House of Commons - Documents considered by the Committee on 26 January 2011

Documents considered by the Committee on 26 January 2011 - European Scrutiny Committee Contents

10 Poverty and Social Exclusion

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Commission Communication: The European Platform against Poverty and Social Exclusion: A European framework for social and territorial cohesion

Commission staff working paper: List of key initiatives

Legal base —

Document originated 16 December 2010

Deposited in Parliament 21 December 2010

Department Work and Pensions

Basis of consideration EM of 11 January 2011

Previous Committee Report None

To be discussed in Council 7 March 2011

Committee's assessment Politically important

Committee's decision Cleared

Background

10.1 In June 2010, the European Council endorsed the Europe 2020 Strategy which is intended to stimulate employment and "smart, sustainable and inclusive growth." At the same time, the European Council set five "headline targets" to be achieved by 2020. These included:

lifting at least 20 million people out of the risk of poverty and exclusion by promoting social inclusion and poverty reduction;
reducing school drop-out rates to less than 10% and increasing the proportion of 30-34 year olds who have completed tertiary or equivalent education; and
raising the rate of employment for women and men aged between and 20 and 64 to 75%, with a particular focus on increasing the labour market participation of young people and older or low-skilled workers and improving the integration of migrants.

10.2 In its Communication on the Europe 2020 Strategy, the Commission proposed seven "flagship initiatives", including one entitled "European Platform against Poverty", which identifies possible actions at EU and national level to combat poverty and social exclusion.

10.3 Article 3 of the Treaty on the European Union (TEU) sets out the objectives of the European Union, which include

combating social exclusion and discrimination;
promoting social justice and protection;
promoting economic, social and territorial cohesion and solidarity among Member States; and
contributing, through its relations with the wider world, to the eradication of poverty.

10.4 Article 3 TEU also says that, in pursuing these objectives, the European Union must act within the competences conferred on it by the EU Treaties. The EU's competence in matters of social policy is set out in Title X of Part Three of the Treaty on the Functioning of the European Union (TFEU). The EU may, for example, adopt Directives establishing minimum requirements on the integration of people excluded from the labour market but the EU does not have legislative competence in the field of social exclusion or the modernisation of social protection systems. In these areas, EU action is limited to the adoption of measures encouraging cooperation between Member States.[48]

The Commission Communication

10.5 The Commission notes that the European Council's headline target on poverty and social exclusion is based on three indicators:

the at-risk-of poverty rate (set at 60% of the national median of disposable income, after social transfers);
the index of material deprivation which includes nine common elements of household expenditure[49] — an inability to pay for at least four constitutes material deprivation; and
the percentage of people living in households with very low work intensity.

10.6 The Commission estimates that, in 2008, there were more than 80 million people across the EU living below the poverty line. A quarter of these were children and well over half were women. Other particularly vulnerable groups include the elderly and people with disabilities. It says that the economic crisis has made things worse, with higher levels of indebtedness and insolvency and rising unemployment, particularly amongst young people, low-skilled workers and migrants. According to the Commission, 8% of Europeans experience severe material deprivation (rising to 30% in the poorest EU Member States) and over 9% of the working age population across the EU live in households where nobody works. Job insecurity, low pay and involuntary reductions in working hours have also increased the risk of poverty for those in work, particularly for single parent or single wage families.

10.7 The purpose of the European Platform against Poverty and Social Exclusion proposed in the Communication is to establish a framework for action within which EU institutions and Member States express their joint commitment to tackling poverty and exclusion across a range of policy areas. The Commission recognises that policies and actions to promote inclusion and reduce poverty are principally a Member State competence and will depend crucially on job creation as well as modern and effective social protection systems. However, the Commission suggests that achieving the EU headline target will require "a pooling of all efforts and instruments at EU and at national level" as well as developing innovative approaches and greater efficiencies at a time of reduced public expenditure.

10.8 The Communication identifies five principal areas for action, which are considered in further detail in the following paragraphs:

ensuring that the focus on poverty reduction and social inclusion is mainstreamed in all aspects of policy development;
making better use of EU Funds to support social inclusion;
- promoting evidence-based social innovation;
working in partnership to harness the potential of the social economy; and
enhancing policy coordination among Member States.

The Commission says that the actions proposed "rely on a mix of policy coordination, dialogue with institutional and non-institutional actors, funding and strategic partnerships."[50] An accompanying Commission Staff Working Paper (Addendum 1) sets out a more comprehensive list of proposed initiatives.

