ts plans, arrangements and proposals, and imposing a duty on  
 Board to consider any representations made by the C o u n c i i .  

J  Consumer Advice Centres and C i t i z e n s

^

e a l v/ith l a r g e numbers of e n q u i r i e s and complaints about p u b l i c  

^

e c t o r goods and s e r v i c e s g e n e r a l l y and 
                                                                                                                                        the 
                                                                                                                                                      Government agrees with  

      e  NCC that they are 
                                                                               an e a s i l y i d e n t i f i e d and convenient source  
Of 
              . . 

^ aQvice and help f o r consumers with problems o f t h i s kind  

-J-Uding domestic f u e l problems, 
                                           Hov/ever, the 
                                                             Government 
                                                                             

Dol-;. 

Aeves t h a t the r e g i o n a l gas 
and area e l e c t r i c i t y consumers
c o n s u l t a t i v e c o u n c i l s , v/ith t h e i r d i s t r i c t **committees,**  

-
Quld continue t o o l a y a valuable r o l e as **s p e c i a l i s t s**  
E d i t i o n to 
the g e n e r a l i s t agencies, as **w e l l** **as**  
w 

e 
\* a l   s t r u c t u r e of 
the E l e c t r i c i t y Supply Industry i n 
England err?. 
Zq£*1?' r e p o r t bv Committee of Enquiry"to the 
Secretary of State­
energy; cmnd 
Gy?2 
1  
1 viav;s are 
 
1 Advice Bureaux **already**  
1 
 
C e d i n g i n c o n s u m e r s
1 
v i e w s t o t h e n a t i o n a l b o d i e s . 

O v e r 2000 
e x p e r i e i i c e d men and women g i v e t h e i r t i m e v o l u n t a r i l y i n t h i s work a n d are a v a i l a b l e w i t h a d v i c e a n d a s s i s t a n c e t o t h e p u b l i c o u t s i d e normal h o u r s ; 
t h e y p l a y a n i m p o r t a n t p a r t i n a d v i s i n g l o c a l N a t i o n a l i s e d i n d u s t r y management a n d m o n i t o r i n g t h e i r p e r f o r m a n c e , p r o v i d e . t h e g r a s s r o o t s c o n t a c t f o r f o r m u l a t i n g a c o n s u m e r v i e w 
^ 
n a t i o n a l l e v e l . 

T h e G o v e r n m e n t purposes t o c o n t i n u e i t s s u p p o r t t h e s e b o d i e s , b u t w i l l h a v e f u r t h e r d i s c u s s i o n s w i t h t h e E C C 
NGCC and t h o s e r e s p o n s i b l e f o r t h e l o c a l a u t h o r i t y a n d o t h e r G e n e r a l i s t s e r v i c e s v / i t h a v i e w t o e n s u r i n g t h e m o s t e f f i c i e n t l i a i s o n and i n t e g r a t i o n b e t w e e n t h e v a r i o u s a d v i c e a g e n c i e s . 

pk. 

T h e n e w l y e s t a b l i s h e d N a t i o n a l E n e r g y C o m m i s s i o n , on w h i c h domestic a n d i n d u s t r i a l c o n s u m e r s a r e r e p r e s e n t e d , w i l l p r o v i d e a l ^ l u a b l e f o r u m i n w h i c h a c o n s u m e r v i e w c a n b e b r o u g h t t o b e a r a t t i l e h i g h e s t l e v e l . 

T h e G o v e r n m e n t h a s a s k e d t h e NCC t o g i v e t h e r e e
^ 
l 
 
e n e r g y c o n s u m e r c o u n c i l r e p r e s e n t a t i v e s i t s s u p p o r t i n O
o o ^ d i n a t i n g t h e V i e w s o f c o n s u m e r a n d v o l u n t a r y o r g a n i s a t i o n s p r o v i d i n g r e s e a r c h a n d s e c r e t a r i a l s e r v i c e s . 

^' 
S u r f a c e T r a n s p o r t . 

T h e G o v e r n m e n t i n t e n d s i n d u e c o u r s e , t o 
^
romote l e g i s l a t i o n t o e x t e n d t h e p o w e r s o f t h e e x i s t i n g C e n t r a l 
"^ansport C o n s u l t a t i v e C o m m i t t e e , a t p r e s e n t p r e s c r i b e d b y S e c t i o n 
^
0 ? t h e T r a n s p o r t A c t 1 9 6 2 . 

I t w i l l be r e n a m e d t h e N a t i o n a l 
1 
C o u n c i l 
( N T C C ) , a n d e n a b l e d t o c o n s i d e r t h e 
^ - s p o r t C o n s u m e r s
^ e r a  
l t a r i f f s t r u c t u r e o f t h e B r i t i s h R a i l w a y s B o a r d
^
a s s e n g e r a n d p a r c e l s s e r v i c e s ; 
t o c o n s i d e r a w i d e r a n g e o f s e r v i c e s d f a c i l i t i e s p r o v i d e d b y o t h e r t r a n s p o r t o p e r a t o r s , i n c l u d i n g 
 
"Us  
s e r v i c e s ; 
a n d t o make a p p r o p r i a t e r e p r e s e n t a t i o n s t o t h e 
 
O r a t o r s , t h e T r a f f i c C o m m i s s i o n e r s o r t h e P r i c e C o m m i s s i o n , a s 
 
e  
c a s e may b e . 

^' 
^he G o v e r n m e n t b e l i e v e s , h o w e v e r , t h a t i t w o u l d b e i n a p p r o p r i a t e ! 

-
-
C Q n i p l a i n t s a b o u t i n d i v i d u a l b u s s e r v i c e s t o be h a n d l e d b y a 
^ t i n 
^ 
-"-onal b o d y . 

