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House of Lords

Thursday, 29th January 1998.

The House met at three of the clock: The LORD CHANCELLOR on the Woolsack.

Prayers--Read by the Lord Bishop of Lincoln.

NATO Enlargement

Lord Wallace of Saltaire asked Her Majesty's Government:

    Whether they will lay before Parliament additional papers on the implications of NATO enlargement for the alliance and for British defence policy to accompany ratification of the enlargement treaty.

Lord Hoyle: My Lords, I have placed in the Library the communique issued by NATO Defence Ministers on 2nd December. That included the conclusions of NATO's classified assessment of the military and financial implications of enlargement. We have also provided further information to the Defence Select Committee in another place to assist its ongoing inquiry into NATO enlargement. We will make further information available as and when we can.

Lord Wallace of Saltaire: My Lords, I thank the Minister for that reply. However, will he accept that it is not a great encouragement to major public debate? Will he further accept that NATO is central to British defence and that enlargement of NATO--thus the transformation of NATO--means the transformation of the context of British defence? Does he agree that a debate about NATO enlargement appears to be under way almost entirely within the United States, and that we ought to have a parallel debate here?

Lord Hoyle: My Lords, I accept that NATO is central to many matters relating to this country. We are committed to making as much information available as soon as we can. As I think the noble Lord will agree, the amount that we can say is limited by the fact that much information is classified on security grounds. After the Defence Committee has considered the information that was classified, it will be up to the committee to publish the evidence given to it by the Government and others. Over and above that--there will be a full debate both in this House and in another place before UK ratification occurs.

The Earl of Lauderdale: My Lords, does the noble Lord agree that we are in danger of becoming entangled in a whole host, a criss-cross, of conflicting claims and counter-claims of a territorial kind in eastern Europe--first against Romania by Hungary, by Bulgaria and so on, over and over again?

Lord Hoyle: My Lords, I realise what the noble Earl is saying. That is one of the reasons why, by unanimous agreement, only three countries were included in the

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first case. Romania and Slovenia were considered as candidates. The best position was that those countries must be absorbed. I believe that the noble Earl and the whole House will agree that, since NATO is essential to our defence, we must see that it is not made less secure by the absorption of other members. There is a limit to what we can do. That is the position until 1999. In future enlargement no candidate is ruled out at this stage.

Lord Jenkins of Putney: My Lords, does my noble friend agree that the case itself for the enlargement of NATO is not widely accepted? Perhaps he can assure the House that we are able to discuss the detail of the subject, about which there is considerable difference of opinion among all parties.

Lord Hoyle: Yes, my Lords, I agree that it is a matter for discussion. At the end of the day there will be a full debate in this House before ratification; indeed, each country will ratify in its own way and debates will take place. There will be an opportunity for all Members to express a view before ratification occurs.

Lord Campbell of Alloway: My Lords, is the noble Lord aware that he has answered the Question in the form in which it was put on the Order Paper? What more can be done? Is that not a matter for congratulation?

Lord Bridges: My Lords, has the Minister studied the debate which occurred during the last Session of Parliament on a Motion by the noble Lord, Lord Lester of Herne Hill, about the ratification of treaties under the Ponsonby rule? It led to some informed discussions between the noble Lord and the noble Baroness, Lady Chalker of Wallasey. My understanding is that the previous government had it in mind that in future foreign treaties should be submitted to the House with an explanatory memorandum, as happens with European legislation. Would that not be a good precedent to follow on this occasion?

Lord Hoyle: My Lords, I am indebted to the noble Lord, Lord Bridges. As much information as possible will be given. The House will agree, I am sure, that we cannot give information that is militarily sensitive on troop movements. But this Government are wedded to open government and will make as much information as possible available.

Lord Kennet: My Lords, perhaps I may echo the good wishes expressed from the Benches opposite for the fact that there is now a commitment to have a full debate in this House on the matter while it is still alive. Is my noble friend in a position to tell us when that is likely to be? Must it await the conclusion of the study by the Defence Committee of the House of Commons, or could it be before that?

Lord Hoyle: My Lords, we are not in a position to say when the debate will be. We know that ratification

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will be complete by April 1999. The debate will take place as soon as possible but I am not able to give my noble friend any date at this stage.

Lord Burnham: My Lords, in consideration of the problems associated with NATO enlargement, can the Minister state that the Government will give an absolute assurance that the costs will be taken into account in the strategic defence review?

Lord Hoyle: My Lords, NATO's initial assessment is that the cost of enlargement will amount to 1.5 billion dollars over the next 10 years. That confirms our assessment that the cost of enlargement will be manageable. The MoD's share of costs to date is 110 million dollars over the same 10 years.

The Earl of Carlisle: My Lords, can the Minister inform the House which of the former Warsaw Pact nations--and I include the Baltic states, Estonia, Latvia and Lithuania--have opted for the United Kingdom model to train and equip their armed forces? What encouragement will Her Majesty's Government give those nations through the supply of military training teams so that they can meet the criteria which NATO will set before they are allowed to join NATO?

Lord Hoyle: My Lords, perhaps the noble Lord should put down a Question on the matter. The new members have already put forward significant programmes of modernisation and restructuring. NATO's assessment of those countries' forces has at the moment produced no nasty shocks. Indeed, they are in far better condition than we expected and the whole of NATO, including ourselves, will give every assistance we possibly can.

Directors' Remuneration

3.15 p.m.

Lord Dormand of Easington asked Her Majesty's Government:

    Whether they accept the findings of the TUC report Wider Still and Wider that average highest paid director salary has increased by 53 per cent. for the period 1994-97 and average employee pay by 13 per cent. and, if so, whether the exhortation of the Chancellor of the Exchequer is sufficient to restrain such increases.

The Minister of State, Department of Trade and Industry (Lord Clinton-Davis): My Lords, the TUC report highlights the need for directors to ensure both that their remuneration is justified by performance and that they are setting an example of restraint. The Hampel report on corporate governance, which was published yesterday, supports the view that directors' remuneration is liable to have an impact both on the company's reputation and on morale within the company. My right

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honourable friend the President of the Board of Trade has said that she will give her considered response to the report in the spring.

Lord Dormand of Easington: My Lords, I thank my noble friend for that most interesting answer. Is he aware that obscene increases continue to be given to chairmen of companies, chief executives and directors? Does he agree, therefore, that the pleas and exhortations which have been made by the Chancellor of the Exchequer and others are not achieving their purpose? In those circumstances, what thought is being given by the Government to the problem?

Lord Clinton-Davis: My Lords, my noble friend has drawn attention to one aspect of corporate governance which is important. I have already indicated that excessive pay can impact on the company's reputation and on morale within the company. Those are two important components of corporate governance.

My right honourable friend will consider the element to which my noble friend drew attention, and all the aspects that have been set out in the Hampel report. Of course, included in her considerations will be the observations made by the TUC.

Lord Marsh: My Lords, do the Government have any intention of bringing in statutory regulation of wage and salary movements? If not, is it still the case that the responsibility of directors is to act within the law and in the best interests of their shareholders, rather than in response to the exhortations of passing politicians?

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