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PRINCIPAL POINTS HADE BY THE PRIME MINISTER ON HER V I S I T TO

THE

DEPARTMENT OF ENERGY: 18 MAY



1979

Oil

The

i n c u r r e d t h r o u g h o r on b e h a l f be

view t h a t c u t s i n consumption

Prime M i n i s t e r e x p r e s s e d the

top p r i o r i t i e s

adeqiate

f o r t h e UX.

account o f t h e

figure

circumstances of

t o the N o r t h Sea

she

i n o i l exploration a c t i v i t y . and

I ; was

s u p p l i e s of f u e l t o kee)

concerned t h a t a blanket

Turning

of i n t e r n a t i o n a l agencies could

industry going.

>f 5% c o u l d

excessive

She

maintain

to

was



very

sufficient

take

countries.

about the

t o the

:omplusion f o r f u t u r e p o l i c y , she

r i s k that

not

Individual

enquired As

much more i m p o r t a n t



not

causes o f the

incentive

r i g h t balance of

felt

that there

decline

was

real

a

of c o u t e r v a i l i n g

regulations regardless

i n c e n t i v e s would have a damaging e f f e c t on



confidence.

Coal The

Prime M i n i s t e r asked what c o u l d be

l o s s which t h e NCB

e x p e c t e d t o make t h i s y e a r .

Government's r e l a t i o n s w i t h the NCB had

'argely consisted

much a p i t hed

done about the £300 m i l l i o n

t o be

f o r so l o n g as

of a succersion l o s i n g before

She

r e c a l l e d that she

of w r i t e - o f f s .

i t could

be

could She

asked

c l o s e d , and

c o n f dence t h a t many m i n e r s would be happy t o a c c e p t

remember, how

expressed

closure

prov: d i n g t h a t t h e y were g i v e n generou3 terms o f redundancy.

The

Rhone da was

not

c i t e d as an a r e a

where e x t e n s i v e

prev' n t e d advances i n economic p r o s p e r i t y .

She

i n S' e i n g the money which, o v e r the y e a r s , i n t o the

c o a l i n d u s t r y as any

kind

p i t c l o s u r e s had had

great

t h e Government had

of s e r i o u s investment

the

i k e l i h o o d o f a r e t u r n remained remote.

she

ad knbirtLedge o f the

industry, again,

difficulty

O v e r the

i t had

proposition;

time i n which

i n v a r i a b l y been

prom.sed that" a f%w

more y e a r s o f i n v e s t m e n t would see the

i n t o the

the

b l a c k ; Uut

improvement had

put

yet to appear.

She

industry therefore

q u e s t i o n e d the wisdom o f t h e massive investment programme which NCB

were c u j r e / ^ l y * e m b a r k e d on.

she

was

Moreover, on

e n v i r o n m e n t a l grounds',

unhappy w i t h the p r o p o s e d B e l v o i r development.

rite.

* •*

W

CONFIDENTIAL

the





Electricity

On

fuel

there

stocks

f o r the

coming w i n t e r g e n e r a l l y ,

by

any

difficulties

reserves

and

flexibility.

i n supply As

i t would be

securing

a b s u r d not

no^ed t h a t

I f the

winter should

should

be

The

d e c i s i o n of the

difficult

a

Government t o b u r n an a c d i t i o n a l 2 m i l l i o n t o n s o f c o a l a t

shortages.

She

s u g g e s t e d t h a t the CEGB s h o u l d

on a s i g n i f i c a n t appreciated The

scale i n order

that the

Prime M i n i s t e r s a i d t h a t

she

competition had

The

had

She

t o a b s o r b energy w h i c h c o u l d industry.

to increase

a t t i t u d e o f t h e NUM

for further re-organisation.

the

She

surplus who

to competition.

She

see

at'the

asked Why

660

mw

fairly

s e t s had

only

moment.


settr.

she

rather than being

to a re-organisation

(The

Recently

electrioity



the



of

add

which i s b e i n g

Secretary

decided



prepared

State

of

t o move from 5 0 0 mw

been overcome: would i t not

l a r g e r ones?

a t t e n t i o n had

tied

changes t o open i t up

small

500

She

not,been g i v e n production.

to



mw

risks

f;lso e x p r e s s e d s u r p r i s e t h a t more

t o the



CONPIDEN

?IAL

r e l a t i v e l y high



ha"«e been b e t t e r

f o r t h e CEGB t o p e r s e v e r e w i t h t h e s e s e t s r a t h e r t h a n t a k e with j s t i l l

i t vfthild

felt

option of buying

* t seemec t h a t t e e t h i n g problems w i t h t h e 1



Party

this).

undertook to look i n t o



of



some

wondered whether i t would be p o s s i b l e t o

Trade S e c r e t a r y

She

r e a l tasks

to i n j e c t

have the

something t o t h i s find t o the C o m p e t i t i o n B i l l by t h e



case

p r o d u c e r - such as a l o c a l m a n u f a c t u r e r ­

In preference

would l i k e t o

she

the

i t because i t tended

remarked t h a t

might happen t o have e x c e s s p r o d u c t i o n ,

industry,



ignored.

r e c a l l e d t h a t the C o n s e r v a t i v e

coisumer could

e l e c t r i c i t y from any

t o a n a t i o n a l monopoly.



she

a s t r u c t u r e o f r e g i o n a l power b o a r d s ,

s u g g e s t e d many y e a r 3 ago

h i g h l y b e n e f i c i a l i f the



imports

a p p l i e d to the

needed was

r a t h e r t h a n a c e n t r a l i s e d i n d u s t r y * and be

be



coal

to

s t o c k s , though

against

o t h e r w i s e be

field.

consider

c o u l d not



the

n e v e r been a b l e t o see

was

change w h i c i was

i n t o the

towards

previous

power s t a t i o n s t h i s summer would make us more v u l n e r a b l e



have

t o have t a k e c e v e r y p o s s i b l e s t e p

alternative supplies.



should

would have need o f maximum'

we

a c o n t r i b u t i o n t o t h i s we

more d u a l - f i r e d power s t a t i o n s . one,

she

losses i n



Nuclear The

m

Prime M i n i s t e r s a i d t h a t

she

believed

t o s o l v i n g our p r o b l e m s i n energy s u p p l y c o n t r i b u t i o n to overall supply t h a t UK us

e n g i n e e r s would not

to incidents

Island.

