The big issue: Caterers in crisis over school meals

Expect operators to consider exiting rather than remaining in an increasingly unviable school food sector, starved of both revenue and capital investment, says Jane Renton...

The glory days of 2014, when both funding and capital investment became available to prepare English state-funded primary schools for the advent of Universal Infant Free School Meals (UIFSM), are well and truly over. Unfortunately, this flagship policy, the centrepiece of a series of school food reforms, was never fully thought through. There was and still is a big problem – in fact a whole series of problems, all stemming from muddled policymaking.

Just take a look at the latest move by London’s mayor, Sadiq Khan. He intends to use the windfall from yet another unpopular and unfair business rate tax to fund a £130m scheme to extend free school meals to all primary school children in the capital next year. So far, the funding is just for one year and aimed, no doubt, at galvanising votes in an election year for an unpopular mayor at war with surrounding boroughs over his even more unpopular Ultra Low Emission Zone tax. Meanwhile, most schools are rightly questioning whether there will be investment into kitchen infrastructure and staff to implement such an ambitious, expansive scheme in the first place.

Political expediency, as well as a lack of foresight, was also behind the original implementation of Free School Meals. For a start, where was the annual adjustment for inflation? There was none, though that hardly mattered at a time when inflation was well within the Bank of England’s now laughable 2% safety zone. But that is certainly not the case now with food price inflation hitting a 45-year of 16.7% in January, according to the government’s own figures. Thus, the National Education Union’s recent estimation that free school meals are being underfunded to the tune of some £395m a year, hardly comes as a surprise.

Yet the response from the Department for Education last year was to add a measly few pence to both UIFSM and Free School Meals (FSM), bringing the amount provided for each meal to £2.41 and £2.47 respectively. As for paid meals, schools and councils have increasingly attempted to increase prices to parents as escalating food costs, energy bills and wages for catering staff continue to rise, but there is a limit to what most parents can afford to pay.

Academisation of schools has led to ever greater fragmentation of budgets. As caterers at our roundtable event in Cannock last month (see page 25) pointed out, councils, now devoid of their traditional economies of scale, have all but given up the ghost when it comes to school meal subsidisation. While school principals are increasingly in control of budgets, there is little in the way of any icing on their cake as they grapple with, in some cases, six-fold increases in energy bills.

There is little, if anything, in the way of offsetting subsidisation, and councils such as Derbyshire County Council are leading the way with a 10p increase in the price of a meal for the 352 primary schools in its area. And just to underline that ‘Bah, humbug’ gesture, the council made very clear that it was not in a position to subsidise such rising costs.

So, where does this leave caterers? In the soup. For starters, the money for school catering is not ringfenced and this is another big structural problem. This means that school leaders can theoretically – and often do – divert earmarked funds for free meals towards other costs. Contrary to what many parents believe, a Local Authority Caterers Association survey last year suggested that close on 40% of respondents did not receive the full funding for free school meals.

The fact is that the academisation of many of England’s schools has given heads discretionary powers over how they spend the money provided. With half of all academy trusts expected to fall into deficit within two years – as a result of soaring energy bills, higher-than-expected pay awards, much of them unfunded, and galloping inflation – it is hardly surprising that school leaders want to claw back as much money as possible, even if it means literally taking it from the mouths of children. One caterer at our roundtable talked of an uncomfortable conversation with a primary school head who insisted on reducing the potato ratio to just one half, rather than the customary whole vegetable.

This Dickensian scenario has inevitably had profound implications for caterers, in both private and public sectors. No amount of substitution and menu-trimming can compensate for this new era of penny-pinching. It is hardly surprising that the industry is awash with whispers and rumours of significant players in this market locked into long-term contracts, mainly with groups of primary schools, from which they cannot possibly make money. Contract law notwithstanding, those caught in the grip of such costly deals will surely seek the means to extract themselves. Survival will depend on it.

Yet those who remain in the sector risk significant reputational damage in a market where the race to the bottom invariably prevails as to who gets the contract. Add to this the ongoing difficulties in recruiting sufficient members of skilled staff and paying them a wage that allows a decent standard of living, then the outlook remains bleak. Anyone who thinks the era of the turkey twizzler is over should think again.

A particularly egregious aspect of all of this is that many parents continue to believe that contracted out school caterers are running dogs of capitalism, profiteering at the expense of their children. Those sentiments have, if anything, been heightened by the £3 supermarket voucher scheme offered to parents on benefits during the Covid lockdowns, a sum that caterers can only dream about receiving. While many such programmes have since ended, they nevertheless remain popular with parents, some of whom would no doubt like to see them as a permanent replacement, or even an alternative to the main school lunch and not simply just during school holidays.

But those parents with their erroneous assumptions are not the only threat. The march of celebrities and campaigners into this territory has generally been welcomed by service providers. Most of these incomers have been well-intentioned, determined to use their fame to highlight a once scandalously neglected area of public policy. Their remonstrances have brought change through adverse comments in the mainstream media and, on occasion, public money and legislation into many aspects of food provision. But in other ways, they have proved false friends, diverting and competing for money that would have been better served going to the main school lunch service rather than their various pet projects.

There is no way that a sandwich, crisps and a cold drink can ever compete with what a good healthy, quality school lunch can provide, and not just in terms of compliance with ever-increasing levels of legislation. Those are achievements that many reform-minded school caterers, many of whom are parents themselves, are rightly proud of.

But those accomplishments are being undermined as caterers are fighting to return their businesses to viability after Covid. It is time to fight back. While the industry has done much to showcase the talents of many of its chefs, it needs to similarly band together and drown old rivalries to educate and inform parents about the importance of the service they provide.

Those parents would surely be shocked to learn the sort of margins the industry effectively operates on. Tackle the parents and get them onboard and you tackle the politicians’ unrealistic expectations of getting something for nothing.

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