F u r t h e r m o r e t h e p r o p o s e d i n t r o d u c t i o n o f P u b l i c a t l s p o r t P l a n s w i l l p l a c e u p o n s h i r e c o u n t i e s i n E n g l a n d a n d 

0 ?5
^
 a d d i t i o n a l r e s p o n s i b i l i t i e s 
i n t h e 
p l a n n i n g o f bus 
s e r v i c e s . 
 
^hese c i r c u m s t a n c e s t h e G o v e r n m e n t t a k e s t h e v i e w t h a t c o u n t y 
 

C
q
 
U
i
i ^ 1 S 
s h o u l d 
s e t 
u p , 
u n d e r t h e i r 
g e n e r a l 
p o w e r s , 
a d v i s o r y 
i r n ; !-ttees v / i t h r e p r e s e n t a t i v e s o f c o n s u m e r i n t e r e s t s a s w e l l a s 
1 s r a i l w a y c o u n c i l members. 

These advisory committees, which **might** **be**  
modelled upon the Transport Users' Advisory Committees **already**  
i n existence i n Passenger Transport A u t h o r i t y areas, would **a s s i s t**  
the county councils-, i n t h e i r p r e p a r a t i o n of **P u b l i c Transport**  
Plans, deal-with complaints about, bus s e r v i c e s i n t h e i r area **and**  
cooperate with l o c a l g e n e r a l i s t advice s e r v i c e s . They w i l l **repor**  
"to the l o c a l a u t h o r i t y who would!, under e x i s t i n g **powers,** **be**  

competent t o 
             make r e p r e s e n t a t i o n s t o 
                                      the 
                                          T r a f f i c Commissioners as appropriate. The l o c a l a u t h o r i t i e s , the 
                                          new advisory committees  

and the e x i s t i n g Area Transport Users' Consultative Committees  

(TUCCs) would be expected t o e s t a b l i s h l i a i s o n on matters of 
                                                                

common i n t e r e s t . The remit o f such advisory committees, as 
                                                              o f 
                                                                 

"the TUCCs, r a y 
                     l a t e r need t o 
                                         be reviewed i n 
                                                              the 
                                                                    l i g h t of  

Government d e c i s i o n s f o l l o w i n g 
                                c o n s u l t a t i o n s on the i s s u e s 
                                                              

E l a t i n g to l o c a l r a i l w a y s e r v i c e s t h a t a r e 
                                                                             p a r t i c u l a r l y c o s t ­

i n e f f e c t i v e , as s e t 
                                        out 
                                                i n 
                                                      paragraphs 98-105 o f 
                                                                                                 the 
                                                                                                         White Paper  

0 h Transport P o l i c y (Cmnd 6836). 

3 7  - F o s t i end Tgleco^unic*.tbns. 
                                                                                                                   The Government w i l l g i v e c a r e f u l c o n s i d e r a t i o n to 
                                                  the 
                                                          recommendations o f 
                                                                                                 the 
                                                                                                         Post O f f i c e  

jfeview Committee-'' r e l a t i n g to consumer r e p r e s e n t a t i o n . 
                                                                        In the  

"teantime, i t 
              has decided as p a r t of 
                                         the 
                                              two year experiment 
                                                                     i n 
                                                                         

i n d u s t r i a l democracy i n 
                                                the Post O f f i c e t h a t there should be 
                                                                                                                           two 
                                                                                                                                    

Members with experience of consumer a f f a i r s on the 
                                                     Post O f f i c e ,  

appointed a f t e r c o n s u l t a t i o n with the 
                                          Secretary o f Sate f o r Price! ^ 
    Consumer P r o t e c t i o n . 3 8  * A v i a t i o n . The C i v i l A v i a t i o n A u t h o r i t y , which i s 
                                                                                                                                                                              responsible 
                                                                                                                                                                                                                

f  ^ the 
                           A i r l i n e U s e r s

                                                                          1 Committee, has given the 
                                                                                                                                                                            Committee new 
Nmis of reference which ensure t h a t i t 
                                                                                                                                              has 
                                                                                                                                                             a c l e a r l y autonomous 

p
    
   0
       
      s
          
         i t i c n with an independent Chairman and s e c r e t a r i a t , a more 

p
  0
     :
       3 i t i v e r o l e i n -furthering 
                                                                                                                        the i n t e r e s t s o f a i r t r a n s p o r t users 

a ? u s l  a r e s p o n s i b i l i t y to co-operate with the a i r p o r t c o n s u l t a t i v e ?ommitt e G S.  

S t l ?

o r t of 
                      the 
                                     Post O f f i c e Review Committee to 
                                                                                                                                                         the 
                                                                                                                                                                       Secretary of 
                                                                                                                                                                                                                      

         e 
-
           f o r Industry, Cmnd 6850. 
                                                                                               CONFIDENTIAL 
                                                                                                                                               

, Toyth^m I r e l a n d . 
                                                                       For those n a t i o n a l i s e d 

-9. 
        Sr^ot?.rr*/\, V.

rr0.pp an:! ?

kidustries v/hich operate on a United Kingdom b a s i s , the arrangements 

e s c r i b e d w i l l a l s o apply i n Scotland, Wales and Northern I r e l a n d , 

f i t h minor v a r i a t i o n s , though account w i l l be taken of the p a r t i c u l a r 
6ed to provide f o r the c o n s i d e r a t i o n of n a t i o n a l issues of s p e c i a l oncern to each of those c o u n t r i e s . 

