Thatcher warned of 'damaging' cuts to Welsh grants

Nicholas Edwards (right) and Peter Walker (left) both served as Welsh Secretary under Margaret Thatcher

Margaret Thatcher was warned by her Welsh Secretary that funding cuts would have "most damaging" political effects, newly-released UK cabinet papers show.

Nicholas Edwards wrote to her in 1985 to complain about plans to cut the budget for regional development grants.

The money was widely used to attract investment and jobs to Wales.

The archives also show UK Treasury concern at overfunding of Scotland and Northern Ireland under the Barnett formula, a political issue to this day.

Protest

In the mid-1980s, Wales secured one fifth of inward investment into the UK despite having only 5% of the population.

But with the then Conservative government trying to cut public spending, the Treasury tried to cut back regional spending in England.

Margaret Thatcher was warned that cutting grants would go down badly in Wales and Scotland

That could have hit the Welsh Office budget and the secretary of state Nicholas Edwards joined his Scottish counterpart George Younger to protest.

In a letter to the Treasury chief secretary (and fellow Welshman) Peter Rees - copied to the prime minister - Mr Edwards complained about the implications for his budget.

He wrote: "I agree strongly with the points George Younger has made in his letter. They apply equally in the three territories. The political effects in Wales, as in Scotland, would be most damaging."

Mr Edwards demanded to be present at meetings between the Treasury and Department for Trade and Industry when the issue was discussed.

The archives do not record any reply and Mr Edwards - now Lord Crickhowell - cannot recall the episode.

'Snouts' in the 'trough'

But, in another parallel with today's politics, the archives show Treasury concern at overfunding of Scotland and Northern Ireland under the so-called Barnett formula that is also used to calculate changes in the Welsh budget.

Peter Rees, later Lord Rees of Goytre, wrote to Mrs Thatcher: "Even our predecessors never saw it as any more than a stop-gap arrangement on the road to political devolution, certainly not as the permanency it has now become.

"Be that as it may, the block system is now publicly construed, in the territories, as apolitical entitlement to public expenditure. The longer we let it run the harder it becomes to challenge that perception, and the greater the risk of political repercussion when we do. "

MP David Willetts, then a Downing Street adviser, wrote: "Scotland and NI have their snouts well and truly in the public expenditure trough. The challenge is to find a politically acceptable way of putting them on the same diet as the English."

The files reveal that the Treasury considered suspending the formula.

Mr Rees wrote to Mrs Thatcher: "The 'fallback' approach to securing savings is to suspend the operation of the comparability formulae for the Scottish and Northern Ireland blocks - though not for Wales, where over-provision is not suspected."

Thirty years on, the UK political parties have vowed to keep the formula as part of a deal to keep Scotland in the United Kingdom.

Mrs Thatcher's ministers considered launching the controversial poll tax in Wales before England, according to other files just released.

The documents released by the National Archives also show Conservative government advisers feared a repeat of the 1984-85 miners' strike the following winter.

They also revealed there were plans to hide art treasures in underground tunnels in the Rhydymwyn Valley works, near Mold, if a civil or nuclear emergency arose during the 1980s.