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EU Regional Funds

7. Joyce Quin (Gateshead, East and Washington, West): If she will make a statement on her Department's policy on the future of EU regional funds. [103886]

The Minister for Employment Relations, Industry and the Regions (Alan Johnson): My right hon. Friends the Deputy Prime Minister, the Chancellor of the Exchequer and the Secretary of State for Trade and Industry published a paper on 6 March that launched a joint consultation on the future of EU structural funds. This set out the preferred approach, the EU framework for regional policy. It would focus EU regional assistance on the poorest member states. Richer member states such as the UK would finance their regional policy domestically and we would increase UK Government spending to ensure that the UK nations and regions do not lose out financially as a result of reform.

Joyce Quin : I welcome the Government's commitment to ensuring that regions such as the north-east will not lose out, whatever the future of EU regional funding may be. I also encourage the Government to follow a policy of further economic decentralisation in the UK. What discussions have taken place with other European Union countries—especially the new countries that will be members by the time that the important decisions are made—and what support have they given to the proposals?

Alan Johnson: We have had a number of discussions. Commissioner Barnier kicked off a round of discussions last year but, as yet, not many EU member states have framed their objectives and policy. In fact, only the Netherlands, as far as I know, has said what it intends to do and what approach it intends to take. That approach is similar to our own. The document is a consultation document—now that other EU member states have seen it, we will, I am sure, get their reaction. As for the accession countries, my right hon. Friend the Secretary of State, Ministers in the Department for Work and Pensions and I have made a point of speaking to the accession countries about those issues. They will not be part of the decision, but they will certainly experience its effects.

Miss Anne McIntosh (Vale of York): The Minister will be aware that in the past North Yorkshire has benefited

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particularly from the old objectives 3 and 5. Is he aware that that there are now pockets of rural poverty in constituencies such as the Vale of York, where rural wages are 12 per cent. lower than urban wages? In the review, will the Department ensure that the moneys that come to regions such as Yorkshire and the Humber will be spread evenly between rural and urban areas?

Alan Johnson: We will ensure that our proposal is for a much more devolved and locally led allocation of European regional structural funds, which account for only a quarter of the money that we spend in the regions in this country. It is important to ensure that overarching principles govern the allocation of EU structural funds, and that they take into account the needs of rural areas.

However, to answer the hon. Lady's question, it is much more appropriate to look at the way in which regional development agencies and we allocate money domestically at the moment to ensure that rural areas get their fair share. We are doing so, and the Minister for Rural Affairs and Urban Quality of Life in the Department for Environment, Food and Rural Affairs is an active participant in discussions with the RDAs. The hon. Lady has made an important point that needs to be looked at, quite apart from objectives 3 and 5, which she mentioned.

Mr. David Watts (St. Helens, North): Can the Minister tell us when he will be able to publish his proposals on areas such as Merseyside, which enjoy objective 1 funding at present? Can he give an assurance that he will discuss his proposals with organisations such as the Alliance for Regional Aid?

Alan Johnson: I met a delegation led by my hon. Friend, so he knows that we are willing to discuss that. We published the consultation document on 6 March. It is important to point out that because the 10 accession countries are all poorer than the poorest EU member states, if we did not change the basis of European Union structural funds, the whole basis for allocating funds would change. Indeed, it is calculated that the total of 83 million people who receive objective funding in the European Union now would be reduced to 35 million, including my hon. Friend's constituents. To those people, of course, nothing material has changed in their plight or conditions. The only change would be in the calculation because of the accession countries. That is why we put that consultation document out, and why we think that we are taking the right approach to the problem.

Rural Post Offices

8. Mr. Jonathan Djanogly (Huntingdon): How many rural post offices have closed within the last 12 months. [103887]

The Minister for E-Commerce and Competitiveness (Mr. Stephen Timms): There were 97 net closures of rural post offices in the twelve months to December

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2002. The number of net closures in the last quarter of that year, the most recent for which data are available, was zero.