In Scotland, however, the 

c c o r i c i t y and bus i n d u s t r i e s need separate arrangements. 
                                                                                                                                                                                                                                               The 
                                                                                                                                                                                                                                                                  two 
                                                                                                                                                                                                                                                                                      

C Q t t i s h E l e c t r i c i t y Consultative Councils w i l l remain, with t h e i r  

joint S e c r e t a r i a t , r e s p o n s i b l e to the Secretary of State f o r Scotland.  

recommended by the S c o t t i s h Consumer' C o u n c i l . 
                                                                                                                         The main operator  

Of v, 

u**ses, outside the f o u r c i t y areas, i s the S c o t t i s h Transport  

o
u
 p 
    (STG), r e s p o n s i b i l i t y f o r which i s to be devolved. 
                                                                     No change  

Proposed at present i n the arrangements f o r r e p r e s e n t a t i o n of  

0£sumer i n t e r e s t s i n r e l a t i o n to any of the STG's operations or to  

- s o t t i s h bus i n d u s t r y generally; these are matters which the  

^ ^ t i s h Administration w i l l wish to consider i n due course i n the  

 Sht of i t s r e s p o n s i b i l i t y f o r the STG and f o r l o c a l a u t h o r i t y  
tpar*5v. 
        , 
            

^ -^por-u f u n c t i o n s . 
                          In Northern I r e l a n d , the E l e c t r i c i t y Consumers

*taii 
     
       a n (j 
                  Transport Users

1 Committee (which deals with bus. 

ciuo a r i p o r t f a c i l i t i e s ) w i l l continue to represent t h e i r 

^ t i 

A c u l a r consumer i n t e r e s t s , with l i a i s o n as appro) 
                                                                                                                                                                       r i a t e with  

consumer bodies i n the United Kingdom.  

Other c o n s u l t a t i v e arrangements  
40. 

In a d d i t i o n to the proposals d i s c u s s e d so f a r , the Government is developing other ways of i n v o l v i n g the main i n t e r e s t groups i n the forward p l a n n i n g of an i n d u s t r y or a s e c t o r . Since 
1 9 7 4 the main policy questions i n the c o a l i n d u s t r y have been d i s c u s s e d on a t r i p a r t i t e b a s i s between the Government, the C o a l Board and the 

coal unions. 
                Last year 
                               the S e c r e t a r y o f S t a t e f o r 
                                                                 Energy 

appointed an Energy Commission which w i l l advise him on the development of an energy s t r a t e g y f o r the U n i t e d Kingdom and on other energy p o l i c y 

issues. 
         The Commission i n c l u d e s r e p r e s e n t a t i v e s of the energy 

i n d u s t r i e s , and t r a d e unions,and i n d u s t r i a l , consumer and other 

i n t e r e s t s . 
                       The recent White Paper on Transport P o l i c y , Cmnd 6S36, 

considered a number of ways i n which the Government wanted to see 

consultation on t h e f o r m u l a t i o n and execution of t r a n s p o r t p o l i c y improved, both at the l o c a l l e v e l and n a t i o n a l l y . 
                                                          I n a d d i t i o n , the 

Government i s e x p l o r i n g f u r t h e r w i t h the NEDO and with both s i d e s 

of industry i t s ideas of s e t t i n g up an Ecohomic Development Committee 

for transport as one means of promoting, 
                                                        i n the context of the i n d u s t r i a l s t r a t e g y , the r e g u l a r c o n s u l t a t i o n between the Government,  

management and the unions on plans f o r t r a n s p o r t . 
                                                       

felaj-ioiis w i t h s u p p l i e r s 
£ 
. 

The NEDO p o i n t o u t t h a t t h e n a t i o n a l i s e d i n d u s t r i e s ' 
t e c h n i c a l f i n a n c e a n d the s c a l e  o f t h e i r p u r c h a s e s means t h a t c e r t a i n s u p p l y i n g i n d u s t r i e s h  w e become a l m o s t w h o l l y d e p e n d e n t  o n t h e i r s t r a t e g i c V i s i o n s and r e l a t e d i n v e s t m e n t p r o g r a m m e s . 

B e c a u s e of t h i s s e v e r a l i m P o r t a n t s t u d i e s have b e e n c o m m i s s i o n e d by t h e N a t i o n a l E c o n o m i c D o v c i o p e n t C o u n c i l s i n c e 
1975 
on v a r i o u s a s p e c t s of t h e r e l a t i o n s h i p m 
* t * e
 
t h e i n d u s t r i e s and t h e i r s u p p l i e r s . 

T h i s r e l a t i o n s h i p  
i s e n
8 e n e r a i i y c l o s e , and g i v e n t h e s t r o n g bond of common i n t e r e s t b e t w e e n the t w o , t h e G o v e r n m e n t a t t a c h e s a g o o d d e a l of i m p o r t a n c e  t o t h i s . 

n u m b e r  o f i d e a s and i m p r o v e m e n t s were d i s c u s s e d  i n a NEDO 
r e p o r t ill Ifinp and t h e i n v o l v e m e n t  o f t h e n a t i o n a l i s e d i n d u s t r i e s  i n t h e 
0 nom.ic D e v e l o p m e n t C o m m i t t e e s and a s s o c i a t e d NEDO w o r k i n g p a r t i e s 
^ i n d u s t r i a l s t r a t e g y s e c t o r g r o u p s g i v e s b o t h t h e i n d u s t r i e s and s u p p l i e r s a f o r u m f o r t a c k l i n g f u r t h e r q u e s t i o n s  
o f common 
^ r e s t . 

