Regulation of the European Parliament and of the Council on the Fund for European Aid to the Most Deprived: EUC Report

Lord McKenzie of Luton Excerpts

Thursday 13th December 2012 Grand Committee

[Lord Boswell of Aynho]

My Lords, the intention is that after today’s debate a Motion will be moved in the Chamber on Monday inviting the House to agree that a formal reasoned opinion should be issued.

Our report concerns a proposal to create a European Union fund to provide aid to deprived people, which was examined by our Sub-Committee on the Internal Market, Infrastructure and Employment, chaired by the noble Baroness, Lady O’Cathain, whom I am delighted to see in her place today. Before I explain our thinking on this proposal, I will briefly explain the background because the committee has considered earlier versions of the policy twice before.

The European Union’s food distribution programme began as far back as 1987 as a way to make use of agricultural surpluses. As the report explains, in both 2010 and 2011 the committee considered proposals relating to the programme to distribute food products. On both occasions the committee suggested that the House should issue a reasoned opinion under the Lisbon treaty because the proposal was not consistent with the principle of subsidiarity—in other words, that this was something that was better done at member state or regional level—and that no compelling argument had been put forward that the European Union was better placed than member states to ensure a food supply to its most deprived citizens. Our view was not shared by a sufficient number of other national parliaments so no so-called “yellow cards” were triggered, which would have inhibited the scheme that the Commission had put forward in those years, and the current scheme was extended to the end of 2013.

The proposal before us today is to create a new “Fund for European Aid to the Most Deprived” to operate from 2014 to 2020 in order to address food deprivation, homelessness and the material deprivation of children. The proposed fund would support and co-finance national schemes to provide non-financial assistance to the most deprived persons. I make it clear that we share the Commission’s concerns about EU citizens suffering from deprivation, and that we recognise the very serious impact of the economic crisis. Our report, though, is about whether the European Commission’s proposal is the right way to respond to these important issues.

The Commission has provided little by way of justification that its proposal complies with the principle of subsidiarity. Our committee had to derive some indication of the Commission’s reasoning by looking at the accompanying impact assessment, which argues that European-level action is necessary because of,

“the level and nature of poverty and social exclusion in the Union, further aggravated by the economic crisis, and 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”.

After careful consideration, our committee concluded that such uncertainty could better be met by action through the existing European Union cohesion programmes, from which money would have to be diverted to fund this scheme, without burdening member states with the extra administrative obligations introduced by the proposal. The committee also concluded that the Commission had failed to put forward any convincing argument that the European Union was better placed than member states to undertake this role, and had therefore failed to justify its implied assertion that the proposal meets the principle of subsidiarity.

In summary, this is an issue of concern about process rather than one of substance. We are not seeking to deny that the substantial matter is important and of interest to all Governments—indeed, to all citizens, in our current economic difficulties—but the principle of subsidiarity is a powerful one. It should be complied with, and our view is that it has not been met on this occasion, hence our proposal to issue a reasoned opinion. I beg to move that the Grand Committee take note of the report.

[Lord McKenzie of Luton]

My Lords, I find myself, somewhat surprisingly, dealing with this for the Opposition, but I think it is because the Secretary of State for Work and Pensions has lead responsibility. I thank the noble Lord, Lord Boswell, for the very clear way in which he introduced the report and its recommendations.

The specific issue before us is the recommendation that support should be given to a reasoned opinion to the effect that the draft regulation does not comply with the principle of subsidiarity. As we have heard, a similar issue was considered two years ago and the same conclusion reached, although that proposed regulation was withdrawn after the European Court of Justice ruling that purchases from the market, rather than use from intervention stocks, could not be made under agricultural legislation. This generated an amended proposal a year ago on which the UK took the same position, although that did not, as we heard from the noble Lord, prevent the life of the scheme being extended until 2013.

The proposal considered by the committee was for a new fund for European aid to the most deprived with the fund to address food deprivation, homelessness and material deprivation of children. It would run from 2014 to 2020. It is different from the previous programme, which grew out a need to make use of the then agricultural surpluses. It has the three strands that have been outlined. It is understood that it did not propose any additional overall expenditure, but the cost, which would be some €2.5 billion, would be met from the proposed cohesion policy—structural funds—the budget total for which is some €339 billion, or less than 1% of the total. If adopted, it would to that small extent divert funds from the structural funds.

