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Nursery Milk Scheme

Volume 552: debated on Monday 5 November 2012

Motion made, and Question proposed, That this House do now adjourn.—(Anne Milton.)

I want to start by saying how important the nursery milk scheme is. All children under five years old in a day-care or early years setting for two or more hours a day are eligible to receive a free daily drink of milk. Milk is full of important nutrients for children. Their free third of a pint portion contains calcium for strong bones and teeth, protein for growth and development, vitamins such as B2, B6, B12 and folate, and the minerals iodine, phosphorus, potassium and zinc.

The Education Act 1944 provided free milk—a third of a pint a day—in schools to all children under the age of 18. I have some personal recollections from the 1950s of the milk in one-third pint bottles left in the sun all day and served in such a way that I am still not very good about drinking my milk, which may be why my bones are a bit fragile. In 1968 Harold Wilson’s Labour Government withdrew free milk from secondary schools, and of course it is well known that in 1971 Margaret Thatcher withdrew free school milk from children over seven.

I saw first-hand the benefits of free school milk for under-fives on my visit to Hayeswood first school in Colehill in my constituency on world school milk day. It was interesting to go to a school, because we have to appreciate that now that children are starting school when they are four, they are accessing the milk at school. I was impressed with the numbers and the uptake at that school, and also with the fact that, through the particular scheme that was operating, older children could have the milk purchased for them at £15 per term.

World school milk day came to my area too. Castle Garden primary school participated and more than 100 young children were present. The important aspect of that visit was that young children who had not taken milk regularly said that they were encouraged by those who were there to participate in taking milk rather than fizzy drinks. Did the same thing happen in the school that the hon. Lady visited?

Absolutely. Indeed, I was talking to one of my local nurseries—a nursery that is registered for milk. The owner of the nursery had discussed with parents whether they wanted the milk or not. Parents had voiced concerns about participating because their children would not drink milk at home, but they said, “Well, we’ll give it a try,” and to their surprise, every child in the nursery drinks their milk in the group setting.

However, in the past few years the costs of the scheme have been rising. In 2007-08 it cost the Government £27 million, but by 2010-11 the amount had risen to £53 million. Increased costs could be due to greater uptake, growth in the number of under-fives in day care settings or increases in the price of milk. The Department of Health has predicted that costs could rise as high as £76 million by 2016 and so recently set up “Next Steps for Nursery Milk”, a consultation to review the current system and consult on how to make efficiencies.

A significant number of day-care providers are effectively paying over 90p a pint for school milk. I know that we must ensure that the scheme can operate as efficiently as possible while ensuring the greatest access for entitled children. There is clearly also a need to add as little as possible to the burden of bureaucracy on child-care providers and schools. I want to take this opportunity to say how pleased I am that the Department has stated its commitment to this universal benefit for under-fives and that it is fully committed to keeping it as such. The options offered in the consultation are: to leave the scheme as it is; to cap the price that can be claimed for milk; to issue e-voucher cards with economy incentives; or for day-care providers and schools to arrange the direct supply of milk themselves.

There are a number of important aspects to consider when thinking about changing the current scheme. First, it is important that as many eligible children as possible receive their allocation of milk. The Department’s own figures show that roughly 40% of the total number of under-fives currently receive milk at their day-care setting. Whatever system is put in place must be easy to use for day-care providers so that as many as possible take part in the scheme. Given the percentage of children who currently do not receive milk, I ask the Minister to look at how the Government can increase the number of children receiving the milk to which they are entitled. I appreciate that that might be counter to the idea of reducing the costs of the scheme, but I was personally rather disturbed that perhaps only 40% of eligible children access the milk.

Is the hon. Lady aware that many children are lactose intolerant and that there have been links between the consumption of dairy products, particularly milk, and the development of childhood asthma—there is no firmly proven link, but it has been suggested that there is a connection? Are there alternative sources of calcium, such as soya milk, available to children who perhaps should not be drinking dairy milk?

I absolutely take on board the point that some children are allergic to cow’s milk. I am sure that is an issue the Minister could address when he sums up.

Although different schemes operate in Scotland, Wales and England, this is, unusually, a GB-wide consultation, and obviously I have an interest as a Member who represents a Scottish constituency. The Scottish Pre-school Play Association has written to all Scottish MPs and is very much in favour of what has been called option 2, which would allow access to local Scottish suppliers and milk producers. Is that the option the hon. Lady would favour of the ones set out in the consultation?

I thank the hon. Gentleman for that intervention. I will not say which option I prefer, because I want to air all the issues, which I think are rather complex, and it is very important that they are all considered.