T h e r e  i s a l s o c o n s i d e r a b l e s c o p e f o r t h e n a t i o n a l i s e d i n d u s t r i e s and t h 
. 

n e i r s u p p l i e r s  t o c o - o p e r a t e  
i n e x p o r t p r o m o t i o n  t o t h e i r m u t u a l 
^ e f i i ­
L
4 
. 

The NEDO s t u d i e s  o f t h i s i n c l u d e d e t a i l e d a n a l y s e s  
o f t h e 
-
n j - C a l s p e c i f i c a t i o n s l a i d down by t h e n a t i o n a l i s e d i n d u s t r i e s , b
0v i e w as  t t o o a l i g n i n g t h e them w h e r e  i n d u s t r i e s p o s s i b l e w i t h b e t t e r i n t e r n a t i o n a l o f g i v e
 
s u p p l y i n g
 
a
 
c h a n c e
 
r e q u i r e -
s e c u r ­
*t 8 
s e * P o r t o r d e r s ; 
and a l s o t h e p r o m o t i o n  o f c o - o p e r a t i o n b e t w e e n l c , i i s e d and p r i v a t e i n d u s t r y  t o a l l o w them  t o compete t o g e t h e r J
Q r o v e r s e a s p r o j e c t s , s u c h as s t e e l w o r k s and r a i l w a y c o n s t r u c t ­
a rnoderni s a t i o n .  
I n 
1 9 7 6 , the n a t i o n a l i s e d i n d u s t r i e s s e t up V i a l A 
a r r a n g e m e n t s  t o p r o m o t e c o J l a b o r a t i o n b e t w e e n t h e m s e l v e s a n d t h * i r r C l J s t o m e r s and s u p p l i e r s  i n t h e p u r s u i t and d e v e l o p m e n t  o f exports. 

n E d i t i o n  
, there a r e g r o w i n g o p p o r t u n i t i e s f o r s a l e s o f h a r d w a r e a n t l o q u i p m e n t by n a t i o n a l i s e d I n d u s t r i e s a c t i n g on t h e i r own a c c o u n t , 
0 
r i n p a r t i c i p a t i o n w i t h t h e p r i v a t e s e c t o r . 

The G o v e r n m e n t s t r o n g l y 
^ c o n i e s a 11 
t h e s e i n i t i a t i v e s and t h e p o s i t i v e r o l e w h i c h t h e n a U o n a l i s e d i n d u s t r i e s are t a k i n g , b o t h j o i n t l y w i t h the p r i v a t e S ( ? c t o r a n d a l s o on t h e i r own b e h a l f i n s e l l i n g c o n s u l t a n c y s e r v i c e s t o o v e r s e a s c o u n t r i e s and d e v e l o p i n g e x p o r t O p p o r t u n i t i e s g e n e r a l l y . 

rnrporntc P l a n s and I n v e s t m e n t and F i n a n c i n g R e v i e w s 
0, F o r many y e a r s t h e d e v e l o p m e n t p l a n s and i n v e s t m e n t programmes of the n a t i o n a l i s e d i n d u s t r i e s , c o v e r i n g p e r i o d s o f 
5 y e a r s a h e a d , have i n c r e a s i n g l y bee.n f o r m u l a t e d w i t h i n t h e w i d e r c o n t e x t of b o t h t h e i n d u s t r i e s ' 
arid t h e G o v e r n m e n t s o b j e c t i v e s and p o l i c i e s . 

T h i s p r o c e s s of c o r p o r a t e p l a n n i n g , c o v e r i n g v a r i o u s t i m e p e r i o d s , i n v o l v e s a c o n t i n u i n g d i a l o g u e on l o n g - t e r m s t r a t e g y , m e d i u m - t e r m d e v e l o p m e n t plans, and a n n u a l o p e r a t i n g p l a n s a n d b u d g e t s . 

T h e i n d u s t r i e s l o o k to the G o v e r n m e n t f o r g u i d a n c e on i n d u s t r i a l p o l i c i e s , on e c o n o m i c prospects, and where a p p r o p r i a t e on s e c t o r a l p o l i c i e s , i n c l u d i n g t h e social o b j e c t i v e s u n d e r l y i n g t h e payment o f g r a n t f r o m p u b l i c f u n d s . 

The Government l o o k s t o t h e i n d u s t r i e s f o r d a t a on m a r k e t s , s u p p l i e s and p r o d u c t i o n . 

The d e v e l o p m e n t o f t h i s p r o c e s s i s more advanced w i t h some o f the i n d u s t r i e s t h a n o t h e r s . 

I t s b e n e f i t s a r e already b e c o m i n g a p p a r e n t i n t h e e n e r g y s e c t o r w h e r e o v e r t h e p a s t year o r so a j o i n t W o r k i n g G r o u p on E n e r g y S t r a t e g y 
( w i t h m e m b e r s h i p drawn at B o a r d l e v e l f r o m the n a t i o n a l i s e d i n d u s t r i e s a n d f r o m Government D e p a r t m e n t s ) 
has c o n t r i b u t e d m a t e r i a l l y t o t h e h a r m o n i z a t i o n Qf p l a n n i n g t i m e t a b l e s and p r o c e d u r e s , t o t h e u n d e r s t a n d i n g o f the i n d u s t r i e s ' 
a n d G o v e r n m e n t s m e d i u m - t e r m *forecasting* 
m e t h o d s , a n d i n P a r t i c u l a r t o the j o i n t e x a m i n a t i o n o f t h e i m p l i c a t i o n s o f a l t e r n a t i v e energy s e c t o r s t r a t e g i e s f o r t h e p l a n s and p r o s p e c t s o f t h e i n d u s t r i e s . 

