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7. There are perhaps three principal difficulties in applying the Royal Commission's proposals.

(1) Prima facie the proposed reduction in working hours through the abolition of regular overtime would necessitate the recruitment of extra staff. As I seek to show in the Appendix, I do not believe that this difficulty will be as acute as may appear at first sight. But I am sure my colleagues will agree that all Departments should accept the obligation to make the fullest possible use of all practicable expedients before taking on any appreciable number of extra staff.

(2) The change from an 11-day fortnight to a 10-day fortnight, and the further change to a 5-day week, would not themselves involve any further reduction in the number of working hours, but would cause considerable difficulties for the management in the deployment of staff, since there are many offices which must remain fully manned on Saturday morning, and perhaps few which can then be closed altogether. Some Departments feel they can move straight to a 5-day week; others feel that the intermediate stage of a 10-day fortnight will be necessary for them. I think we must leave this to be further worked out, and accept the probability that there will, for some years at least, be some lack of uniformity among the different Departments.

(3) The fact that the "package" proposals for lower and middle grades involve in some cases a cut in take-home pay, and in all cases a reduction in annual leave, means that negotiations for an agreed settlement will inevitably be very difficult. I think we must give the Official Side of the National Whitley Council discretion to do the best they can, on the lines set out in the Appendix, to obtain an agreement as near to the Royal Commission's proposals as possible. It will be seen that the cost of the proposals is of the order of £5 million to £10 million on a total bill of about £400 million. I must record my personal view that the possibility of obtaining a reasonable settlement by agreement or even, in the last resort, by arbitration-will be seriously affected if the Government are at the same time giving wholly disproportionate pay increases to the Armed Forces.

8. The proposals constitute in my view an important set of reforms which will enhance the efficiency of the Service and its ability to recruit and retain staff of the requisite quality. I regard it as important that they should be brought into effect at the earliest possible moment. Most of them require negotiation with Staff interests, and any disagreements can (except as regards the pay of the higher grades) be taken to arbitration. A preliminary meeting has been held with the National Staff Side in order to discuss machinery and establish a reasonably favourable atmosphere. It is, I think, essential that substantive negotiations should start at once: delay can only make things more difficult.

9. I propose :

(1) that the Cabinet should record their general approval of the recommenda- tions made by the Royal Commission, both as respects general principles and as respects the changes proposed in present conditions of service;

(2) that the Official Side of the National Whitley Council should be instructed to enter at once into negotiations with the Staff Side with a view to the early implementation of these proposals: their aim should be to secure an agreed settlement as near as possible to the Royal Commis- sion's terms, reporting back for further instructions on any point where agreement seems to be impossible without a material departure therefrom.

10. I ask for my colleagues' agreement accordingly.

Treasury Chambers, S.W. 1,

14th December, 1955.

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