To return to my point about the variability in how children access free school milk, I have some figures from Bournemouth, Poole and Dorset, three local authorities, for the percentage of under-fives accessing Cool Milk, which is the agent that provides it, so it is possible that there are other ways of getting the milk. The figures are interesting: for Dorset it is 89.8%, for Bournemouth it is 25.5% and for Poole it is 46.3%. It would be worthwhile to get all the figures from the local authorities, rather than receive the answer, “This information is not collected centrally.” Some worthwhile statistical analysis could be carried out to make sure that our most disadvantaged children actually access the milk, because that is not automatically the case.

The School and Nursery Milk Alliance raises serious concerns about the knock-on effect that changes to the nursery milk scheme could have on the over-fives scheme. It is worried that a reduced take-up among under-fives will result in fewer over-fives moving on to school milk and that, if providers are no longer supplying nurseries in other settings, it will be harder for them to supply schools as part of the over-fives milk scheme.

Another point to consider is the administration process for child-care providers. At present, child-care providers or the agent they use, such as Cool Milk, which operates in my constituency, are reimbursed for the costs of the milk after they have purchased it. Whatever scheme is put in place must not put more of a burden on child-care providers, but be simple and easy to use so that nurseries and other settings are not put off taking part in the scheme.

We must consider how the milk will be delivered to the care providers. It is, of course, more expensive to deliver to nurseries in small and rural areas and to childminders working in difficult to access places.

I congratulate my hon. Friend on securing this debate. As has been said, the issue’s ramifications go much wider than England. On rurality, I represent Ceredigion and she also represents a rural constituency, and there are particular challenges when nurseries and child-care providers are based in a rural setting, where the operational costs are that much greater than in urban areas. The Member for Edinburgh North and Leith (Mark Lazarowicz) asked my hon. Friend whether she would support option 2. If she went along with that and a cap system, I would hope that she would ask for guarantees that the operational costs could be factored in so that rural people were not put at a disadvantage.

It is important that we take on board the additional costs in rural areas, which would become highly relevant if a capping system were to be introduced. I agree with the points that have just been made.

In any new system, it is important that nurseries and child-care settings are still able to make a choice about where they procure the milk. It is important that a supplier can ensure a suitable delivery time so that the quality of the milk remains high. In many settings the location of the milk provider will be important, with nurseries choosing a local, trusted supplier.

It is also important, when considering how best to progress and how to ensure best value for money, that we consider the requirements of the child-care providers. The consultation document repeatedly refers to pints of milk, but it must be remembered that children receive a third of a pint a day. Many settings do not have facilities to wash drinking cups, so they require milk to be supplied in single-serve packaging, and many would not be able to serve children milk if it was not delivered in those sizes, which is another cost factor. It is also important to consider special types of milk, such as kosher milk, that might be needed for religious or cultural reasons or, indeed, as an alternative if children have an allergy. I was particularly impressed with the cartons that I saw on my school visit on world school milk day, because they were really attractive and it literally was cool to drink milk.

I have received representations from a number of different organisations from the child-care and dairy industries. Although they understand why the Department is conducting a review, many of them, such as the School and Nursery Milk Alliance, are concerned that, while the Government are committed to protecting the entitlement of children to milk in early-years settings, proposed changes to the scheme could reduce the actual number of children receiving the milk. It is important that we maximise the number of children taking up the offer.

I know that the organisations will have submitted detailed responses to the consultation, so I just want to touch briefly on the different options and some of their pros and cons. Under option 3—the e-voucher system—child-care providers would no longer have to pay for milk and then claim reimbursement. They would instead be credited with a prospective monthly payment equal to the number of pints required multiplied by a fixed reimbursement rate, which would be set at an average market price per pint. The National Day Nurseries Association has voiced concerns that this kind of scheme might place additional administrative responsibility on providers. I ask the Minister to consider that, particularly given the Government’s commitment to reducing the burden on early-years settings that is currently being consulted on by the Department for Education.

Having garnered opinions, it seems that option 4—direct supply—is least favoured by those in the industry. Anticipated problems that have been raised with me include the cost of the operation; the fact that a national tender may quickly become uneconomic because while the supply of larger settings may be relatively straightforward, cost is quickly added when significant numbers of smaller, local, rural deliveries are required; denial of choice; the impact on local suppliers and dairy farmers; and the impact on the quality of the milk—I have heard time and again about the importance of fresh rather than UHT milk being supplied.

Bodies such as Dairy UK, Dairy Crest and the National Day Nurseries Association favour option 2—capping the price paid for milk—but they are concerned that a cap at the levels suggested by the Department might mean that many settings are not able to afford to have milk delivered at that price and so will opt out of the scheme, meaning that fewer children receive their milk. Dairy UK has suggested a single price cap in the region of 65p to 69p per pint, which it hopes would allow for the delivery of one-third of a pint packages of milk to smaller, rural and remote settings.

