European Standing Committee ASCHOOL MILK
1st December 1993
HOUSE OF COMMONS
European Standing Committee A
Wednesday 1 December 1993
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The Committee consisted of the following Members:
Chairman: Mr Michael Shersby
Barnes, Mr. Harry (Derbyshire North-East)
Coe, Mr. Sabastian (Falmouth and Camborne)
Connarty, Mr. Michael (Falkirk, East)
Dunwoody, Mrs. Gwyneth (Crewe and Nantwich)
Evans, Mr. Nigel (Ribble Valley)
Gillan, Mrs. Cheryl (Chesham and Amersham)
Harris, Mr. David (St. Ives)
Lidington, Mr. David (Aylesbury)
McMaster, Mr. Gordon (Paisley, South)
Nicholson, Miss Emma (Torridge and Devon West)
O'Hara, Mr. Edward (Knowsley South)
Sykes, Mr. John (Scarborough)
Taylor, Mr. John D. (Strangford)
Dr. C. R. M. Ward, Mr. E. P. Silk, Committee Clerks2 3 European Standing Committee A Wednesday 1 December 1993
[MR. MICHAEL SHERSBY in the Chair]
The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. Michael Jack): The bell has rung, Mr. Shersby. However, it is time not for break but for business. I am grateful for the opportunity to discuss with the Committee the changes that have been made in the European Community school milk scheme. The Committee has before it the Commission's original proposal for a 50 per cent. reduction in the rate of subsidy under the scheme and also the associated explanatory memorandum. Since then, there have been important developments, some of which are explained in the supplementary memorandum that I submitted on 13 October. The proposal for a 50 per cent. cut in the rate of school milk subsidy came about because of the decision to end the milk co-responsibility levy, the proceeds of which have contributed 75 per cent. of the funding for the current scheme. With the intense pressure on the Community budget for 1994, the Commission concluded that it would not be able to maintain the same level of funding for the scheme as had been possible while co-responsibility levy funds were available. However, I am pleased to be able to inform the Committee that, in the light of pressure by the United Kingdom and some other member states, the Agriculture Council concluded in September that the proposed across-the-board 50 per cent. cut in the rate of subsidy was too draconian and that, instead, the reduction should be limited to 25 per cent. However, the Council recognised that that would not achieve the full amount of the proposed budgetary savings. The Commission was therefore invited to find the balance of the savings through technical amendments to the rules of the scheme. Why did the Government fight so hard to avoid a 50 per cent. cut in the rate of subsidy? We did so because a cut of that magnitude would have threatened the viability of what has become a very important scheme for the United Kingdom. I shall illustrate its importance and popularity with the aid of some facts and figures. Of the 34,500 nursery, primary and secondary schools in the UK, 92 per cent. currently benefit from the scheme; the United Kingdom is second only to France in terms of receipts from the scheme and the number of school children who receive subsidised products; and we head the rest of the Community in the volume of products distributed. Another factor that weighed heavily with the Government was the nutritional benefits that derive from establishing the milk drinking habit at an early age and maintaining it through the teenage years, when it is especially important for adolescent girls, for whom it may help prevent osteoporosis in later life. 4 Having acheived our objective in reducing the magnitude of the cut in subsidy, our principal aim in the subsequent negotiations on the technical amendments to the scheme was to avoid changes that would impact more heavily on the United Kingdom than on other member states. Again, I am pleased to say that we were successful. The biggest threat came from the Commission's proposal to discontinue the payment of subsidy on milk used in the preparation of school meals, an important feature of the scheme in the United Kingdom. However, we negotiated a provision allowing the Commission to grant a derogation to any member state which could justify the continued payment of subsidy on that milk. We can, so we have already submitted a request for such a derogation to the Commission. We are optimistic that it will be granted shortly. The other technical changes are of little consequence for the United Kingdom. The list of eligible products has been reduced by removing fruit yoghurt and some other minor products. The higher daily consumption allowance of 0.5 litres per pupil, which is used to calculate a school's maximum entitlement to subsidy, has also been removed but the impact of those changes will also be minimal. Assuming that our application for a derogation in respect of catering milk is successful, we estimate that next year, those technical measures will reduce public expenditure in the United Kingdom by about £2.4 million. The 25 per cent. reduction in the rate of subsidy will save a further £6.4 million, but that will still leave us with a forecast expenditure on the scheme of about £20 million next year. At Community level, the Commission estimates that the 25 per cent. cut in the rate of subsidy and the package of technical amendments will reduce expenditure on the school milk scheme by 112.8 million ecu—£86.6 million—in 1994 and by 111.7 million ecu—£85.7 million—in subsequent years. That represents a 50 per cent. reduction in expenditure from the 1993 level. I hope that the Committee will agree that the Government's negotiating stance has maintained for Britain's schools a viable agreement that will continue to keep down the price of school meals and maintain a valuable free milk scheme for children in primary and special needs schools. I commend the agreement to the Committee.