The p r o c e s s o f j o i n t e x a m i n a t i o n o f i s s u e s a f f e c t i n g p o l i c i e s and p l a n s ls now t o be c a r r i e d f u r t h e r i n t h e r e c e n t l y f o r m e d E n e r g y C o m m i s s i o n f o r E n e r g y u n  aer the c h a i r m a n s h i p o f t h e S e c r e t a r y o f S t a t e / . 

T h e r e have a l s o b een v a l u a b l e d e v e l o p m e n t s i n c o r p o r a t e p l a n n i n g i n o t h e r n a t i o n a l i s e d i n d u s t r i e s , and t h e l e g i s l a t i o n e s t a b l i s h i n g B r i t i s h A e r o s p a c e and f U i s h S h i p b u i l d e r s r e q u i r e s t h e t w o C o r p o r a t i o n s i n f o r m u l a t i n g t h e i r C o r P o r a t e p l a n s t o a c t on l i n e s s e t t l e d f r o m t i m e t o t i m e w i t h t h e approval'or t h e S e c r e t a r y o f S t a t e f o r I n d u s t r y . 

The R a i l w a y s A c t 
19?/, l n a d e s i m i l a r p r o v i s i o n i n r e l a t i o n t o the R a i l w a y s B o a r d . 

The G o v e r n m e n t c o n s i d e r s t h a t the c o r p o r a t e p l a n , and t h e e x a m i n a ­
t A o n of s t r a t e g i c o p t i o n s , s h o u l d have a c e n t r a l p l a c e i n the r e l a t i o n ­
s h * P between t h e n a t i o n a l i s e d i n d u s t r i e s and t h e i r s p o n s o r i n g d e p a r t ­
^ n t s . 

A s Corporate p l a n n i n g i s e s t a b l i s h e d more w i d e l y i t w i l l enable the a n n u a l r e v i e w o f t h e i n d u s t r i e s ' 
m e d i u m - t e r m i n v e s t m e n t programmes t o take pis co i n t h e c o n t e x t o f known a n d u n d e r s t o o d l o n g e r t e r m a L e g i e s . 

T h i s i s n o t t o s a y t h a t t h e r e w i l l be no c h a n g e s f r o m Ye" n t o y e a r i n the f i v e y e a r p l a n s o f t h e i n d u s t r i e s f o r i m p l e m e n t i n g 
^
e agreed s t r a t e g i e s . 

The i n d u s t r i e s r e g u l a r l y r e v i s e t h e i r f i v e y e a r P r o S r a m m e , o f t e n s u b s t a n t i a l l y , t o t a k e a c c o u n t o f c h a n g e s i n t he u t l o o k f o r t h e e c o n o m y , i n t h e demand f o r t h e i r p a r t i c u l a r p r o d u c t s , R e l a t i v e c o s t s and p r i c e s , i n the b u r d e n o f t h e i r f i n a n c i n g r e q u i r e -
Of 
* and i n p h y s i c a l p r o g r e s s i n t h e i n s t a l l a t i o n o f new p l a n t s o r e w b u i l d i n g s . 

N a t i o n a l i s e d i n d u s t r i e s , l i k e any c o m m e r c i a l n j - s a t i o n , must c o n t i n u e t o show f l e x i b i l i t y and t o make s u c h c h a n g e s M
o
-
r e V 
e r t h e s t r a t e g i c f r a m e w o r k i t s e l f c a n n o t be r e g a r d e d as i m m u t a b l e . 

^J-me t o t i m e t h e r e a r e m a j o r l o n g - t e r m r e v i e w s o f o v e r a l l p o l i c y , 

## C O Y E R I N

A n g e i t h e r t h e w h o l e f u t u r e s t r a t e g y o f an i n d u s t r y o r some Q J  - a s p e c t o f i t , s u c h as a t e c h n o l o g i c a l d e c i s i o n on t h e c h o i c e Of a new s y s t e m . 

T h e s e r e p r e s e n t an i m p o r t a n t t u r n i n g p o i n t f o r an r v
 * 
and t h e G o v e r n m e n t a c c e p t s t h a t , once l o n g - t e r m p o l i c y A O n s a r e t a k e n on t h i s b a s i s , t h e y s h o u l d n o t be r e o p e n e d u n l e s s 
^ i l t h e r e has been a m a t e r i a l c h a n g e o f c i r c u m s t a n c e s . 

So t h a t 
% 
S
e , l e c t C o m n i t t e e on N a t i o n a l i s e d I n d u s t r i e s , a n d t h e p u b l i c , c a n 
6  b e t t t e
-
r i n f o r m e d o f t h e i n d u s t r i e s ' 
o b j e c t i v e s t h e G o v e r n m e n t h a s 
^4 
th u , l e m t o p u b l i s h i n t h e i r a n n u a l r e p o r t s and a c c o u n t s a summary 
 
t n e m a
 
0 jth Gv.

i  
n p o i n t s 
^
b r o a d objectives in t h e i r c o r p o r a t e p l a n , a n d / i n a n y m a j o r r e v i e w , a n v M
 
G o v e r n m e n t r e s p o n s e t o t h e m . 

Th Ha .

 
0 
NEDO p o i n t o u t t h a t t h e i n v e s t m e n t p l a n s o f a number o f t h e t
^ 
"-used i n d u s t r i e s have s u f f e r e d o v e r t h e y e a r s f r o m i n t e r v e n t i o n o  ^
V
e r n j n c n t s , t h r o u g h s h o r t - t e r m c u t s t o r e d u c e p u b l i c e x p e n d i t u r e r b e t n e e n t h e G o v e r n m e n t and i n d u s t r i e s i n t h e c o r p o r a t e p l a n n i n g r o u d i .

S h i n t e r v e n t i o n i n p r e v i o u s l y a g r e e d s t r a t e g i c p l a n s . 