Mr. Djanogly : St. Ives post office in my constituency—a rural post office serving 17,000 people—was recently closed, having been given three weeks' notice, which I find quite unacceptable. Thanks to a massive local effort and a receptive Post Office, St. Ives is to reopen. However, that raises some serious issues, such as the lack of closure notification procedures, the lack of sourcing of alternative sites, the Post Office's inability to recruit and retain sub-postmasters and the lack of attractive products, which are leading to the closure of scores of post offices around the country. What is the Minister going to do about it?

Mr. Timms: I am grateful to the hon. Gentleman for drawing to the attention of the House the success of the Government's measures to ensure that where there is a proposed closure an alternative can be found. He has done the House a service by explaining how that works—it is exactly what the Government have done. The Post Office has put in place a team of rural transfer advisers to make sure that when the problems that he described arise alternatives can be found, as has been done successfully in his constituency. I made the point that in the most recent quarter for which data are available there were no closures at all. The number of net closures that I gave for the year was less than half the number in 2001–02, which, in turn, was half the number in the preceding year. We have committed £450 million to maintain the rural network up to 2006. We have therefore backed fully, with funding, our commitment that there should be no avoidable closures of rural post offices, and I am delighted that that is working in the hon. Gentleman's constituency.

Dr. Stephen Ladyman (South Thanet): Many of the rural post offices in my constituency have tried to meet the challenge facing them by diversifying into retail newsagency. They have just discovered that retail newsagents have to obtain newspapers from wholesale newsagents that are granted a monopoly by newspaper publishers—a monopoly that has been abused by increasing service charges by 650 per cent. Would we not help rural post offices generally and retail newsagents across the country by breaking the monopoly of wholesale newsagents?

Mr. Timms: Of course, these arrangements have been in place for a considerable time, but the Office of Fair Trading is looking at precisely the issue that my hon. Friend raises, and it will report back in due course.

Mr. Roy Beggs (East Antrim): In Northern Ireland, just as elsewhere in Great Britain, rural post offices, in addition to delivering pensions and benefits conveniently, contribute to local village life. Will the Minister acknowledge that there has been disproportionate encouragement to benefit recipients to have bank accounts, and will he use some of the £450 million that he has mentioned to indicate in simple terms that people may still choose, as he has announced this

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morning, to receive payments in cash at their local post offices? That might just help to avert some further closures.

Mr. Timms: I agree with the hon. Gentleman about the importance of post offices in the life of a community, and he is right to draw attention to that point. However, in putting in place arrangements for the change to automated credit transfer, we have ensured that anyone who wishes to obtain their benefit in cash from a post office—either through a Post Office card account, or through any of the basic bank accounts that all banks will offer—can continue to do so. Those accounts will be fully accessible at the local post office. The great benefit is that people will be able to use the bank accounts and go to the post office, and post offices will be offering the services that people increasingly want. The old-fashioned giros did not offer a future for the post office, but our new arrangements will.

Mr. Andrew Robathan (Blaby): Given that rural post offices will lose some 40 per cent. of their income over the next two years with the introduction of universal banking, and given that the Government's largesse of £150 million a year will continue only to the end of 2005, taking us up to the next general election, will the Minister explain what happens then? The House, sub-postmasters and the public who use post offices will want to know whether this Government have a long-term, coherent plan for the future of rural post offices after the next general election.

Mr. Timms: I hope that the hon. Gentleman will welcome the figures that I have given to the House on the falling number of post office closures in rural areas. His suggestion that 40 per cent. of income will be lost to the Post Office assumes, of course, that nobody who obtains their benefit at a post office at the moment will do so in future. However, very many of the benefit recipients who currently use post offices will use the Post Office card account, a basic bank account or an ordinary bank account and continue to obtain their benefit in cash at local post offices, thereby generating income for the post office network. The arrangements beyond 2006 will, of course, be a matter for the next spending review, but the Government's commitment to ensuring a successful future for the post office network in every part of the country will be maintained.

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