Mainstreaming poverty reduction and social inclusion across all policy areas

10.9 The Commission emphasises the synergy between the EU headline targets on poverty reduction and on education and employment and the important contribution that another flagship initiative — An Agenda for New Skills and Jobs — can make to the creation of high quality and sustainable jobs.[51] Education and training, access to health, social care and other essential services, pensions, the integration of non-EU migrants and measures to combat discrimination are all highlighted as policy areas which can make a real difference in promoting social inclusion and reducing poverty. The Commission also says that more should be done to reduce the risk of energy poverty, to improve access to financial services for the most vulnerable and to bridge the digital divide by making the internet accessible to more people. It suggests that all major initiatives and legislative proposals should be accompanied by an impact assessment that specifically addresses their social impact.

10.10 The Commission proposes actions across a range of policy areas. On the first, access to the labour market, the Commission says that it will present a Communication in 2012 assessing Member States' implementation of active inclusion policies to help those out of work into employment (including the impact of minimum income schemes and the use of EU support programmes).

10.11 Commission proposals in the field of social protection and access to essential services include:

a White Paper on Pensions in 2011, looking at the adequacy and sustainability of pensions;
a European Innovation Partnership on active and healthy ageing in 2011, and initiatives to support the European Year for Active Ageing in 2012;
a Voluntary European Quality Framework for social services, looking specifically at long-term care and homelessness;
an assessment of the efficiency and effectiveness of health expenditure, with a view to reducing health inequalities;
a law in 2011 to ensure access to basic banking services; and
a request to the banking sector to submit a self-regulatory initiative on bank charges to encourage transparency and comparability.

10.12 Proposed actions in the field of education and youth policies include:

a Communication in 2011 and a proposal for a Council Recommendation on policies to combat early school leaving;
the launch in 2012 of an initiative to encourage more effective intervention at all stages of education to tackle disadvantage; and
a Recommendation in 2012 on child poverty.

10.13 The Commission says that it will present a New European Agenda on Integration in 2012 to support Member States' efforts to promote the integration of third country nationals. Further proposals to promote social inclusion and combat discrimination include:

presentation in 2011 of an EU Framework for National Roma Integration Strategies;
implementation of the EU Strategy on Gender Equality 2010-15 to promote the economic independence of women;
implementation of the EU Disability Strategy 2010-20; and
continuing work on homelessness and housing exclusion.

Making better use of EU Funds to support social inclusion

10.14 The Commission highlights the importance of the European Social Fund in providing co-funding for projects promoting employment and social inclusion and says that it will be an important tool in helping to achieve the objectives of the EU's 2020 Strategy. The Commission also highlights support available from the European Regional Development Fund, the European Agricultural Fund for Rural Development as well as a new Microfinance Facility which aims to provide up to €500 million in the form of microloans. The Commission proposes the following actions:

ensuring that the European Social Fund is used to support Member States' efforts to achieve the Europe 2020 objectives, including the poverty reduction target;
simplifying access to the Fund, especially for NGOs and local partnerships; and
putting forward proposals in 2011 for a new regulatory framework for EU Structural and Cohesion Funds from 2013 onwards which will seek to simplify access to the Funds and ensure greater synergy between them.[52]

Promoting evidence-based social innovation

10.15 The Commission advocates "social experimentation", which uses small scale projects to test policy innovations before launching them on a wider scale, and suggests that it would provide a useful tool to evaluate the types of structural reforms likely to be needed to achieve the Europe 2020 objectives. The Commission says that it will publish a Communication to raise awareness about work in the field of social innovation. It also intends to propose an initiative in 2011 to pool a number of funds to develop:

a European research excellence network to help design and evaluate social innovation programmes;
a European research project to identify a methodology for assessing the impact of social innovation programmes; and
common principles on the design, evaluation and implementation of small scale projects to test policy innovations or reforms.

Working in partnership to harness the potential of the social economy

10.16 The Commission says it will promote the involvement of a wide range of stakeholders and develop voluntary guidelines on their role in policy formulation and implementation. The Commission highlights the importance of volunteering as a means to develop the social economy as well as the potential contribution of businesses through corporate social responsibility programmes. It promises a new policy initiative on corporate social responsibility in 2011 which will focus on reporting and disclosure, human rights and the employment and enterprise aspects of the EU 2020 Strategy. The Commission also intends to propose a "Social Business Initiative" in 2011, which will include provision for social ratings and ethical and environmental labelling, and to consider ways to make it easier for mutual societies and cooperatives to operate across national borders .

