Documents considered by the Committee on 12 March 2014 - European Scrutiny Committee Contents


3 School milk and fruit schemes

(a)

(35785)

5958/14

COM(14) 32

(b)

(35786)

6054/14

COM(14) 31

(c)

(35787)

6059/14

SWD(14) 28

+ ADDs 1-2

(d)

(35788)

6062/14

SWD(14) 29


Draft Regulation amending Regulation (EU) No. 1308/2013 and Regulation (EU) No. 1306/2013 as regards the aid scheme for the supply of fruit and vegetables, bananas and milk in educational establishments

Draft Council Regulation amending Regulation No. 1370/2013 determining measures on fixing certain aids and refunds related to the common organisation of the markets in agricultural products

Commission Staff Working Document: Impact Assessment accompanying draft Regulation amending Regulation (EU) No. 1308/2013 and Regulation (EU) No. 1306/2013 as regards the aid scheme for the supply of fruit and vegetables, bananas and milk in educational establishments

Commission Staff Working Document: Summary of the Impact Assessment accompanying draft Regulation amending Regulation (EU) No. 1308/2013 and Regulation (EU) No. 1306/2013 as regards the aid scheme for the supply of fruit and vegetables, bananas and milk in educational establishments

Legal base (a) Articles 42 and 43(2) TFEU; co-decision; QMV

(b) Article 43(3) TFEU: consultation; QMV

(c) and (d) —

Documents originated 30 January 2014
Deposited in Parliament 6 February 2014
Department Environment, Food and Rural Affairs
Basis of consideration EM of 17 February 2014
Previous Committee Report None; but see footnote
Discussion in Council See para 3.10 below
Committee's assessment Politically important
Committee's decision Not cleared; further information awaited

Background

3.1 The EU has had in place two similar instruments specifically targeting children:

·  the School Milk Scheme, through which grants have been available since 1977 for the sale of reduced-rate milk products in schools;

·  the School Fruit Scheme, which has co-financed the distribution of fruit and vegetables in schools since the 2009-10 school year.

3.2 The Milk Scheme in particular was originally seen as a way of disposing of surplus stocks, but the Commission gradually came to identify better nutrition as the main objective, and with the aim of both Schemes being to increase or maintain the consumption of these products in the short term, whilst having an educational influence on eating habits in the long term. However, there have been a number of significant differences between them, notably:

·  Aid for school milk has come in the form of a fixed-rate EU subsidy of €18.5 for 100 kg of milk, but, although there has been a maximum subsidisable quantity of 0.25 litre per school day and per pupil in regular attendance, there has been no budgetary ceiling, the EU contribution having been calculated on the sum of the eligible applications received. There is no obligation on Member States to contribute, and each educational establishment decides whether or not to take part. Also, although the scheme may take a number of different forms, there are three main models — subsidies for milk products included in canteen meals; and milk sold outside canteens either at a reduced price, or distributed free of charge.

·  EU aid for fruit and vegetables (including processed fruit and vegetables and banana products) has been based on a single distribution model, and has accounted for 50%[7] of the cost of the produce distributed (including certain associated charges), with the remainder usually being financed by the Member States. The overall budget ceiling of €90 million has been shared among the participating Member States, with each Member State free to decide, through its national strategy, how to divide its national allocation among potential applicants. However, this support has been conditional on the mandatory adoption of accompanying educational measures, and, although ineligible for EU funding, these were considered a crucial part of the scheme.

3.3 Despite the School Fruit Scheme having sought to take on board some of the criticisms made of the School Milk Scheme, a number of subsequent external evaluations, including a Special Report[8] by the Court of Auditors in 2011, concluded that, although the underlying rationale of the two Schemes was still relevant, consumption — particularly of fruit and vegetables — had continued to decline in the face of increased preferences for highly processed and convenience food stuffs, which are often high in added sugars, salt and fat. Furthermore, this tendency was expected to persist in future, with children, particularly in urban areas, becoming increasingly disconnected from food traditions and methods of production. It was also suggested that the impact of the Schemes, both in encouraging consumption in the short term, and in bringing about a longer term change in eating habits, had been limited, and that this required certain weaknesses in their design and functioning to be addressed.

3.4 As a result, a number of changes were incorporated in Regulation (EU) No. 1308/2103, which gave effect to the most recent reform of the Common Agricultural Policy (CAP). This included increasing the basic rate of EU co-financing for the School Fruit Scheme from 50% to 75%; enabling co-financing to be applied to certain accompanying educational measures within a threshold to be established by the Commission; and increasing the overall budget from €90 million to €150 million a year. However, it maintained both schemes as two separate systems with different financing arrangements, and it was not possible at that stage to agree more than a limited change to the School Milk Scheme, requiring Member States to produce national strategies for its implementation. There also continued to be no overall ceiling on EU expenditure under the Scheme.

