10 European aid to the most deprived
~
| (34394)
15865/12
+ ADDs 1-2
COM(12) 617
| Draft Regulation of the European Parliament and of the Council on the Fund for European Aid to the Most Deprived
|
| Legal base | Article 175(3) TFEU; co-decision; QMV
|
| Department | Work and Pensions
|
| Basis of consideration | Minister's letter of 29 August 2013
|
| Previous Committee Report | HC 86-xxii (2012-13), chapter 3 (5 December 2012)
|
| Discussion in Council | No date set
|
| Committee's assessment | Politically important
|
| Committee's decision | Not cleared; further information requested
|
Background and previous scrutiny
10.1 Since 1987, the EU has operated an EU Food Distribution Programme
which uses surplus public intervention stocks of agricultural
products to provide food aid to the most deprived. Participation
is voluntary but has risen in recent years to include 20 Member
States (but not the UK). 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 them with food purchases on the
open market.
10.2 The draft Regulation would 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. Unlike the Food Distribution Programme, which
is a measure based on the EU's Common Agricultural Policy, the
new Fund is an EU cohesion policy instrument. Its objective is
to promote social cohesion by alleviating poverty, thereby contributing
to the poverty reduction target established by the European Council
in June 2010 as part of the Europe 2020 Strategy. This seeks
to lift at least 20 million people out of the risk of poverty
and social exclusion by 2020.
10.3 Member States would be responsible for establishing
objective criteria to determine which individuals, families or
households qualify as "most deprived" and for selecting
partner organisations at national level to distribute food and
basic consumer goods. The Fund would be managed in the same way
as other EU cohesion instruments, using a shared management model.
Member States may choose to focus on one or more of the three
types of material deprivation within the scope of the Fund: 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[30]
and living in households with very low work intensity.
10.4 The Commission believes that EU action is justified
for two reasons. First, poverty reduction and social inclusion
are essential elements of the sustainable growth agenda set out
in the Europe 2020 Strategy. It estimates that nearly one quarter
(116 million) of Europeans are at risk of poverty or social exclusion
and approximately 40 million suffer from severe material deprivation
at a time when Member States are struggling to provide the social
investment needed to prevent further social fracture. It suggests
that the 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). Second, the goal of social inclusion (which is an integral
part of EU cohesion policy and features in the general objectives
of the EU Treaties) 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.
10.5 There are two further imperatives which explain
the Commission's desire to act. 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. Existing
EU cohesion instruments (notably, the European Social Fund and
the European Regional Development Fund) focus primarily on labour
activation measures and skills and training to generate growth
and jobs. By contrast, the new Fund would provide emergency assistance
to those who are furthest from the labour market.
10.6 The Government questioned whether the draft
Regulation complied with the principle of subsidiarity and considered
that its objectives could be sufficiently achieved by Member States
acting on their own. The Minister for Employment (Mark Hoban)
suggested that the Fund would lead to heavy and costly administrative
burdens for Member States and partner organisations and that the
European Social Fund should remain the principal EU tool for tackling
poverty, with a specific focus on helping disadvantaged people
to gain employment. He added that the Government intended to
work with other like-minded Member States to oppose the adoption
of the draft Regulation.
10.7 We shared the Government's subsidiarity concerns
and our recommendation that a Reasoned Opinion should be sent
to the Presidents of the EU institutions was endorsed by the House
on 18 December 2012. A further four Reasoned Opinions were issued
by the Danish and Swish Parliaments, the German Bundestag and
the House of Lords, insufficient to meet the threshold required
to trigger a formal review of the proposal under the Protocol
on the application of the principles of subsidiarity and proportionality.
10.8 Notwithstanding the Government's intention to
oppose the draft Regulation, we asked the Minister to reconsider
his decision not to initiate a consultation as we thought that
the views of stakeholders could help to establish a more robust
evidence base against which to assess the potential benefits or
costs of EU action. We also requested further information on
the costs and administrative burdens associated with participating
in the Fund, given that the draft Regulation would allow Member
States to implement it through the structures already established
for their European Social Fund programmes. Finally, we asked
for progress reports on the negotiations.
The Minister's letter of 29 August 2013
10.9 The Minister (Mark Hoban) says that initial
discussions have enabled the Commission to clarify the scope of
the Fund and the budget. He continues:
"First, on the scope of the proposal, a Member
State would be able to use the Fund to support food aid for the
most deprived people, and/or basic consumer goods for homeless
people, and/or basic consumer goods for children. Second, on
the budget, the allocation that a Member State receives would
not be additional funding, but would be taken from its structural
funds allocation (therefore a Member State's structural fund allocation
would be reduced by the amount it receives from the Fund)."
10.10 The Minister highlights three main issues in
the negotiations:
- whether the participation of Member States in
the Fund should be mandatory or voluntary;
- the scope of the Fund; and
- allocations to Member States.
10.11 He indicates that the UK and like-minded Member
States explored two ways in which participation in the Fund could
be made voluntary:
"The first would have given Member States the
option to retain their allocations within their structural funds
programmes instead of supporting food aid or basic consumer goods.