Enhancing policy coordination among Member States

10.17 The Commission says that it will consider how best to integrate the open method of coordination — which is based on a system of peer review to monitor progress towards achieving jointly agreed targets and objectives — into the Europe 2020 process. It will also "assist and advise" Member States in setting national poverty reduction and social inclusion targets and will undertake a comprehensive assessment of the effectiveness of national policies on social protection and inclusion mid-way through the Europe 2020 Strategy.

10.18 Finally, the Commission proposes strengthening dialogue with other EU institutions, stakeholders and civil society and holding an Annual Convention of the European Platform against Poverty and Social Exclusion to take stock of progress made in meeting the European Council's headline target on poverty reduction. The Commission will also review implementation of the Platform in 2014 to see if any adaptations are required in light of the outcome of negotiations on the EU budget for 2014 onwards.

The Government's view

10.19 The Minister for Employment (Chris Grayling) says that the Government is committed to social justice and poverty reduction and notes that many of the areas for action identified in the Communication are "consistent with its own objectives of freedom, fairness and responsibility." He cites, for example, "active inclusion of those furthest from the labour market; child poverty measures; early years interventions; the long term sustainability of pension systems; narrowing health inequalities; getting people into jobs; and combating homelessness", but adds that any proposed EU action in these areas must add value without imposing additional burdens or costs on the Government or UK businesses.[53]

10.20 The Minister emphasises the importance the Government attaches to the effective use of EU funds and that "any future commitment of EU budget funds will need to be considered in the context of the UK aim of negotiating a smaller overall EU budget and demonstrating value added at EU level. It will be important not to pre-empt discussions by committing to specific actions in advance of budget negotiations."[54] The Government agrees that Structural and Cohesion Funds should help to deliver the objectives of the Europe 2020 Strategy, but Member States should continue to have the flexibility to determine their own investment priorities.

10.21 The Minister welcomes the emphasis placed by the Commission on evidence-based social innovation and on developing partnerships to tackle social exclusion which, he says, "reflects the themes of the UK Government's 'Big Society' principles and the value of social enterprises and volunteering to the social economy."[55]

10.22 While supporting many of the ideas contained in the Communication, the Minister expresses particular caution about possible legislative initiatives, and adds:

"The UK is clear that any proposals should not extend the scope of Commission influence over areas which are not within their competency. There are some proposals within the Communication that represent a prima facie risk of an extension of Commission competence. Until detailed proposals with respect to each area are published by the Commission it is not possible to assess how great the risks are. However, the UK Government is alive to this issue and colleagues and I will closely review each proposal as details emerge and as they are prepared for individual scrutiny."[56]

10.23 The Minister highlights proposals which he thinks "represent significant risks of the extension of Commission competence" and which will be subject to close scrutiny. These concern:

the Voluntary European Quality Framework on aspects of social care;
the European Innovation Partnership on Active and Healthy Ageing;
the Commission's proposed assessment of health expenditure;
a possible law on access to basic banking services; and
a New European Agenda on Integration.

10.24 The Minister says that he expects the Employment, Health, Social Policy and Consumer Affairs Council to adopt Conclusions on the Communication at its meeting on 7 March.

Conclusion

10.25 This is the sixth of seven flagship initiatives to be presented by the Commission and which are intended to deliver the goals identified in the Europe 2020 Strategy and the headline targets set by the European Council. As such, it is clearly an important document which we are therefore drawing to the attention of the House.

10.26 A number of the actions proposed in the European Platform against Poverty and Social Exclusion have been foreshadowed in other flagship initiatives, for example in Youth on the Move,[57] Innovation Union,[58] the Digital Agenda for Europe[59] and an Agenda for New Skills and Jobs,[60] as well as in the Single Market Act[61] proposed by the Commission. As we have said previously, while the goals set out in the flagship initiatives appear to be reasonable, designing the right mix of policies and instruments to implement them at the appropriate level may prove to be contentious. The breadth and generality of the Commission's Communication make it difficult to foresee at this stage whether the actions proposed are justified in terms of the EU's competence to act in a particular area (especially, for example, in the fields of social protection, housing and homelessness, education and health) and in terms of their added value and respect for the principle of subsidiarity. We welcome the Minister's assurance that the Government will consider carefully whether proposals flowing from the Communication respect the boundary between EU and Member State competence. We agree that the extent of the risk of encroachment on areas of national competence can only be fully assessed in the light of specific proposals for action. We are therefore content to clear the Communication from scrutiny but will ensure that measures proposed to implement the Platform are subject to rigorous scrutiny.