The funding paradox
The ability of local authorities to intervene in schools has been sharply curtailed by central government funding reforms. Does this really matter? Jane Renton asks Apse.
Sweeping school reforms that began under New Labour and turbocharged by the Tories have by and large proved hugely popular with parents. Liberated from the dead hand of the town hall, so the supporting argument goes, the new academy schools are free to drive up standards. Control over budgets resides firmly in the hands of the man or woman who supposedly knows best – the school head.
But not everyone sees it like that. For a start, there is a lack of accountability: a series of MPs’ committees have been highly critical over the lack of oversight. Some of the larger chains of academies have grown so rapidly that their standards have suffered. Some of them faced criticism recently from Ofsted’s chief, Sir Michael Wilshaw, over their failure to improve academic results. What was even more galling was that many of those same boards awarded themselves for failure with fat salary rises.
The overwhelming majority of England’s state-funded secondary schools are now academies even though the policy to enforce academisation of all schools has now been halted by Theresa May in favour of grammar schools and faith schools. At the last count there were 2,132 such secondary academies, leaving only 1,249 secondary schools under local authority control. There are also close on 4,000 academy primary schools out of a total of 16,500. Many of these schools are currently standalone, but most are expected by government to eventually band together with other academies to form Multi-Academy Trusts (MATs), or what one headmaster described recently in the Guardian as a ‘marriage from which you can never divorce’.
What does this all mean for school catering? I ask Vickie Hacking, principal advisor at the Association for Public Service Excellence (Apse), a not-for-profit organisation that works with over 300 local authorities across the UK and which possesses a wealth of data about such issues. Our meeting is a timely one as EDUcatering has just published its own State of the Nation research showing a rapid decline in involvement by local authorities in the catering arrangements of these MATs, with an overall market share of only 19%. What seems to be happening is that those trusts are ousting the incumbent local authority caterers once contracts expire in favour of contracted outsourced deals, or less frequently, self-operated in-house arrangements.
However, in spite of appearing to lose its market share, the local authority sector is performing well as a provider of catering services. Overheads have fallen in every region from an average of 4.82% in 2014-15 to 4.6% in 2015-16. Average food cost per meal is now just 76p and average productivity has gone up with nine meals served on average for every staff hour. So why it is that even with a high performing service local authorities are being squeezed out of the academies market?
Vickie explains: “For a start there is no level playing field between private meal providers and those operations controlled by local authorities. Local authority caterers tend to pay more towards staff pension costs than many outside contractors, as well as better pay rates, which can make them in some cases less competitive.
“To a large extent, the introduction of the living wage has led to a harmonisation of wages for staff in both public and private sectors, but there is still a gap between them on employer contributions to pensions and generally better terms and conditions. However, the money paid to local workers – and most catering staff will be local people – is recycled into local economies. So, there is still a benefit to supporting local authority caterers. Apse research on the economic footprint of public services very much supports this view.”
Perhaps, I say to Vickie, local authorities should just retire gracefully from the ultra-competitive school catering market, leaving it to the new incumbents and act instead as commissioners of those services for the state-run schools that they still control?
Apse acknowledges that whether local authorities assume a commissioning role over certain services is a matter for local determination. However, it does regard the loss of what it refers to as ‘core capacity’ to become wholly reliant on outsourced services, as potentially damaging. This already happened to some degree under compulsory competitive tendering of the 1980s and 1990s when councils lost both the capacity and knowledge to deliver those services, with disastrous consequences in many cases; including poor outcomes on service quality and the development of a ‘sellers’ market as the public sector lost its capacity to deliver services and act as a market regulator.
“Overall Apse would not wish to see a race to the bottom on pay and pensions of staff but a holistic approach to providing high quality local services which properly reward staff,” says Vickie. “By taking a more positive approach to local services, local councils can see longer term economic benefits and we would want to discourage an approach which has a negative impact on low paid, part-time, women workers.”
One of the big problems with local authorities losing core capacity when it comes to school meal provision is that they are less able to intervene in schools to promote food education and wellbeing policies, statutory healthcare and anti-obesity policies, which obligates them to get involved. Legislation is also being proposed that could compel local authorities to provide holiday food provisions for those children most at need. Schools, often lying idle during the long summer break, provide the right setting for holiday school clubs. But gaining access to academy schools, which may be hired out for other purposes, may not be possible.
There are other unresolved issues: not all academy schools have to conform to existing school food standard legislation. As Vickie points out, there are 4,000 such academy schools that are exempt – the ones created before the legislation came into effect in 2015. While many individual academies provide outstandingly good catering, with some of them voluntarily signing up to the standards, many appear not to place much of a priority on catering.
EDUcatering’s own research based upon the country’s 250 largest MATs suggests that the leadership of those trusts do not appear to regard catering as a priority, with close on 70% of the top leadership – either chief executives or business managers – of those trusts saying they do not get involved in their catering operations. Only 44% of our respondents said they had made changes or improvements in school catering arrangements when taking over schools, with 63% admitting they had no further plans to update either school kitchens or dining areas.
Funding for Universal Infant Free School Meals (UIFSM) is not ring-fenced by government. Short of the head taking a holiday with the surplus in the Bahamas, the money can be spent legitimately on other school requirements such as teaching assistants or IT equipment, for example.
“There is no detailed research on how exactly this money is being spent,” says Vickie. “We know the Children’s Food Trust is looking at this. The main concern is that money could be siphoned off from the food service for other things and meal standards could fall.”
UIFSM appears to have driven uptake and contrary to earlier fears, recent reforms of the school food service also appears to have boosted uptake for paid meals as well. According to Apse’s figures, meal uptake (based on census day figures) has risen sharply in England over the past five years rising from just above 50% in 2011-12 to about 66% in primary schools and from 36% to 40% in secondary schools.
Surpluses from UIFSM can be substantial in larger schools, but not in smaller, more isolated schools, those with less than 150 pupils on the roll.
“You need to have at least 100 pupils taking lunch to breakeven on UIFSM. Previously local authorities would use larger schools in their catchment to subsidise those smaller schools,” explains Vickie.
This is something now much harder to do. Many of those small schools themselves are now academies and are responsible for their own budgets from central government and local authorities, in many instances, have lost those crucial economies of scale that allowed them to cross-subsidise those schools for which the food service would have been economically unviable.
Add to this the 8% cut in funding per pupil that the government is now imposing on schools as part of targeted efficiency savings of £3bn by 2020, then you realise that money for school catering, which is not ring-fenced, could be squeezed disproportionately. Add to that further worries and uncertainties over Brexit, which had already fuelled food price inflation and a squeeze on parental incomes, then the new money that has gone into school food improvements over the past decade could be quickly eroded. Quality could suffer.
It is not a totally bleak picture, however, for the future of local authority catering. As Vickie reminds us, local authorities have been forced to become a whole lot more competitive with their commercial rivals. Wigan, for example, is raising funding for a development chef to create more excitingly nutritious menus. Derbyshire is undertaking its own holiday hunger scheme by inviting all the pupils at selected schools in deprived areas to come and get a bag of food to take home. Many are joining up with other agencies and commercial operations to promote healthy eating schemes to the wider communities they serve.
Good private companies take a sustainable approach to their business and customer base, but there are still companies whose main priority is to build profit above all other considerations. Local authorities have to take a longer view. They have to combine profitability with policy and healthcare objectives. Those that continue to do that well will surely have a vital role to play in helping to raise standards and drive down inequality. School food is an undeniable piece of this battle.