The current proposals

3.5 According to the Commission, this still leaves a number of significant problems identified previously by the Court of Auditors, particularly as regards the structure of the School Milk Scheme and the lack of coordination, consistency and common identity between it and the School Fruit Scheme. It has therefore proposed in document (a) that Regulation (EU) No. 1308/2103 should be amended so as to establish a common legal and financial framework for the distribution of fruit and vegetables and milk to schoolchildren. This would be based largely on those existing elements of the two schemes which are considered to have worked well, but would:

·  re-focus distribution on two core products, which are the most widely distributed at present — fresh fruit and vegetables (including bananas) and drinking milk — and in the process exclude processed products and reduce the organisational burden for schools;

·  introduce separate budgetary envelopes of €150 million for fruit and vegetables (as agreed under the CAP 2020 reform) and €80 million for milk to be allocated to Member States, although Member States could within certain limits transfer their allocations between the two Schemes;

·  within these allocations, thresholds would be established for supporting educational measures and other eligible activities, such as evaluation, monitoring and communication;

·  the level of EU contribution for fruit and vegetables would be limited through a maximum aid per portion, rather than through co-financing levels as at present, thereby simplifying the Scheme, bringing it into line with the School Milk Scheme in this particular respect, and alleviating the large disparity in the price for products distributed;

·  the level of subsidy for school milk would be increased in order to reduce the deadweight effect identified by the Court of Auditors, and increase the cost-effectiveness of distribution, and Member States would be able to continue to provide national top-ups (or attract private funding);

·  the requirement for supporting educational measures would be extended to milk distribution, thereby bringing the two Schemes into line, and would focus on long term objectives, covering agricultural issues, nutrition and health, and environmental matters, thereby reconnecting children with food, agricultural production and farmers: and, subject to approval by national health authorities, Member States would be able to choose educational themes covering agricultural products other than fruit and vegetables and milk (such as yoghurt, processed fruit and vegetables, and honey), with the objective of promoting healthy diets.

3.6 The other proposal at document (b) would simply amend Council Regulation (EU) No. 1370/2013, which fixes aid levels under the Common Agricultural Policy, including those for the School Milk and Fruit Schemes, to reflect the latest changes now proposed.

The Government's view

3.7 In his Explanatory Memorandum of 17 February 2014, the Parliamentary Under Secretary at the Department for Environment, Food and Rural Affairs (George Eustice) says that the Government is committed to encouraging and helping children and adults to eat more healthily, and that the Commission's proposals are welcome in principle because they aim to increase the share of fresh fruit and vegetables and milk products in children's diets. He adds that they are of direct interest to the UK, which not only participates in the School Milk Scheme, but also provides additional 'top-up' subsidies from national budgets to schools receiving EU funds (although it does not currently participate in the EU School Fruit Scheme, taking the view that it is financially more effective to run its own scheme).

3.8 The Minister welcomes the fact that the proposals seek to reduce the administrative and organisational burdens currently associated with the implementation of the Schemes, and supports the principle of greater simplification and streamlining. In particular, he notes that Member State participation in the School Milk Scheme would in future be on a voluntary basis, but that the proposal would not prevent them continuing their own national initiatives. However, he says that the Government will scrutinise the Commission's main recommendations closely to ensure they genuinely improve implementation, and do not create additional burdens for paying agencies, local authorities or schools, which run the risk of reducing the overall value for money of the schemes.

3.9 He adds that the UK will work with the Commission and other Member States in order to achieve better value for money, and a scheme which is simpler overall for beneficiaries, administrators and paying agencies, and can be operated more cheaply and efficiently than the current regime, though he cautions that it is not at this stage clear that the proposals would achieve these aims. However, the Government will be undertaking, and expects to make available in May 2014, its own analysis of the proposals, including the impacts of alternative aid rates and the administrative costs, its aim being to inform and influence the negotiations. It is also considering the need for, and timing of, any formal domestic consultation process and will keep Parliament informed.

3.10 The Minister says that, although discussions in Council Working Groups are expected to begin in March 2014, the process of negotiating and agreeing the different elements in the package may take one to two years.

Conclusion

3.11 We note that the aim of these proposals is to further streamline and re-focus the operation of the School Milk Scheme and School Fruit Scheme in response to previous criticisms, including those from the Court of Auditors, and that they are in general welcomed by the Government. On the face of it, therefore, they seem unlikely to give rise to any major issues, but, as the Government has said that it will be looking more closely at the proposals as part of its own analysis, we are holding these documents under scrutiny, pending receipt of that information. In the meantime, we think it right to draw them to the attention of the House.


7   75% in regions designated under the Convergence Objective. Back

8   (33301) 16099/11: see HC 428-xlii (2010-12), chapter 21 (23 November 2011). Back


 
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