The a 
^
r o c e  s s s h o u l d h e l p t o p r o v i d e a more s t a b l e f r a m e w o r k . 

I n E d i t i o n the G o v e r n m e n t has made t w o c h a n g e s i n i t s p r o c e d u r e s w h i c h D ( J l i e v c s i m p r o v e t h e way i n w h i c h the i n d u s t r i e s ' 
e x p e n d i t u r e p l a n s r e h a n d l e d and p u b l i c l y p r e s e n t e d . 

f o l l o w i n g an i n i t i a t i v e i n t h e N E D C , i n 
1 9 7 5 , M i n i s t e r s a g r e e d n a t t h e y w o u l d a i m t o g i v e t h e i n d u s t r i e s by t h e e n d o f t h e s u m m e r , e r t h a n t h e e n d o f y e a r , a p p r o v a l f o r 
100% 
o f t h e i r a g r e e d i n v e s t ­
nient Programme f o r one y e a r a h e a d , 
85% f o r t h e s e c o n d y e a r and 
70% 
I
l
 
e t h i r d y e a r 
( f o r w h i c h , u n d e r t h e p r e v i o u s p r o c e d u r e s , no P
p r o V a l had b e e n g i v e n a t a l l ) .

 
T h i s new p r o c e d u r e h e l p s t h e n atj n a i i s e d i n d u s t r i e s d i r e c t l y by e n a b l i n g them t o g e t on w i t h ifiipiem A n t i n g and r o l l i n g f o r w a r d t h e i r p l a n s . 

I t a l s o p u t s t h e m i n a Pos i f ­
-
c * o n where t h e y c a n h e l p t h e i r s u p p l y i n g i n d u s t r i e s by d r a w i n g  
up f .  
m P l a n s e a r l i e r t h a n h a d b e e n p o s s i b l e h i t h e r t o . 

n e
 
NEDO commented o n t h e p r e s e n t a t i o n o f t h e n a t i o n a l i s e d 

## R H 8 T

i e s ' f i g u r e i n s t a t i s t i c s o f p u b l i c e x p e n d i t u r e , a n d 
 
Gov  
ornment has made c h a n g e s i n l i n e w i t h t h i n k i n g . 

U n d e r t h e s e new a r r a n g e m e n t s t h e i n v e s t m e n t programmes 
0 f th i n d u s t r i e s a r e s t i l  
l p u b l i s h e d i n P u b l i c E x p e n d i t u r e W h i t e P e P s 
, 
 
3 
out i t i s t h e e s t i m a t e s o f t h e f u n d s t o be p r o v i d e d  
t, ­
u U  
s i n v e s t m e n t , i n the f o r m o f l o a n s , P u b l i c D i v i d e n d C a p i t a l  
O
f t  
Slant o  
U b ? 

w h i c h a r e i n c l u d e d i n t h e p u b l i c e x p e n d i t u r e t o t a l s . 

T h i s Pre S
e n t a t i o n r e c o g n i s e s t h e e s s e n t i a l d i f f e r e n c e b e t w e e n t h e f
 
J-isod i n d u s t r i e s , w h i c h f i n a n c e a g r e a t d e a l o f t h e i r i n v e s t m e n t 
% t h 
­
%
 
e j - r e a r n i n g s , and t h e g e n e r a l i t y of n o n - t r a d i n g p u b l i c s e r v i c e s , u
 
e r n m e n t b e l i e v e s t h a t i t w i l l a l s o be h e l p f u l t o t h e i n d u s t r i e s ai e X e r c i s e to r e d u c e the p l a n n e d l e v e l o f p u b l i c e x p e n d i t u r e . 

7 
f u t u r e o c c a s i o n s i t i s n e c e s s a r y t o i n v o l v e t h e m i n a n y Whereas p r e v i o u s l y any c u t s t h e y made h a d t o be i n t h e i r i n v e s t m e n t D r o g r a m m e s , i n f u t u r e t h e y w i l l i n p r i n c i p l e be a b l e as an a l t e r n a t i v e t o t a k e any o t h e r a c t i o n w h i c h w o u l d r e d u c e t h e i r r e q u i r e m e n t s f o r e x t e r n a l f i n a n c e 
- 
s u c h as c o s t s a v i n g s a n d , S u h j e c t t o c o u n t e r i n f l a t i o n p o l i c i e s , p r i c e ' i n c r e a s e s . 

The p r e s e n t a t i o n o f t h o s e f i g u r e s i n t h e P u b l i c E x p e n d i t u r e W h i t e P a P e r shows l o a n s and P u b l i c D i v i d e n d C a p i t a l , on w h i c h the l n d u s t r i e s a r e e x p e c t e d t o pay i n t e r e s t and d i v i d e n d s , s e p a r a t e l y f l**'om**  
g r a n t s g i v e n f o r s o c i a l and r e g i o n a l p u r p o s e s . 

48. 

The NEDO c o n s i d e r t h a t t h e b o a r d s a r e n o t e f f e c t i v e l y r e q u i r e d t o a c c o u n t f o r t h e i r p e r f o r m a n c e i n a s y s t e m a t i c o r o b j e c t i v e m a n n e r . 

Th e v p o i n t our. t h a t t h e r e i s no e x t e r n a l a u d i t m e c h a n i s m - 
a d d i t i o n a l t o the p r e s e n t f i n a n c i a l a u d i t p r o c e d u r e s 
- 
w h i c h m i g h t p r o v i d e r e  a s s u r a n r e t o G o v e r n m e n t and P a r l i a m e n t a b o u t t h e e f f e c t i v e n e s s o f a n a g e m e n t o r g a n i s a t i o n a n d p r o c e d u r e s w i t h i n t h e i n d u s t r i e s . 

