The Department for Education was not advised to renegotiate its contract with free school meals voucher provider Edenred during the pandemic, its permanent secretary has said.
DfE is also “content” with the level of profit being generated by the company, which has been issuing vouchers for children who are eligible for free school meals during the coronavirus pandemic, Susan Acland-Hood said.
The department has “continued to look at options of alternative support throughout the lifetime” of Edenred’s contract, which was put in place on 28 March to ensure children would not go hungry when schools closed because of Covid-19, Acland-Hood said. The contract has since been extended twice.
But despite its efforts, DfE has found no “strong market alternative” to Edenred, according to the perm sec.
The provision of free school meals has been the subject of enormous controversy during the pandemic, with the government making several U-turns on its policy – both on whether to issue vouchers at all for eligible children, and on the nature of the support.
A separate contractor, Chartwells, recently came under fire for providing food parcels – which schools can opt to offer as an alternative to vouchers – that were of low quality and value.
The Edenred contract, which DfE forecasts will cost “no more than £384m”, has also run into several problems since being put in place.
Early snags included a limited number of supermarkets accepting the vouchers, and schools being some distance from supermarkets that accepted the vouchers.
In a letter to the Public Accounts Committee, Acland-Hood said in the absence of an alternative, DfE’s “primary focus therefore was on improving and maintaining delivery through the contract with Edenred”.
In December, the National Audit Office issued a report that concluded DfE did not know how many children had been supported by the voucher scheme, or how much profit Edenred had made.
The watchdog found the department had not exercised its contractual right to see information about Edenred’s income and costs relating to the scheme under the contractor’s “open book” arrangements.
In her letter, Acland-Hood said the department had now “been sighted on the level of profit made by Edenred through this contract and we are content that it is reasonable”.
She said the contractor had “invested heavily in improving the scheme, especially in the early weeks and months”.
The figure the government paid Edenred amounted to 99% of the financial support delivered to parents, as the Crown Commercial Service charges Edenred a 1% management fee as part of the contract, she said.
However, she said ministers had not told officials to negotiate the contract “at any point” during the programme.
“Fees are set through the framework and given the uncertain duration of the contract and the novel and bespoke nature of how the framework was being applied, it was not possible to secure improved terms and extended delivery within the timescales available,” she said.
Edenred generates profit on the contract by buying vouchers from supermarket chains at a discount, while DfE pays the company the face value of the vouchers, less the management fee.