European Scrutiny Committee Contents

3 European aid to the most deprived



COM(12) 617

+ ADDs 1-2

Draft Regulation of the European Parliament and of the Council on the Fund for European Aid to the Most Deprived

Commission staff working documents: Impact assessments

Legal baseArticle 175(3) TFEU; co-decision; QMV
Document originated24 October 2012
Deposited in Parliament13 November 2012
DepartmentWork and Pensions
Basis of considerationEM of 23 November 2012
Previous Committee ReportNone
Discussion in CouncilNo date set
Committee's assessmentPolitically important
Committee's decisionNot cleared; further information requested; for debate on the Floor of the House on a draft Reasoned Opinion before the House rises for the Christmas recess


3.1 Article 3 of the Treaty on European Union (TEU) sets out the general objectives of the European Union. It includes references to:

  • the sustainable development of the EU on the basis of a highly competitive social market economy;
  • promoting social justice and protection, equality, solidarity between the generations and protection of the rights of the child;
  • promoting economic, social and territorial cohesion and solidarity among Member States; and
  • combating social exclusion. [7]

3.2 Articles 9 and 10 of the Treaty on the Functioning of the European Union (TFEU) are horizontal provisions which seek to integrate the goals of high employment and adequate social protection, and the fight against social exclusion and discrimination, into all aspects of EU policy and action.

3.3 Although concepts of equality, solidarity, social justice and social cohesion permeate the EU Treaties, Treaty provisions on social policy focus primarily on the labour market and EU cohesion policy is principally a vehicle for reducing disparities in the levels of social and economic development between regions across the EU. The European Social Fund (ESF) straddles both policy areas, operating as an instrument of EU social and cohesion policy. ESF interventions focus specifically on improving employment opportunities for workers within the EU's internal market by encouraging geographical and occupational mobility and by helping workers adapt to change.[8]

3.4 In a Communication setting out the objectives of EU cohesion policy for the period 2014-20, the Commission called for a greater thematic concentration of financial resources on the objectives and headline targets of the Europe 2020 Strategy.[9] One of the headline targets seeks to,

"promote social inclusion, in particular through the reduction of poverty, by aiming to lift at least 20 million people out of the risk of poverty and exclusion."

Promoting social inclusion and combating poverty is included as one of four objectives in the draft Regulation establishing the European Social Fund for 2014-20. It also includes a requirement to ensure that at least 20% of ESF resources allocated to each Member State is used to fund this objective.[10]

The draft Regulation

3.5 The purpose of the draft Regulation is to establish a new Fund for European Aid to the Most Deprived ("the Fund"), with a proposed budget of €2.5 billion for the period 2014-20, to alleviate poverty and material deprivation in the EU by supporting national schemes for the distribution of food products and the provision of basic consumer goods for the personal use of homeless people or children. It would replace an existing EU Food Distribution Programme for the Most Deprived, in place since 1987, which enables Member States to use public intervention stocks of agricultural products as food aid. The Food Distribution Programme is funded by the European Agricultural Guarantee Fund (EAGF). Participation is voluntary but has risen in recent years to include 20 Member States (but not the UK). For some Member States, it remains the principal source of support for food distribution to the most deprived.[11] However, the Programme is being phased out by the end of 2013 because the range and quantity of products in intervention stocks has diminished, and there is limited scope for Member States to supplement intervention stocks with food purchases on the open market.[12]

3.6 Unlike the Food Distribution Programme, which is a measure based on the EU's Common Agricultural Policy, the new Fund for European Aid to the Most Deprived is an instrument of the EU's cohesion policy, based on Article 175(3) TFEU. This Article provides for the adoption of specific actions outside the framework of the EU's Structural Funds (the European Social Fund and European Regional Development Fund) if necessary to achieve the objectives of economic, social and territorial cohesion. Although the Fund would be resourced from the Structural Funds, it is intended to complement the objectives of the ERDF and ESF by offering temporary relief to the most deprived, who are also likely to be furthest from the labour market. Article 3 of the draft Regulation states:

"The Fund shall promote social cohesion in the Union by contributing to achieving the poverty reduction target of at least 20 million of the number of persons at risk of poverty and social exclusion in accordance with the Europe 2020 Strategy. The Fund shall contribute to achieving the specific objective of alleviating the worst forms of poverty in the Union by providing non-financial assistance to the most deprived persons."

3.7 Member States would be responsible for identifying, by means of objective criteria, those individuals, families or households qualifying as "most deprived" and for selecting partner organisations at national level to distribute food and basic consumer goods. These may be directly purchased by partner organisations or provided to them free of charge by a public body. A small element of funding may be used by partner organisations for social inclusion activities involving beneficiaries of EU aid.

