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Lord Lea of Crondall: My Lords, I thank my noble friend for that reply. I welcome the modest stepping up of our euro preparations. I wish to ask my noble friend two questions. First, does he not agree that the real significance of the switch to euro notes and coins at the end of next year is the fact that 300 million fellow Europeans from Helsinki to Lisbon and from Rome to Dublin will use the euro not as a foreign currency nor even as a dual currency, but just as the Americans use the dollar; that is, as their only currency--the currency in which they price all their goods and services? Secondly, is not the implication for this country that there is a danger of complacency and of feeling that we do not need to do anything because we have not joined, or, as the Leader of the Conservative Party would have it, try to be King Canute and operate at a disadvantage in the single European market?

Lord McIntosh of Haringey: My Lords, my noble friend is certainly right to say that, at the beginning of 2002, 300 million people will use the euro on a daily basis. Any sensible business in this country which expects to do retail business, for example, with those 300 million people who may visit this country would do well to display the prices of its goods in euros, just

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as it may display them at present in dollars. That is the advice which the Government would give from now on, whether or not we ultimately join the euro.

Lord Lamont of Lerwick: My Lords, has the noble Lord noticed that the "one size cannot fit all" interest rate of the euro is causing financial divergences in the different economies of Europe? Has he noticed that the Irish rate of inflation has now reached over 4 per cent, measured by their own measurement, or over 5 per cent, measured as the British measure inflation? How high does he think British inflation would have risen if, for the past 12 months, we had had euro interest rates?

Lord McIntosh of Haringey: My Lords, as regards the final part of the noble Lord's question, he asks me to speculate on purely hypothetical circumstances. Certainly there have continued to be variations between the different countries in Euroland in interest rates and in many other economic measures. However, only those who thought that the introduction of the euro would bring about an economic superstate can be surprised at that.

Lord Taverne: My Lords, has it not become evident in retrospect that the most fundamental strategic mistake which the Government have made in their term of office, and which they must now secretly deeply regret, was the announcement on 27th October 1997 when they funked the issue of the euro? Is it not clear that if they had been brave then they could easily have won a referendum, the pound would now be closely linked to the euro and the difficulties of manufacturing industry and the agriculture industry would not be as severe as they are now?

Lord McIntosh of Haringey: My Lords, the noble Lord is in another Cloud-cuckoo-land at the opposite end of the spectrum from the noble Lord, Lord Lamont of Lerwick. The announcement by the Chancellor of the Exchequer in October 1997, which was reaffirmed by the Prime Minister in February of last year, is, and remains, the policy of Her Majesty's Government. We have no regrets about that.

Lord Barnett: My Lords, does my noble friend agree that even those with the extremist views of the noble Lord, Lord Lamont, must surely accept that millions of British businessmen and holidaymakers will be using the euro every year? Having paid commission to change their money into euros, they will have to pay commission again to change it back. Would it not be sensible to allow the euro to be used here?

Lord McIntosh of Haringey: My Lords, I meant to bring my euro chequebook to demonstrate my devotion to the euro. Unfortunately I have left it at home.

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We have never claimed that transaction costs were the principal argument for the single currency, but of course they are significant.

Lord Saatchi: My Lords, why do the Government think it right to spend £26 million on preparations to change over to the euro when every poll shows that 70 per cent of the British public do not want to join it?

Lord McIntosh of Haringey: My Lords, the £26 million is an estimate of the total costs of preparation for the existence of the euro, whether or not we join. The amount of public money is of course much smaller; at present it stands at £6.3 million. But not even those opposite with the more extreme views would suggest that we should pretend that the euro will not exist in the 11 countries that have adopted it and that it will not have an effect on our business. The preparations for it are essential in order that we have a proper, practical choice when the time comes.

Lord Harrison: My Lords, does my noble friend accept that the superior design features of the euro--distinctive colours, sizes and embossments of notes--will be much preferred by the blind and visually impaired community of Britain? I speak as a committed "Eurofighter".

Lord McIntosh of Haringey: My Lords, it is a matter of aesthetic judgment. Simplicity has to be set against the complexity necessary to deter forgers. I am not terribly fond of the bridges which appear on so many of the euro notes.

Viscount Cranborne: My Lords, arising out of the reply given to my noble friend Lord Saatchi, can the Minister explain why he thinks that the views of 70 per cent of the British public are extreme?

Lord McIntosh of Haringey: My Lords, I was describing as extreme the views of noble Lords opposite. The views of the public have changed on the euro and may well change again as the issue gets closer to determination.

Bank Branch Closures

2.51 p.m.

Earl Peel asked Her Majesty's Government:

    Whether they will take any action to protect the economic base of rural areas from the effects of the current programme of bank branch closures.

The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Lord Whitty): My Lords, the Government are taking a wide range of steps to support rural economies, including funding for rural regeneration and development of rural transport. The Government recognise the importance of access to financial services in rural areas. They are fully committed to maintaining

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a nationwide network of post offices, which are increasingly giving bank customers convenient access to their accounts. The Government are investing £500 million in the Horizon programme to automate every post office in the country by 2001. That will enable the Post Office to extend its arrangements with the banks.

Earl Peel: My Lords, I thank the Minister for his reply. However, following the recent remarks in another place of his honourable friend Chris Mullin--which reflected, to put it mildly, a pessimistic view of the effect of bank closures on rural areas--and today's media report of his other honourable friend Alan Johnson, who is now predicting that over the next year between 400 and 500 rural post offices are likely to close, does the Minister accept that these developments will seriously threaten the Government's rural regeneration project? Will he, at the very least, assure the House that he will reconsider the Government's policy of removing benefit payments from post offices?

Lord Whitty: My Lords, the Government accept that there are parts of the Post Office rural network which are under social, economic and technological pressures. That is why modernisation is necessary in all 19,000 branches of the Post Office. That is why the Government have put the Horizon project--which is the major technological advance for the Post Office--back on track. It will enable the payment of benefits and other banking transactions, but those drawing benefits who wish to retain cash payments will be able to do so.

Lord Ackner: My Lords, does the Minister find anything objectionable in a Minister suggesting to a disgruntled customer of a rural bank that he always has the alternative to change banks?

Lord Whitty: My Lords, I do not regard that as objectionable. Those were almost exactly the terms used by my honourable friend Chris Mullin. Clearly where a bank has let down a rural community, it is open to its customers in that area, and to those in other areas who sympathise with them, to change their banker. That is understandable in those circumstances.

The Lord Bishop of Salisbury: My Lords, does the Minister accept that it is not only the economic but also the social base of rural communities that are affected by bank closures? Can he spell out, in more detail than he has, exactly what help he intends to encourage so that post offices can take over more of the banks' roles?

Lord Whitty: My Lords, it is certainly the case that the existence of the post office is vital to the continued social well-being of many rural areas. The steps that the Government and the Post Office have taken include: the major investment programmes to which I have referred; plans to install 3,000 cash machines in

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smaller towns and villages; and the possibility of having Post Office cash points outside the post offices themselves. The Post Office is already engaged in joint arrangements with some banks to cover their facilities. It has such arrangements with the Co-op Bank, with the Alliance and Leicester and with Lloyds Bank. The problem which gave rise to this Question is that, apart from an experiment in Cornwall, Barclays Bank has not made the same nationwide arrangement with the Post Office.

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