The government was “surprisingly unconcerned” about whether the supplier of its free school meals voucher scheme was profiting at “taxpayers’ expense”, and “missed potential opportunities” to cut costs, MPs have warned.
The Department for Education “focused on firefighting” the problems with the voucher scheme, including “unacceptable delays” in processing orders and issues accessing the website, at the expense of “actively managing” its contract with supplier Edenred, according to the House of Commons Public Accounts Committee (PAC).
In a damning report into the voucher scheme, published today, the PAC found that, despite twice extending its contract with Edenred, increasing its value fivefold from £78 million to £425 million, the DfE “failed to renegotiate the terms and secure better value for money for the taxpayer in the process”.
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Background: Vouchers for FSM pupils backed by the DfE
“The department considered it achieved good value for money because it did not pay Edenred anything more than the face value of the vouchers issued to families,” the committee said.
“However, Edenred bought the vouchers from supermarkets at a discount, and the department could have chosen to try and renegotiate how much it paid Edenred per voucher and so reduce the cost to the taxpayer.”
Concerns over free school meals voucher scheme
The department was “surprisingly unconcerned about whether Edenred was profiting from the voucher scheme at taxpayers’ expense”, according to the PAC.
And it neglected the “open book” arrangement in the contract, which would have allowed it to monitor Edenred’s income and costs, until the scheme had come to an end, the committee found.
The amount of profit made by Edenred remains unknown, as the DfE declined to share details with the PAC on the grounds of commercial confidentiality.
“The department now says that it is ‘very comfortable’ with the level of profit Edenred made from the scheme, but has provided no figures or explanation of any kind to back up that judgement,” the committee added.
The PAC made five key conclusions, each with its own recommendation for the DfE:
- The department’s failure to understand how schools and parents would use the scheme contributed to delays in getting vouchers to families.
Recommendation: The department should take on board lessons from the scheme and ensure, in designing services intended to be used by schools and parents, that: it properly user-tests new systems and engages with frontline school leaders and representatives to better identify likely problems before they are launched; and
ensures there is sufficient call centre capacity to meet maximum expected demand at the start, which can be stood down or increased further as needed.
- The department was surprisingly unconcerned about whether Edenred was profiting from the voucher scheme at taxpayers’ expense, and missed potential opportunities to reduce the cost or share in the profits.
Recommendation: The department should strengthen its commercial skills, taking advice from the Crown Commercial Service, and take opportunities to renegotiate terms when it changes or extends contracts, in order to secure better value for the taxpayer.
- The department did not have the information it needed to manage Edenred’s performance and understand whether the scheme was meeting the needs of families.
Recommendation: The department should collect complete management information specified in contracts from the outset, monitor performance as well as activity, and use this information to manage contracts effectively.
- The department did not do enough to assess how far families had to travel to supermarkets in the scheme and whether coverage was adequate to meet needs.
Recommendation: In implementing future policies, the department should ensure it robustly evaluates geographic coverage and likely travelling time for people to access services.
- Limitations in the data shared between the DfE and the Department for Work and Pensions meant that support for vulnerable families with children eligible for free school meals could not be routed through the benefits system.
Recommendation: The department should work with the Department for Work and Pensions to explore how data sharing could be improved to allow government to support families with children eligible for free school meals more flexibly and responsively.
Last month, the government relaunched the Edenred voucher scheme for free school meals in the second week of the spring term after a last-minute decision to close schools due to rising Covid cases.
The DfE also came under fire for a separate scheme after pictures of meagre food parcels sent to families from catering firms sparked an outcry on social media.
Compass, which owns Chartwells, one of the companies behind the inadequate food parcels, apologised again on Thursday and committed to covering the costs of food parcels during the February half-term.
Geoff Barton, general secretary of the Association of School and College Leaders, said: “The launch of the Edenred national food voucher scheme at the outset of the pandemic was an absolute shambles and it put schools under huge additional pressure at what was already an incredibly difficult time.
“It adds insult to injury to see the damning conclusion of this report that the Department for Education apparently missed potential opportunities to renegotiate the contract and reduce costs, and that it seems to have been pretty complacent on this front.
“The DfE is constantly lecturing schools about the importance of running efficiently and saving costs wherever possible, but appears not to have brought the same rigour to bear on its own management of this scheme.”
Paul Whiteman, general secretary of the NAHT school leaders’ union, said heads spent hours trying to get the website to work and often stayed up until the early hours of the morning to access the system.
He said: “This obviously created huge amounts of stress and frustration. Although the intentions behind the scheme were good, it is clear that the government’s chosen delivery system was inadequate.”
And committee chair and Labour MP Meg Hillier said the government’s failure to learn from contracting mistakes was “costing this nation too dear”.
“After the initial urgency, we have seen the government continuing to play catch up on how to support families whose children are entitled to free school meals, and despite the contract with Edenred growing more than five-fold there was no discussion about tendering the contract or even renegotiating it,” she said.
In a statement commenting on the PAC report, a spokesperson for Edenred said: “With 95 per cent of families saying the free school meal voucher scheme has worked well for them and a contract which has ensured that every pound of public money was passed on to the children and families who needed it, with no charges to the DfE or the taxpayer, Edenred has delivered a programme which has provided vital support for families through the pandemic and value for money for the DfE.
“Edenred rejects entirely any suggestion of profiteering from the free school meal voucher scheme. Edenred has handed back 1 per cent of the contract value to the government in rebates since the beginning of the scheme. This means the taxpayer paid less than the total value of vouchers distributed to families.
“We are pleased that the PAC recognises how, after the initial challenges in the month of the launch which took place at pace and at scale in the first month of lockdown, for the overwhelming majority of the scheme’s operations, it ran smoothly for parents and families, delivering the equivalent of £384 million during the 2020 programme.”
A DfE spokesperson said: “There is no evidence of any ‘profiteering’ through the national voucher scheme. In its investigation the National Audit Office acknowledged the rapid action this government took to deliver free school meals for eligible pupils, the significant improvements that were made to the scheme and our oversight of it.
“We have already made further improvements to the scheme which take account of the recommendations in this report, including improving the terms of the contract to ensure the better value for money for taxpayers.
“The scheme has been tested extensively and extra support for schools and parents has been provided, resulting in an efficient system with £47 million worth of eCodes redeemed as of Wednesday - 96 per cent of parents say they are happy and satisfied.”