T h e y r e commend t h a t t h e a n n u a l r e p o r t a n d a c c o u n t s o f e a c h i n d u s t r y s h o u l d l n f u t u r e i n c l u d e a s t a t e m e n t o f f i n a n c i a l a n d o t h e r c r i t e r i a a n d o f c h.ievement a g a i n s t t h e m . 

I t i s t h e r e s p o n s i b i l i t y o f e a c h b o a r d t o m o n i t o r p e r f o r m a n c e a n d c * e n c y w i t h i n i t s i n d u s t r y b u t t h e G o v e r n m e n t a g r e e s t h a t i t i s a l S  
o e s s e n t i a l f o r t h e i n d u s t r i e s t o a c c o u n t e f f e c t i v e l y t o P a r l i a m e n t t o the p u b l i c . 

I t h a s , t h e r e f o r e , a s k e d e a c h o f t h e m t o i n c l u d e L 
S 
a n n u a l r e p o r t a s t a t e m e n t s u m m a r i s i n g a n d b r i n g i n g t o g e t h e r the V omnient's m a i n c u r r e n t i n s t r u c t i o n s and g u i d a n c e , and a l s o i n f o r m ­
n on how i t i s m e a s u r i n g up to i t s o b j e c t i v e s . 

T h e r e may be some O r f n a t . i o n w h i c h an i n d u s t r y c a n n o t p u b l i s h f o r r e a s o n s o f c o m m e r c i a l cOr\f  j r  
i a e
*
n t i a l i t y . 

B u t i n g e n e r a l the s t a t e m e n t w o u l d i n c l u d e , f o r p x e , t h e m a i n p o i n t s i n t h e c o r p o r a t e p l a n and a n y G o v e r n m e n t sPonso t o t h e m 
(see p a r a g r a p h /,/,); 
t h e f i n a n c i a l t a r g e t , and t h e P a n y i n g P a r l i a m e n t a r y s t a t e m e n t e x p l a i n i n g i t , i n c l u d i n g any r a i a n d s o c i a l o b j e c t i v e s s e t f o r t h e i n d u s t r y 
( p a r a g r a p h 
7 3 ) ; 
d s r i l i m i t 
( p a r a g r a p h s 7 9 - 8 2 ) ; 
s u i t a b l e aims i n t e r m s o f p e r f o r m ­
and s e r v i c e 
( p a r a g r a p h 7 8 ) ; 
and a n y g e n e r a l o r s p e c i f i c d i r e c t i o n s 
11 
t o i t 
( p a r a g r a p h 2 0 ) . 

I n i t s s t a t e m e n t o f how w e l l i t w a s u**ing up t o t h e s e o b j e c t i v e s , the i n d u s t r y w o u l d c o m p a r e i t s 
4 a i p e r f o r m a n c e a g a i n s t i t s t a r g e t a n d a l s o i t s p r o g r e s s a g a i n s t f ) U u i i s h e d p e r f o r m a n c e and s e r v i c e a i m s . 

The s y s t e m a t i c and 
 
P u b l i c a t i o n o f t h i s i n f o r m a t i o n w i l l be an i m p o r t a n t d e v e l o p ­
h
0 f H i. 

l u r e s p o n s e t o t h e N E D O ' s r e p o r t a n d one w h i c h w i l l be h e l p f u l  
a the o 
 
e i o c t C o m m i t t e e on N a t i o n a l i s e d I n d u s t r i e s , and t o P a r l i a m e i i n e x a m i n i n g a n d m o n i t o r i n g t h e p e r f o r m a n c e o f t h e e r j  
s , and o f t h e d e p a r t m e n t s w h i c h d e a l w i t h t h e m . 

-

50. 
      There are 
                     a i s o a number of o t h e r ways i n w h i c h the 
                                                                                      i n d u s t r i e s ' 

a c t i v i t i e s w i l l come under independent s c r u t i n y . 
                                                                                                               Under the 
                                                                                                                                      P r i c e 

Commission A c t 
                of J u l y 1977, 
                                the P r i c e Commission has 
                                                              d i s c r e t i o n , 

subject t o M i n i s t e r i a l v e t o , t o i n v e s t i g a t e most p r i c e 
                                                                                      i n c r e a s e s 

proposed by the n a t i o n a l i s e d i n d u s t r i e s . 
                                                  (The main e x c e p t i o n s 
                                                                             aro 

bus and a i r f a r e s , which are c o n t r o l l e d by the T r a f f i c Commissioners 

and by the 
           C i v i l A v i a t i o n A u t h o r i t y , and 
                                                 c o a l andnost s t e e l p r o d u c t s 

which are s u b j e c t 
                     t o European C o a l and 
                                                S t e e l Community 
                                                                     r e g u l a t i o n s ) . 

*f M i n i s t e r s d i r e c t i  
                                t t o do so, the Commission can a l s o examine a 

nationalised i n d u s t r y which i s a monopoly s u p p l i e r . 
                                                                            S e c o n d l y , 
                                                                                           the 

Government e x p e c t s the consumer c o u n c i l s t o play an i m p o r t a n t r o l e 

in monitoring the i n d u s t r i e s ' r e s p o n s i v e n e s s t o the needs of t h e i r customers and i n making recommendations on the s e r v i c e s they g i v e ; 

and a number of ways i n which t h e consumer c o u n c i l arrangements have 

been strengthened are d e s c r i b e d 
                                         i n paragraphs 30-39. 
                                                                       T h i r d l y , 
                                                                                    the 

Government w i l l 
                  be p r e p a r e d on o c c a s i o n t o a p p o i n t s p e c i a l committees 

of enquiry t o examine the 
                                      structure, performance and p l a n s of p a r t i c u l a r 

industries where i t appears t h a t t h e r e i s a need f o r a f a r r a n g i n g 

review. 
         The Government w i l l keep under review the 
                                                              p o s s i b i l i t y 
                                                                              of 

strengthening arrangements f o r the e x t e r n a l m o n i t o r i n g of t h o s e 

industries w h i c h e n j o y s u b s t a n t i a l p r o t e c t i o n from c o m p e t i t i o n . 

