Milk and Healthy Snack Scheme (Scotland) Regulations 2021: business and regulatory impact assessment

Purpose and Intended Effect

Background

• A UK Nursery Milk Scheme (UK NMS) is currently administered by the UK Department of Health and Social Care (DHSC) under the terms of the 2019 Welfare Foods Agency Agreement (the Agreement) and the Welfare Food Regulations 1996 (1996 Regulations).

'The Nursery Milk Scheme allows approved suppliers to claim for reimbursement of milk provision for children aged under five in two hours or more of childcare per day. The functions associated with the continued delivery of the Nursery Milk Scheme are set out in the 1996 Regulations. The Secretary of State will continue to deliver these functions insofar as they relate to Scotland on behalf of the Scottish Ministers for the duration of the Term.'

• Day care providers and childminders (Settings) can claim for providing eligible children with a free 189mls (1/3 of a pint) of whole or semi-skimmed cow's milk, or infant formula for those children under the age of 1 year. The DHSC arranges repayment of receipted claims to eligible childcare providers, suppliers or agents within the Scheme including Scottish day care providers and childminders via the Nursery Milk Reimbursement Unit (NMRU). The Scottish Government then reimburses the DHSC on a quarterly basis.
• Welfare food powers under section 13 of the Social Security Act 1988 (the 1988 Act) were devolved to Scotland under section 27(2) of the Scotland Act 2016 in February 2019 (devolved welfare powers).
• Despite having competence to establish a new Scheme via regulations under the 1988 Act since 2019, the Scottish Government and the DHSC agreed the UK NMS should be administered under the Agreement, the 1996 Regulations and by DHSC on behalf of the Scottish Government until regulations were drafted and the Scheme became operational.
• By these Regulations, made (in part) under the 1988 Act, Scottish Ministers can establish a new scheme in Scotland, The Scottish Milk and Healthy Snack Scheme (Scheme), to replace the UK NMS in Scotland from 1 August 2021.

Objective

The Milk and Healthy Snack Scheme (Scotland) Regulations 2021 (also cited as the Scottish Milk and Healthy Snack Scheme) seek to replace the current UK regulations with regards to the UK NMS in Scotland and establish a new Scottish Scheme for the funding of free milk (or non-dairy alternative) and a healthy snack item (a portion of fresh fruit or vegetables) for the children in their care to all registered day care providers and childminders who wish to participate. The aim is to help children incorporate the prescribed food benefit into their diets.

Policy

The new Scheme will:

• Be delivered by local authorities who have been delegated prescribed Ministerial functions in the Regulations;
• Allow local authorities to provide direct and upfront funding for all pre-school day care providers and childminders (also cited as 'settings' in this context) which are registered with the Care Inspectorate; where children spend 2 or more hours per day; and where the settings have registered with their local authority to be part of the Scheme;
• Provide funding for 189mls (1/3 pint) of plain fresh cow's milk (whole milk for children over 1 year or to include semi-skimmed milk for children over 2 years), or first infant formula (for children under 12 months). It will also now permit the provision of 189mls (1/3 pints) of plain fresh goat or sheep milk (whole milk for children over 1 year or to include semi-skimmed milk for children over 2 years), or unsweetened calcium enriched non-dairy alternatives for those children who cannot consume cow's milk because of medical, ethical or religious reasons;
• A healthy snack item (a portion of fresh fruit or vegetables);
• Reduce administrative burdens for day care providers and childminders by moving to an 'upfront' payment approach aligned with funded Early Learning and Childcare (ELC) provision rather than the current claims and reimbursement model.

These proposals build on those described in the Welfare Foods consultation published in 2018. Since funding will be delivered via local authorities, Scottish Government have been working collaboratively with the Convention of Scottish Local Authorities (COSLA) and the relevant governance groups to develop proposals on the design and delivery of the Scheme.

The Scheme will support the Scottish Government's policy intentions around improving children's health and wellbeing. It is an opportunity to improve children's nutrition, tackle health inequalities, and integrate the policy with broader Scottish approaches.

Early intervention and prevention initiatives are fundamental as a healthy start lays the foundation to a healthy future. Establishing good nutrition, healthy diet and positive eating habits in a child's early years is important as these habits can be taken forward into adolescence and throughout adult life. This supports both physical health and mental wellbeing in the long term, including helping to prevent obesity.

Administration

The Scheme will:

• Provide direct and upfront funding for all pre-school, day care and childminder settings which are registered with the Care Inspectorate; where children spend 2 or more hours per day; and where the settings have registered with their local authority to be part of the Scheme;
• Route this funding through local authorities regardless of whether the setting is delivering ELC funded or non-funded provision;
• Allow local authorities in performing its delegated functions some flexibility to establish registration and payment mechanisms to suit local needs;
• Allows for the establishment of systems within the regulatory framework to reduce financial risk and provide oversight on the use of public funds, and to ensure the Scheme meets policy's intentions; and
• Provides a proportionate approach in the development of funding systems between Scottish Ministers, local authorities and childcare providers.

In taking this approach, it is intended that the Scheme aligns as much as possible with pre-established funding mechanisms for the delivery of ELC, thus keeping administrative burden of the Scheme as low and efficient as possible. While it is acknowledged that the incorporation of non-funded provision into the same Scheme will require the establishment of new funding relationships between each local authority and these settings, it is considered to be the most proportionate approach rather than procuring a discrete system for non-funded provision.

The move to upfront payments from the current reimbursement system is intended to reduce the administrative burden on settings, which was a key theme in responses to the Welfare Foods Consultation 2018.

Rationale for Government Intervention

This is a Scottish replacement of an existing UK Scheme using devolved powers. As the current Scheme is delivered via legislation in Social Security Act 1988, the devolution of Welfare Foods powers through section 27 of the Scotland Act 2016 enables the Scottish Ministers to create a new Scheme.

The Scheme will contribute to fulfilling the Scottish Government's National Outcomes as per the National Performance Framework:

• Children and Young People – We grow up loved, safe and respected so that we realise our full potential;
• We are healthy and active;
• We tackle poverty by sharing opportunities, wealth and power more equally;

It will also support the Scottish Government's Sustainable Development Goals:

• SDG 1 – No Poverty
• SDG 2 - Zero Hunger
• SDG 3 – Good Health and Wellbeing
• SDG 10 – Reduced Inequalities