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the year had increased by 0.25 per cent to 9.25 per cent. The increase in unit wage costs in the United Kingdom over the year was 6 per cent, which compared unfavourably with the position in other major countries. In the Federal Republic of Germany and the United States, for example, the equivalent figure was 1 per cent, in Japan minus 1 per cent, and in France minus 3 per cent. There was a prospect of further high wage settlements in the car industry. Moderation in pay remained a key requirement if the United ngdom was to remain competitive in world markets and the 6llowing year's employment prospects were not to be put at
NFIDENTIAL
Water
Privatisation
THE SECRETARY OF STATE FOR THE ENVIRONMENT said that the flotation on the Water Industry had been highly successful. There had been over 2.7 million applications for shares,
beé of which half were from customers. This was the second highest number applications for a Government
privatisation te offer. In the light of the demand, the overseas and United Kingdom clawback arrangements had been triggered so thaer cent of the total offer was available to the general public and employees. The share allocations had favered the smaller investor and over one million applications 4 per cent) had been met in full. Despite the immense logital difficulties of selling 10 companies to the public shtaneously against the background of unparalleletical opposition and problems with the European Commission on environmental issues, the original objective and timetable had been met. The offers had been managed and presented in a way that had enabled the Stock Market to aber complex major sale very smoothly. Credit for this portant success should be given to his predecessor, the Secretary of State for Trade and Industry, and the Minister for yousing and Planning (Mr Howard).
Credit for this
The Prime Minister said that the Cabinet joged in congratulating the Environment Secretary (the Trade and Industry Secretary and the Minister for Housing and Planning for the very successful outcome of the share offer. The Minister for Housing and Planning deserved
particular credit for the skilful way in which handled both the Water Bill and the flotation in difficult political circumstances.
The Cabinet
Warmly endorsed the Prime Minister's remarks.
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