I am very pleased that the Government are committed to keeping free milk for all children under five years old in a day-care or early-years setting for two or more hours a day. I understand the need for a review of the scheme to ensure value for money, and I look forward to reading the Government response to the consultation, which I am sure will have taken into account a number of the concerns that have been raised in the House today. I urge the Minister to use this review as an opportunity to widen participation in the scheme so that more eligible children receive the milk to which they are entitled. I strongly believe that everyone who is entitled to the milk and wants it should be able to have it, as that is beneficial to the child and ultimately to the nation, with perhaps fewer costs and burdens on the NHS. As a final request to the Minister, will he say whether any European Union money or subsidies would be available to support this excellent scheme?

I congratulate my hon. Friend the Member for Mid Dorset and North Poole (Annette Brooke) on securing this debate. During her years in the House she has not only shown a keen interest in the nursery milk scheme but has been a strong parliamentary ambassador for the National Society for the Prevention of Cruelty to Children and, since 2006, a champion of Save the Children. That is a long track record of supporting and standing up for issues that matter to children—in this case, the nursery milk scheme. She rightly outlined the tremendous health benefits not only of the nursery milk scheme but of a healthy diet in young children, and highlighted the benefits of drinking milk, given the proteins, minerals and vitamins that it contains. I want to confirm to the House again that the nursery milk scheme is here to stay.

Before I address the points that my hon. Friend raised, it is worth highlighting a few of the issues. While we fully endorse the provision of nursery milk, she is absolutely right to point out that the cost of the scheme has gone up considerably over the past few years. In an average supermarket, a pint of milk costs about 50p to 55p. According to the most recent figures of June 2011, within the scheme there are 23,000 claims—well over 50% of the total—where milk costs 70p to 79p per pint, and almost 9,000 claims where it costs over 90p per pint, which is almost double the cost in the supermarket.

Many hon. Members representing rural constituencies will be concerned that dairy farmers across the country are struggling, and that the increased cost of milk is not rewarding those farmers in the farm-gate price. We must reflect on the cost of the scheme. Since the scheme costs a lot of money, it would be nice if those companies that profit from it also recognised that some of that profit could be passed back to famers in the farm-gate price. The Government and the National Farmers Union do not see that happening as part of the scheme, and although the NFU and the Department for Environment, Food and Rural Affairs support the nursery milk scheme as a way of supporting dairy farmers, it is nevertheless disappointing that companies that supply nursery milk are not supporting our farmers in the way we would like.

As my hon. Friend rightly said, the nursery milk scheme is of long standing and has been running throughout Great Britain since the 1940s. The devolved Administrations in Scotland and Wales fund milk supplied through the scheme to children in their countries, and Northern Ireland has its own, similar scheme—I am pleased to see the hon. Member for Strangford (Jim Shannon) in his seat as usual.

As we know, the scheme funds free milk for around 1.5 million children under five years of age at 55,000 child-care providers throughout Great Britain. Nursery milk is a universal benefit, meaning that child-care providers can claim the cost of milk provided to any child, regardless of the child’s home circumstances. The scheme is valued by parents and pre-school staff, and its health care benefits were thoroughly outlined earlier in the debate.

The Government recognise, however, that the nursery milk scheme is expensive, and the consultation was about improving its operation and ensuring that it remained fit for purpose. The scheme remains largely unchanged since it was first introduced as a wartime measure, and in recent years prices claimed for milk purchased under the scheme have risen significantly, owing largely to third-party agents who seek to make considerable profits by delivering milk to child-care providers. As I said earlier, unfortunately those profits are rarely paid back to farmers in the farm-gate price.

The prices claimed for milk supplied under the scheme have risen significantly, with some claims reaching almost £1 a pint. That has led to a corresponding increase in the overall cost of the scheme. In 2007 and 2008, the scheme cost £27 million, but by 2010-11 that had risen to £53 million—it almost doubled in only four years. If we do nothing, that trend looks likely to continue, with costs potentially rising to £76 million by 2016.

Under the current system, there is no limit on the price at which child-care providers may purchase milk, or even a requirement for each provider to review their milk expenses. In many cases, agents supplying milk handle the claims themselves, rendering child care providers unaware of the price paid. For those reasons, the total cost of the scheme has risen dramatically over the past few years, and although the amount of milk supplied has risen by 25% since 2009-10, the total cost of the scheme has risen by 45%.