51. The Government a l s o e x p e c t s the i n d u s t r i e s t o t a k e the 
                                                                                        i n i t i a t i v e 
                                                                                                         

in s t r e n g t h e n i n g t h e i r own 
                                       systems f o r c o n t r o l and m o n i t o r i n g . 
                                                                                                 I t 
                                                                                                        

therefore welcomes the development of A u d i t Committees, which 
                                                                              the 
                                                                                    

National C o a l Board, the 
                              B r i t i s h S t e e l C o r p o r a t i o n and 
                                                                      a number of  

Private s e c t o r companies .have r e c e n t l y been i n t r o d u c i n g , whereby a  

special group, u s u a l l y i n c l u d i n g p a r t - t i m e non e x e c u t i v e d i r e c t o r s ,  

examine and r e p o r t 
                      on annual f i n a n c i a l s t a t e m e n t s , a u d i t arrangements  

and i n t e r n a l f i n a n c i a l c o n t r o l s . 
                                        . T h e G o v e r n m e n t b e l i e v e s 
                                                                        t h a t 
                                                                              t h i s 
                                                                                     i s 

a u s e f u l 
                                      i n n o v a t i o n w h i c h o t h e r 
                                                                                                                                                 n a t i o n a l i s e d 
                                                                                                                                                                                                             i n d u s t r i e s may w i s h 
                                                                                                                                                                                                                                                                                                             t o 

a d o p t . 
                        i t 
                                   h o p e s 
                                                        t h a t 
                                                                        t h e y 
                                                                                          w i l l 
                                                                                                           d e v e l o p 
                                                                                                                                       f u r t h e r t h e 
                                                                                                                                                                                r o l e 
                                                                                                                                                                                                  o f 
                                                                                                                                                                                                             t h e s e 

A
  u d i t C o m m i t t e e s , 
                                                o r s e t 
                                                                   up c o m p a r a b l e a r r a n g e m e n t s , 
                                                                                                                                                 t o 
                                                                                                                                                          l o o k more 

g e n e r a l l y 
                    a t q u e s t i o n s 
                                                o f e f f i c i e n c y 
                                                                               and p e r f o r m a n c e w i t h i n 
                                                                                                                                  t h e i r 

^ d u s t r y . 
                   T h e G o v e r n m e n t a l s o e x p e c t s 
                                                                            t h a t , 
                                                                                       i n 
                                                                                              the 
                                                                                                     n o r m a l 
                                                                                                                     e x e r c i s e o
   r 
           t h e i r management 
                                                                                        f u n c t i o n s , 
                                                                                                                                            t h e 
                                                                                                                                                               i n d u s t r i e s w i l 1 
                                                                                                                                                                                                                                         c o n t i n u e 
                                                                                                                                                                                                                                                                                   t o 
                                                                                                                                                                                                                                                                                                   t a k e . t
    h
          e 
                       i n i t i a t i v e 
                                                                                                  i n c a l l i n g 
                                                                                                                                                                                i n management 
                                                                                                                                                                                                                                                                                 c o n s u l t a n t s 
                                                                                                                                                                                                                                                                                                                                                                     t o 
                                                                                                                                                                                                                                                                                                                                                                                            u n d e r t a k e 

s P e c i a l 
                                     s t u d i e s when 
                                                                                                           n e c e s s a r y . 

' 
The n a t i o n a l i s e d i n d u s t r i e s a r e m a j o r u s e r s o f n a t i o n a l r e s o u r c e s . 

M
C
 
v e m p l o y a b o u t 
1 , 7 0 0 , 0 0 0 
p e o p l e , o r 7% o f t h e - c o u n t r y
^orce. 

T h e i r t o t a l i n v e s t m e n t t h i s y e a r a n d l e x t i s a b o u t 
£ 3 , 5 0 0 
i^Uon **a t** 
1 9 7 7 p r i c e s , and i n 
1 9 7 6 t h e y a c c o u n t e d f o r 
1/,?o o f t o t a l 
*
e d i n v e s t m e n t . 

A c o n s i d e r a b l e p a r t o f t h e i r c a p i t a l r e q u i r e m e n t s l s f i n a n c e d by a d v a n c e s f r o m , o r g u a r a n t e e d b y , t h e G o v e r n m e n t , a n d l n  
1 **9 7 6** - 7 7 t h o s e r e p r e s e n t e d a b o u t 
15% 
. 

o f t h e t o t a l P u b l i c c t o r B o r r o w i n g R e q u i r e m e n t o f 
£ 8 , 8 0 0 
m i l l i o n . 

I n 
1 9 7 6 t h e y C O n t * r i b u t e d a b o u t 
10?$ o f t h e t o t a l o u t p u t o f t h e UK e c o n o m y . 

T h e y 
0 r n i n a t c f o u r s t r a t e g i c s e c t o r s o f e c o n o m i c a c t i v i t y : 
e n e r g y , p u b l i c t J* *. 

s P o r t , c o m m u n i c a t i o n s a n d i r o n and s t e e l . 

T h e y s u p p l y b a s i c 
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