3.8 The Fund would be managed in the same way as other EU cohesion instruments, using a shared management model. Each Member State would be required to submit an operational programme for the period 2014-20 indicating how it intends to use its allocation of funding. It may, for example, choose to focus on only one of the three types of material deprivation within the scope of the Fund, or to address all three: food deprivation, homelessness, or the material deprivation of children. The allocation of resources between Member States would be based on population data provided by Eurostat indicating the proportion suffering from severe material deprivation[13] and living in households with very low work intensity.

3.9 Financial support from the Fund would be subject to the principle of co-financing, with the EU contribution capped at 85% of eligible public expenditure. However, this rate may be increased by a further 10% at the request of Member States facing liquidity problems and receiving additional support from various EU financial support mechanisms. Member States, partner organisations and beneficiaries of aid would be required to publicise the support obtained from the Fund and to ensure that the EU contribution is made visible.

3.10 The draft Regulation contains detailed provisions on the management and control of the Fund which are similar to those applicable to EU Structural and Cohesion Funds. In an attempt to avoid duplication, the Fund may be implemented through the same structures and procedures as Member States have established for the European Social Fund.

The justification for EU action

3.11 The Commission estimates that nearly one quarter of Europeans (116 million) are at risk of poverty or social exclusion and approximately 40 million suffer from severe material deprivation, adding:

"While the needs of those who are at the margins of society keep growing, the ability of Member States to support them has in many cases diminished. Social cohesion is threatened by fiscal constraints more than ever before. In many Member States it is felt that policies decided at European level are in some way responsible for these developments."[14]

3.12 The Commission suggests that,

"[C]urrently more and more social stakeholders and EU citizens perceive the EU as a threat for their personal and collective protection. Action at European level is required, all the more so, as a lack of social cohesion would hinder the Union's further development and undermine its legitimacy in the eyes of its citizens."[15]

3.13 The Commission describes food deprivation, homelessness, and the material deprivation of children as "the worst and most socially corrosive forms of poverty" and says that the new Fund is intended to assist the most vulnerable "who suffer from extreme forms of poverty [and who] are too far removed from the labour market to benefit from the social inclusion measures of the ESF."[16] The Commission estimates that the new Fund would provide direct material assistance for approximately 2.1 million people each year, but would have a multiplier effect extending its reach to at least 4.2 million people (roughly 10% of those experiencing severe material deprivation throughout the EU).

3.14 The Commission underlines that EU cohesion policy is not simply a tool for reducing regional disparities, but also seeks to promote social cohesion. It suggests that the new Fund is strongly anchored in the principle of subsidiarity, adding:

"EU-level action is necessary given the level of poverty and social exclusion in the Union and the unacceptable diversity of the situation among individual Member States, further aggravated by the economic and fiscal crisis, which has led to a deterioration of social cohesion and lessened the chances of achieving the Europe 2020 Strategy's objective in relation to the fight against poverty and social exclusion.

"European financial support helps to catalyse action at national level, coordinate efforts and to develop and introduce instruments to promote social inclusion. It allows the Union to lead by example."[17]

3.15 In its accompanying Impact Assessment (ADD 1), the Commission describes poverty and social exclusion as major obstacles to achieving the balanced vision of economic growth and social progress set out in the Europe 2020 Strategy. It suggests that the type of emergency assistance provided by the new Fund is needed to address continuing uncertainty "about the ability of all Member States to sustain social expenditure and investment at levels sufficient to ensure that social cohesion does not deteriorate further" and to achieve the objectives and headline targets of the Europe 2020 Strategy.[18]

The Government's view

3.16 In an Explanatory Memorandum dated 23 November the Minister for Employment (Mr Mark Hoban) questions whether the draft Regulation complies with the principle of subsidiarity, on the grounds that it is primarily a social policy measure which can be sufficiently achieved by Member States acting on their own.

3.17 The Minister notes that the UK stopped participating in the existing Food Distribution Programme in the mid-1990s because of dwindling UK intervention stocks and bureaucratic overheads. He says that the Government intends to work with other like-minded Member States to oppose the new Fund for the following reasons:

  • measures of this type are better and more efficiently delivered by individual Member States through their own social programmes, and their regional and local authorities, who are best placed to identify and meet the needs of deprived people in their countries and communities;
  • the use of EU cohesion policy processes would impose heavy and costly administrative burdens on Member States and partner organisations, without adding value to existing arrangements in Member States; and
  • EU cohesion policy should continue to tackle poverty through European Social Fund programmes to help disadvantaged people enter employment — the Government does not, therefore, support taking resources from the European Social Fund or other cohesion policy programmes to finance the new proposal.