She

the

Government was

CDFR but

that the

AGR

programme.

She

felt

n o t e d the

was

Sffe noted t h a t the as

possible

not

before

been the

that

relevant first

case i n the



be making g r e a t e f f o r t s

n u c l e a r power t o t h e p u b l i c i n a p o s i t i v e l i g h t .

a n a l y s i s o f the use



She

remarked t h a t

o f c o a l as a f u e l , had



a

i t be*en p e r f o r m e d

e x p l o i t a t i o n o f c o a l became common-place, would c e r t a i n l y

have condemned such a dangerous and

messy power s o u r c e .

were t o have adequate s u p p l i e s o f energy f o r t h e r e - a s s u r a n c e by t h e Government vt

essential.

On

she

waste, she

remarked 1 hat

volume o f m a t e r i a l which had some more e f f i c i e n t way

future

t h e need f o r , and

a c c e p t a b i l i t y o f , n u c l e a r power was

nuclear

expose

at Three M i l e

field.

commended a l e c t u r e i n which S i r J o h n H i l l had

the

confident

d e s i r a b i l i t y of ensuring

t h a t a l l of those concerned should

to present

be

She

would l i k e t o see t h e p r o j e c t move ahead a s f a s t

c o n s t i u c t i o n work commenced, as had

before

a substantial

F r e n c h programme i n f a s t

e a r l y l e a d i n the

She

come c l o s e

w h i c h 'could

taken place

e r g i n e e r i n g problems were f u l l y worked out

critical

had

committed t o a major p u b l i c e n q u i r y 'on

within that constraint. all

when we

c u t c o r n e r s fei a way

o f the k i n d which had

o v e r t a k e n our

would o n l y

from n u c l e a r power.

noted w i t h r e g r e t

r e a c t o r s had

t h a t we

t o be

had

If

this

fundamental

been c o n c e r n e d by

dealt with.

She



we

hoped

tae



that

o f d e a l : ng w i t h t h e s e l a r g e volumes cou'.d

foundf*.^ •

Gas



>*

Th<

Prime M i n i v e r

foi

reason^ of

hac

i n h e r i t e d a great

t o be

hoped t h a t

the p r i c e o f gas

energy p o l i c y a l o n e .

through the

wi.: h t q see-* u n n e c e s s a r y a d d i t i o n s t o

Thi

i.

noted that

many i n f l a t i o n a r y p r e s s u r e s

a l l o w e d t o work t h e i r way

ft* C

She

would not

these.

the

be new

increased Government

which would hi ve

system.

She

would i.ot



i

Prime W l f c l s t e y made c l e a r t h a t she

.

•

CONFIDENTIAL

saw

no v a l u e

i n having.another

>

commercial o i l company. and

She noted t h a t BNOC's e x i s t i n g c o n t r a c t s

commitments - which would have t o be r e s p e c t e d

r e s t r a i n t s on a r a d i c a l r e s t r u c t u r i n g o f BNOC.

- imposed

She saw no advantage

o f i n t r o d u c i n g a p r i v a t e e q u i t y i n t e r e s t t o BNOC, making i t more BP,

like

q u i t y i n t e r e s t s c o u l d be

and would p r e f e r t o dismember i t . The

s o l d o f f , s u b j e c t t o a r y f e t t e r i n g r e q u i r e d t o r e g a i n fen. a p p r o p r i a t e

UK s h a r e i n t h e UKCS o r t o r e t a i n Government c o n t r o l . convinced

that having

She was n o t

o i l i n t h e hands o f BNOC p u t t h e Government

i n any s t r o n g e r p o s i t i o n i n e v a d i n g EEC r e s t r i c t i o n s t h a n V o u l d

o b t a i n i n t h e absence o f BNOC.

International The

Negotiations



Prime M i n i s t e r s a i d t h a t t h e UK s h o u l d

international negotiations

on energy i s s u e s .

t h a t the n a t i o n a l i n t e r e s t should

«0

I t was e s s e n t i a l

be p r o t e c t e d .

31.5.79

4

t a k e a tough l i n e i n

*

CONFIDENTIAL

CONFIDENTIAL

l O D O W N I N G STREET From the Private

Secretary

MR. V I L E

CABINET O F F I C E

I a t t a c h a n o t e on t h e p o i n t s w h i c h t h e

P r i m e M i n i s t e r made w h e n s h e v i s i t e d t h e

D e p a r t m e n t o f E n e r g y on 18 May. The n o t e

was p r e p a r e d by t h e D e p a r t m e n t o f E n e r g y ,

t h o u g h I i n s i s t e d on s e v e r a l d r a f t i n g c h a n g e s .

It i s being circulated only to Senior O f f i c i a l s

i n t h e Department o f E n e r g y and t o y o u , b e c a u s e

the Prime M i n i s t e r s p e c i f i c a l l y s a i d t h a t she

d i d n o t want any m i n u t i n g .

T. P. L A N K E S T E R

31 May

i

1979