The second would have divided the Fund's budget among Member States
who opted to participate in the Fund (without reducing the structural
funds allocations of Member States which did not participate).
There was no consensus among Member States on either of these,
and both were opposed by the European Commission. The most recent
discussions indicate there is a qualified majority for a mandatory
Fund, and the Lithuanian Presidency is taking forward negotiations
on this basis."
10.12 Turning to the scope of the Fund, the Minister
explains:
"[T]he main issue has been whether it should
be made more flexible so that a Member State could use the Fund
to support social inclusion measures for the most deprived rather
than food aid or consumer goods. This would enable a Member State
to align the Fund with the delivery of social inclusion measures
under the European Social Fund, and use it to address the causes
rather than the symptoms of poverty. The most recent discussions
have indicated considerable support among Member States for broadening
the scope of the Fund, and the Lithuanian Presidency plans to
consider this further in September. The UK has supported broadening
the scope if the Fund is to be mandatory. The Commission has indicated
that it is willing to consider broadening the scope."
10.13 On allocations to Member States, the Minister
says that the Commission produced a first simulation in July,
based on the two indicators — severe material deprivation
and households with very low work intensity — set out in
Article 6(3) of the draft Regulation. He continues:
"The simulation also capped allocations at 2%
of a Member State's structural and cohesion funds allocation,
so that no Member State would see a disproportionate reduction
in its allocation. The simulation was based on an EU budget of
€2.5 billion over seven years from 2014-2020 and produced
a UK allocation of €205.7 million over seven years following
the application of the cap. The Commission also produced a second
simulation which incorporated an additional indicator on the number
of people at risk of poverty after social transfers. This produced
a UK allocation of €158.1 million. There will be further
discussion of the allocations methodology in September. Because
of the impact on our structural funds allocation, the UK will
support adjustments to the methodology which reduce the UK allocation
from the Fund.
"With the Multi-annual Financial Framework for
2014-2020 it has been agreed that the budget for the Fund will
be €2.5 billion, with the option to increase this by up to
€1 billion if individual Member States wish to allocate more
of their structural funds to the Fund.[31]
Therefore once the Commission has allocated the €2.5 billion
among all Member States, each Member State will have the option
to receive a share of the additional €1 billion (on the basis
that this will then be taken from its structural funds allocation).
The UK does not intend to seek a share of the additional €1
billion. The methodology for allocating the additional €1
billion will also be discussed in September."
10.14 The Minister notes that the European Parliament
supports a mandatory Fund and has rejected amendments that would
have made participation voluntary. It also supports the option
to increase the Fund by up to €1 billion and is seeking a
stronger focus on food aid and a greater role for partner organisations
in implementing the Fund. Member States have expressed concern
that the EP's amendments would increase administrative burdens
and introduce greater prescription.
10.15 The Minister expects the Lithuanian Presidency
to produce a compromise text later in September and to seek agreement
to a general approach at the Employment and Social Policy Council
on 15 October. He undertakes to provide a further update before
then.
10.16 Finally, the Minister explains why he has not
undertaken a consultation on the draft Regulation as well as the
basis for the Government's concerns regarding the costs and administrative
burdens associated with participating in the Fund:
"We have not conducted a consultation on the
proposal as our focus has been on challenging the principle of
the Fund and seeking to make it voluntary. We do not wish to raise
expectations about how much money will be available from the Fund,
or what it could be spent on. If the scope is broadened to include
social inclusion measures, then it might be appropriate to consider
delivering it alongside the European Social Fund, in which case
Local Enterprise Partnerships and their partners could have a
role in identifying local needs and priorities.
"We remain concerned about the administrative
burden of delivering the Fund, even if European Social Fund systems
were used, although this would depend on the scope of the Fund.
European Social Fund systems have been set up to procure and deliver
employment, training and social inclusion provision. If the scope
were limited to the distribution of food and basic consumer goods,
our initial assessment is that this would require different processes
which could involve additional administrative burdens particularly
in relation to the evidence that would be required from delivery
organisations to support claims for reimbursement of costs."
Conclusion
10.17 We thank the Minister for his informative
letter. We share the Government's disappointment that participation
in the Fund will be mandatory for all Member States, not least
because their differing capacity to provide adequate levels of
investment to support social cohesion at national level, and the
absence of any discernible cross-border dimension, would appear
to undermine the case for a uniform approach across the EU.
10.18 If the Fund is to be mandatory, we agree
that the Government should seek to mitigate the impact that participation
in the Fund will have on the UK's allocation of EU Structural
Funds for 2014-20 and to preserve the flexibility to utilise these
Funds according to national, regional and local needs and priorities.
We look forward to receiving a further update, in light of any
compromise text produced by the Presidency. Meanwhile, the draft
Regulation remains under scrutiny.
30 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
31
This commitment is set out in a draft Council Declaration issued
on 27 June 2013 which says that, in addition to the €2.5
billion already agreed for the Fund for European Aid to the Most
Deprived, "Member States may decide to increase their allocations
by up to €1 billion on a voluntary basis". See http://register.consilium.europa.eu/pdf/en/13/st11/st11698.en13.pdf. Back
| 