The Commission’s impact assessment sets out that the EU has the objective of reducing by at least 20 million the number of people at risk of poverty or social exclusion by 2020. However, it reports that poverty and social exclusion are rising in many countries. The explanatory note states that in 2010 nearly a quarter of Europeans were at risk of poverty or social exclusion, which was 2 million up on the previous year, with later figures confirming a worsening trend, and this at a time when the ability of member states to support the disadvantaged is in some cases diminishing. In our own country, we see a rise in homelessness and rough sleeping. The latter is up by 23% in the past year alone. According to the IFS, the number of materially deprived children is increasing, and we have the well publicised growth of food banks, and we are one of the richer countries in the EU.

Paragraph 11 of the committee’s report states that it considers that the uncertainty about cohesion can be met by action through existing EU cohesion programmes. I understand that point, but will the Minister—I am not sure whether I should be addressing the noble Lord, Lord Boswell, the Minister or perhaps both of them—expand a little on that belief? How does it address the comment made in the explanatory note that some of the most vulnerable citizens who suffer from extreme forms of poverty are too far removed from the labour market to benefit from the social inclusion measures of the ESF? Would it propose any changes to the ESF programme?

Will the noble Lord please explain whether there is something inherent in the nature of the expenditure proposed in the programme—food deprivation, homelessness and material deprivation of children— which makes this a social policy matter where member states must act on their own accord or does it depend on the ability in practice of member states to resource appropriate individual country programmes? If the latter, can we hear the evidence base for the assessment that each member state is in a position to do what is necessary for its own people? Indeed, is there any point or any scale of food deprivation, homelessness and materially deprived children where the committee would accept a role for such a fund and an EU dimension?

I do not ask these questions to be difficult, but to understand the routes to addressing this awful poverty. I think the noble Lord, Lord Boswell, made the point that this is not about the substance but about the mechanisms available to deal with it.

[Baroness Stowell of Beeston]

My Lords, I am grateful to the noble Lord, Lord Boswell, and indeed the EU Committee for scrutinising the proposal from the Commission and producing the report that we are debating today. Along with the noble Lord, Lord McKenzie, I am grateful also to the noble Lord, Lord Boswell, for his very clear introduction to this debate. Because he was very comprehensive in going through the history of how we got to the present position, I will not spend any time repeating that history, not least because we are all feeling the chill in this Room and brevity is the key. However, first, it is essential to make the point that the Government share the committee’s view that this Commission proposal is not consistent with the principle of subsidiarity and that we support the Motion put forward today.

In 2011, the Commission sought to extend the existing scheme. It is worth reminding ourselves, as I think the noble Lord, Lord Boswell, already has, that the French and German declaration at that time stated that they considered that the conditions were not met for a proposal for a new programme after 2013—even though they had supported at that time the extension of the existing programme—and that they could not agree with legal and financial proposals by the Commission for such a programme in future. In response, the Commission issued a declaration saying that it,

“takes note of the opinion of a significant group of Member States not to pursue the program beyond 2013”,

and that:

“Without prejudice to its right of initiative under the Treaty, the Commission will take account of this strong opposition to any legal and financial proposal of such a program in the future”.

The Commission has now produced a proposal but it is very difficult to see how the Commission has taken account of this strong opposition that was stated at the time. We have to ask what the main changes are in the new proposal.

First, the new scheme is presented as an instrument to promote social cohesion and to contribute to the European 2020 target on reducing poverty, whereas the current scheme has an agricultural legal base. Secondly, the fund will no longer be financed from the CAP but from the structural and cohesion fund, as has already been mentioned, for the 2014-20 budget. Thirdly, the fund will be used to purchase basic consumer goods for the personal use of homeless people or children, as well as to provide food aid. Fourthly, the new fund will be obligatory—this is a key point—whereas the current scheme is optional. Each member state will receive a financial allocation and be required to set up a single national programme to implement the fund in 2014-20. Fifthly, not only will the fund be obligatory, but member states will be required to provide matched funding of at least 15% of the costs of their national programmes—in other words, on top of the welfare programmes we already have in this country. The fund from the European budget will contribute only up to 85% of the costs of the scheme being proposed in most cases. Sixthly, the new fund will be implemented along similar lines to the structural and cohesion funds.