Mr. Morley: I seek some technical clarification. If I understood the Minister correctly, he said that various adjustments within the scheme would bring about the savings outlined in the explanatory memorandum. On that basis, is he saying that the scheme that provides subsidised milk for school meals can continue without an extra financial burden being placed on county councils that participate in it with local education authorities? Are the Government confident that the technical measures and the derogation mean that no extra financial burden will be placed on county councils?
Mr. Jack: Given that expenditure on the scheme will be reduced, it would be wrong to say that that will not result in a potential for an extra burden on county council catering budgets. The fact that the rate of subsidy on whole milk will drop from 17.6 pence per pint to 13.2 pence per pint, and on semi-skimmed milk from 11.1 pence to 8.3 pence means, 5 in effect, that the rate of subsidy will be reduced. However, the hon. Gentleman will note that a substantial amount of money will still be available under the scheme. It is interesting to explore with local authorities what they calculate the impact will be on the price of a school meal. We must take into account that all local authorities determine the mix of products in their school meals based on nutritional advice. On the basis of the soundings that I have taken, I estimate that the measures will result in a rise of a penny or two on the price of a school meal, bearing in mind the proportion of a dairy product that is incorporated in the meal. A similar increase might result from the milk that is served as a drink with the school meal. Clearly, there will be a reduction in subsidy and it will be for local authorities to consider how to deal with it.
Mr. Morley: I have a letter from the Association of County Councils in which it calculates that the net loss to county councils will be £3.43 million. On a national basis, that sum is not inconsiderable. Has the Minister discussed with his right hon. and hon. Friends in the Department of the Environment whether local education authorities within the county council structures can have that shortfall reflected in the standard spending assessments that are laid down by the Government? I do not dispute that the Minister is talking in global terms when he refers to comparatively small sums of money, but many county councils are right up against the maximum of then-standard spending allowance and it may be difficult for them to find even small sums of money to make up the shortfall.
Mr. Jack: It goes beyond my remit to give assurances or to comment on behalf of the Department of the Environment about the operation of the standard spending assessments. The short answer is that the subsidy scheme comes via the Community through the United Kingdom Government and is given in proportion to the demand from county councils for subsidised milk products. Interestingly, one of the ways in which county councils could maintain the cashflow benefit of the scheme would be to find a way of encouraging the take-up of milk—as opposed to, say, carbonated drinks—as that milk would be subsidised. It is important to point out that the sum total spent by the scheme is demand driven, so in many cases the consumption of milk will determine how much money a local authority receives. Taking my own local authority in Lancashire as an example, its income from the school milk scheme is a penny or two short of £1 million a year. It would not willingly give that up, even though, clearly, it will have to assess the impact of the directive. I shall ensure that a copy of our proceedings is sent to my colleagues in the Department of the Environment. I repeat, however, that from our discussion with local authorities our assessment is that they want to maintain the value of the scheme and that the impact on school meals will be minimal
Mr. McMaster: I note the Minister's offer to notify the Department of the Environment of the impact of the directive. May I ask him also to notify the Scottish, Welsh and Northern Ireland Offices which are responsible for local government in their areas?6
Mr. Jack: I shall certainly do that. I note that the hon. Gentleman's local authority, Strathclyde regional council, benefits by £1,862,000 from the scheme, so I understand its importance. I shall ensure that all the territorial Departments are made aware of these proceedings.