Does the Department of Health have a grip on the procurement process involved in this scheme? When providing milk across the nation, surely we should be able to supply from local sources or distributors. The costs that the Minister mentions seem to have escalated greatly, but farm-gate prices have not changed much. It seems extraordinary that someone has not got a grip on procurement.

My hon. Friend is absolutely right, and that is why the Government launched the consultation in the first place. The scheme was devised in the second world war, and its provisions mean that the Department of Health currently has no role in active procurement. The Government embarked on the consultation in view of the rising costs, and my hon. Friend will rightly feel concern for dairy farmers in her area of Somerset. Profits from this scheme are going to intermediate companies, and the cost has recently escalated out of control. My hon. Friend also highlights the fact that farm-gate prices have not improved as a result of those increased prices and profits for intermediate suppliers of milk.

It is worth pointing out that an important factor contributing significantly to the scheme’s accelerating costs seems be embedded in its design. No mechanism exists to incentivise child-care providers to economise and search for the highest attainable value for money in their local markets, to support their local farmers or to source their milk from a certain provider. Over the last three years, the average price paid for a pint of milk in a supermarket has been 50p, but the average charged by agents is 78p, which is well over 50% higher. That shows that the scheme is rapidly becoming unfit for purpose, which is exactly why the Department embarked on the consultation.

Until recently, at least one school was not registered in the scheme because it feared the bureaucracy would be too great. A balance must therefore be struck to ensure that schools and child-care providers participate in the scheme.

My hon. Friend makes a good point. As part of our consultation, we are looking at a number of options as to how we can maintain an effective scheme and ensure that the one we offer and deliver is better value for money.

It is worth looking at the three options in the consultation. The first option was to cap the price that can be claimed for milk. Under that option, an upper limit on the price that could be claimed for milk would be introduced and increased each year in line with inflation in the retail price of milk. In special circumstances, arrangements would be put in place to vary the cap for child-care providers that, perhaps because of geographical isolation and rurality, to which hon. Members have alluded, do not have access to milk priced at the normal market rate.

The second option was to issue e-voucher cards with or without devolved incentives for child-care providers to buy milk economically. Under that option, child-care providers would no longer have to pay for milk and then claim reimbursement from the nursery milk reimbursement unit. On joining the scheme, child-care providers would indicate how many children would normally be attending for two hours or more per day. They would then be credited with a prospective monthly payment equal to the number of pints required, multiplied by a fixed reimbursement rate, which would be set at an average market price per pint.

The final and third option was to contract a company or consortium of companies for the direct supply and delivery of milk to all child-care providers. Under that option, the Department of Health would take a much more active role in procurement. It would contract a company, or a consortium of companies, for the direct supply of milk to all child-care providers registered with the scheme at an agreed price per pint supplied. That is one way to avoid the bureaucratic burden to which my hon. Friend has referred.

The debate so far has been about the price of a pint of milk. My recollection, like that of the hon. Member for Mid Dorset and North Poole (Annette Brooke), is of a third of a pint of milk. If we reduce the quantity of milk for a small child, would that not reduce the price? Is that too simplistic?

We will see what the consultation says. One option, which I have outlined, takes into account the bureaucratic burden of the cost on schools. We value the scheme and want to keep it—that is implicit—but at the same time, we recognise that going through a bureaucratic process to claim for milk could increase the cost to nurseries and other child care settings. The third option in the consultation is therefore for direct procurement from the Department of Health. That would help to reduce the bureaucracy in the scheme, although the hon. Gentleman will be aware that there is an allied, parallel scheme in Northern Ireland that operates in a similar way to the schemes in England, Scotland and Wales.

The National Farmers Union values the nursery milk scheme as a well established and highly regarded programme that plays an intrinsic role in society, supporting our dairy farmers as a key part of the supply chain. At the same time, the NFU believes that every attempt must be made to ensure a fair return to the whole dairy supply chain, including the primary dairy farmer. We must not lose sight of that. When the intermediaries are making huge profits, the farm-gate price—the price paid to farmers, who we value, particularly in rural communities—must be recognised in how the scheme operates. For the NFU and all those concerned about the impact of the proposed changes on the dairy market, let me explain that, according to Dairy UK estimates, milk supplied under the nursery milk scheme represents less than 1% of the total value of the UK dairy market; nevertheless, it is an important part of that market.

We are consulting on the scheme. The consultation closed at the end of last month, and we will be considering the representations made. To conclude, I repeat that the nursery milk scheme will continue as a universal benefit. It has huge health benefits for young children, and all eligible children in the care of child-care providers will continue to receive their free milk. We need to establish a system, however, that makes the nursery milk scheme fit for purpose and makes it adapt to recognise the important role that farmers play in the supply of milk—

House adjourned without Question put (Standing Order No. 9(7)).