Despite these changes, the Government’s view has not changed. We remain unconvinced as to the merits or appropriateness of this proposal. The principle of subsidiarity, currently enshrined in Article 5 of the Treaty on European Union, states that the EU should act collectively only where the objectives of the proposed action cannot be sufficiently achieved by the member states acting on their own, and that they can therefore be better achieved by action on the part of the Union.

We consider that measures to assist the neediest members of society, as set out in this proposal, can be better and more effectively delivered by individual member states through their own social programmes and not at EU level. The member states and their regional and local authorities are best placed to identify and meet the needs of deprived people in their countries and communities, and to do that in ways that are administratively simple and efficient. We will therefore oppose this proposal on the grounds that social measures of this sort are a matter for individual member states.

We are also concerned that the proposal does not represent value for money and would be burdensome to administer. Using EU structural and cohesion fund processes to deliver this instrument would lead to heavy and costly administrative burdens on member states and partner organisations, without adding value to existing arrangements in member states.

Not only is this fund inconsistent with subsidiarity, it will use resources that would be better deployed at national or local level. It is worth pointing out that if this fund were removed from the proposals, the UK could argue for an equivalent reduction of €2.5 billion from the EU budget over the seven years of the multiannual financial framework.

I underline that the Government strongly support measures to tackle poverty and social exclusion and certainly agree with the points made by the noble Lord, Lord Boswell. In the UK, we have a full range of social security benefits and tax credits in place to cover financial needs for those who are both in and out of work. We are investing £400 million in the current spending review period to help local authorities prevent and tackle homelessness. We are committed to eradicating child poverty and are taking a new approach to tackling the root causes, including worklessness, educational failure and family breakdown.

On food aid, the Healthy Start scheme provides a nutritional safety net in the form of vouchers for basic healthy foods and free vitamin supplements for pregnant women and children aged under four in disadvantaged and low-income families. Initiatives such as FareShare and FoodCycle are good examples of the essential work that charities are doing to support communities to relieve food poverty.

The noble Lord, Lord McKenzie, asked a couple of questions. I know that he directed them to the noble Lord, Lord Boswell, but it is perhaps worth me responding to them. He asked whether each member state provides for the three issues that the new fund would cover. Obviously, I will allow the noble Lord, Lord Boswell, to respond as he sees appropriate on behalf of the committee. From the Government’s perspective, it is clearly not for us to comment on other member states’ ability. Our approach is to tackle the root causes of poverty, as I just said. Any future proposal will have to be considered on its merits and in the circumstances at the time. If an alternative proposal were put forward by the Commission, we would want to consider it rather than set out our views now on whatever alternative might be proposed.

[Lord McKenzie of Luton]

Just to pick up on that point, a moment ago the Minister said that it is accepted that the EU can act where objectives cannot be sufficiently achieved by member states acting on their own. Does that imply some understanding of the resources that are available to individual member states? Is that part of the judgment about whether, acting on their own, they can deal with the issue?

[Baroness Stowell of Beeston]

The principle of subsidiarity is clear. I set that out clearly in my previous remarks and the noble Lord, Lord Boswell, has done the same. It is not for this Government to comment on whether other individual member states feel that they are in a position to be able to fulfil the objectives of the proposed fund.

[Lord McKenzie of Luton]

I am sorry to interrupt, but who can therefore make that judgment and how? If the judgment is about whether it can be sufficiently achieved by member states acting on their own—that is what the Minister has just said—who makes that judgment and on what basis? If we are saying that each individual member state has to ignore what the resources are and what the position is in each other member state on this issue, how on earth does that make sense of trying to make that evaluation, which she says is important?

[Baroness Stowell of Beeston]

The Commission itself, in bringing forward a proposal, has no doubt made a judgment in order to inform its decision to put forward this proposal to fund the scheme. I am saying that it is not for us as a member nation to comment on the ability of other member nations as to whether they can meet the objectives that the fund is there to meet. It is our view, from the position of a member state, that we are can provide for our citizens in the way that we are. We think that the issues to be addressed are better addressed by nation states and by local communities or regional bodies within those nation states because of the nature of the issue. That is the point that I am seeking to make.

I conclude by saying that we agree with the committee that the Commission has provided no convincing argument that its proposal meets the principle of subsidiarity. I restate that I thank the committee for its report and all its members who have contributed to this debate. I repeat that the Government support the Motion on the reasoned opinion.