Mr. Jack: I beg to move, That the Committee takes note of European Community Document No. 7825/93, relating to the supply of milk and certain milk products at reduced prices to schoolchildren; and acknowledges the Government's efforts in securing an agreement which, whilst reflecting the need for budgetary restraint, safeguards the viability of the scheme.
Mr. Elliot Morley (Glanford and Scunthorpe): We very much welcome the fact that the cut in support was reduced from the proposed 50 per cent. to 25 per cent. Many of the European Community schemes are wasteful and negative, but its milk scheme is constructive and should be supported. It is ironic that this week is national schools meals week, which should be a time for celebrating and for supporting our schools meals service, rather than imposing an additional financial burden on it, as the measure will do. I welcome the Minister's assurances that he will raise the issue with the Departments that control local government expenditure. It is a great shame that local government is so tightly centrally controlled. If it had more freedom and flexibility, there would be less concern about even modest measures such as this which have an impact on local government income. I recognise that in the report to the Committee, concern was expressed about the costs of the administration of the scheme. I hope that when schemes supported by EC finance are considered and our Ministers go to the Council of Ministers, they will press strongly not for cuts in schemes that benefit groups such as children in nursery schools and special schools or the school meals service—benefits which all hon. Members would support—but for cuts in wasteful administration and bureaucracy that absorb so much of the EC budget. That is what must be trimmed, rather than beneficial support and services such as school milk, which I am sorry to see being reduced nationally.
Mr. Jack: I thank the hon. Gentleman for his remarks: It is useful to have support from both sides of the Committee for our negotiating stance. I congratulate those who, through the milk management committee, have managed to safeguard the position of catering milk in the United Kingdom during the negotiation of the derogation. Catering milk accounts for some 30 per cent. of the expenditure of our scheme and is most important. The scheme impacts somewhat differently upon the United Kingdom than upon other Community countries and it is helpful to have broad support for our position. We sometimes forget that the other side of the equation is that a burden upon agriculture has been lifted by the ending of the co-responsibility levy on dairy producers. Each sector can make a case for the pressures that are placed upon it, but the lifting of the levy, has been an aid to dairy farmers. We are conscious of the hon. Gentleman's point about administration, but I hope that he will understand that one reason for our success in retaining schemes such as this 7 within the Community has been that we have been able to prove that we can account for the resources used. The soundings that I have taken among local authorities suggest that they are much more concerned that support should be maintained, even if at reduced levels, than about the need to account for it. Lancashire county council, which I mentioned a moment ago, is happy to have officials working in that area because the scheme is worth the equivalent of an extra £1 million to its income. Returning to my point about nutrition, it is highly likely that milk products will still form part of the school diet. We must consider the scheme from the perspective that, if that is the case, we are at least making access to milk products cheaper.8
Question put and agreed to.
Resolved, That the Committee takes note of European Community Document No. 7825/93, relating to the supply of milk and certain milk products at reduced prices to schoolchildren; and acknowledges the Government's efforts in securing an agreement which, whilst reflecting the need for budgetary restraint, safeguards the viability of the scheme.
Committee rose at fourteen minutes to Eleven o'clock.
THE FOLLOWING MEMBERS ATTENDED THE COMMITTEE:
Shersby, Mr. Michael (Chairman)
Nicholson, Miss Emma
Taylor, Mr. John D.
The following also attended, pursuant to Standing Order No. 102(5):
Jack, Mr. Michael Minister of State, Ministry of Agriculture, Fisheries and Food)
Morley, Mr. Elliot (Glanford and Scunthorpe)