3.18 The Minister indicates that the Government will also examine the proposed inclusion of delegated and implementing powers to ensure that their use is appropriate. He says that the Government does not intend to launch a consultation on the draft Regulation.


3.19 We are struck by two elements which appear to be at the heart of the Commission's proposal for a new Fund for European Aid for the Most Deprived. The first is the perception that the EU shares responsibility for the austerity measures being implemented in many EU Member States and has, as a result, forfeited the confidence of ordinary citizens in its ability to ensure an adequate level of social protection. The second is the Commission's desire for a high visibility EU instrument, capable of providing direct material assistance to those worst affected by rising levels of poverty and social exclusion, to mitigate negative perceptions of its contribution to the economic and financial crisis.

3.20 The justification advanced by the Commission for action at EU level is two-fold. It observes that poverty reduction and social inclusion are essential elements of the sustainable growth agenda set out in the Europe 2020 Strategy and are reflected in the headline target endorsed by the European Council. It also argues that the goal of social inclusion necessitates action by the EU because the economic and financial crisis has diminished the ability of some Member States to maintain adequate levels of social expenditure and investment. However, the fact that the Commission is anxious to be seen to act, does not mean that EU action is necessary or justified.

3.21 We are disappointed that the Commission's Explanatory Memorandum accompanying the draft Regulation contains only the most cursory statement of the justification for EU action and fails to include any of the qualitative and quantitative indicators required by Article 5 of Protocol (No 2) on the application of the principles of subsidiarity and proportionality. The Commission's Impact Assessment states elliptically that the draft Regulation "leaves to Member States and their lower levels of government decisions that should be taken at their respective levels"[19] but does not explain why the objectives of the draft Regulation cannot also be sufficiently achieved by Member States. Indeed, whilst the Commission suggests that there is "uncertainty" about the ability of some Member States to provide the social investment needed to prevent a further fracturing of social cohesion, it does not assert that all Member States are in the same position. The draft Regulation would, however, bind all Member States.

3.22 We note, moreover, that the European Council, in endorsing the Europe 2020 headline target on social inclusion and poverty reduction, made clear that Member States were free to set their own national targets using the most appropriate indicators which take account of their national circumstances and priorities.[20] It is far from clear that the European Council contemplated that an EU funding instrument would be necessary or desirable in order to meet the headline target. We do not accept, therefore, that the Commission has provided a sufficient justification for EU action and recommend that the House sends the attached Reasoned Opinion to the Presidents of the EU institutions before 26 December, following a debate on the Floor of the House.

3.23 The Minister indicates that the Government intends to oppose the draft Regulation. We assume that this may be the reason why the Government does not propose to initiate a consultation. If so, we urge the Minister to reconsider. Whilst we do not think EU action is justified in this case, we also consider that the views of stakeholders in the UK could help to establish a more robust evidence base against which to assess the potential benefits or costs of EU action. We therefore ask the Minister to consult interested stakeholders in the UK and to provide a summary of their views.

3.24 We note the Minister's view that the management of the Fund would lead to heavy and costly administrative burdens for Member States and partner organisations. As, however, the draft Regulation envisages that Member States may use the structures already established for their European Social Fund programmes to implement this Fund, we would welcome further explanation of the additional costs likely to be involved. We also ask the Minister to provide progress reports on the negotiations.

3.25 Meanwhile, the draft Regulation remains under scrutiny.

7   See Article 3(3) TEU. Back

8   See Article 162 TFEU. Back

9   See (32199); HC 428-xi (2010-11), chapter 6 (15 December 2010) and HC 428-xviii (2010-11), chapter 6 (2 March 2011). Back

10   See (33218); HC 428-xli (2010-12), chapter 7 (9 November 2011) and HC 86-v (2012-13), chapter 9 (20 June 2012). Back

11   See Annex 2 to ADD 1. Back

12   See (31957) and (33197); HC 428-xxxix (2010-12), chapter 7 (26 October 2011). Back

13   Severe material deprivation is measured in terms of the inability to afford at least four of the following: payment of rent, mortgage or utility bills; adequate heating; coping with unexpected expenses; eating meat or protein every second day; taking one week's annual holiday away from home; purchasing any one of the following: a colour TV, car, telephone, or washing machine. Back

14   See p.2 of the Commission's Explanatory Memorandum. Back

15   See p.14 of ADD 1. Back

16   See p.3 of the Commission's Explanatory Memorandum. Back

17   See pp.4-5 of the Commission's Explanatory Memorandum. Back

18   See p.26, ADD 1. Back

19   See p.25, ADD 1. Back

20   See the footnote to the headline target on social inclusion in the European Council Conclusions of 17 June 2010 at  Back

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© Parliamentary copyright 2012
Prepared 13 December 2012