DfE ‘doesn’t know’ if free school meals voucher company made profit

NAO says contractor charged department face value for supermarket vouchers but obtained them at discount

By Jim Dunton

03 Dec 2020

The Department for Education does not know how many children were supported by its free school meals voucher scheme introduced to offset the impact of this year’s first coronavirus lockdown – or how much profit contractor Edenred made from the venture, the National Audit Office has said.

A report on the programme, forecast by DfE to have a final cost of “no more than £384m”, found that 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.

The public spending watchdog said DfE had given Edenred the face value of vouchers paid to parents or guardians of children entitled to free school meals – equivalent to  £15 a week per child. The NAO said that although it was known that 10.1m vouchers were issued, the vouchers varied in value because they could cover more than one child in the same family and more than one week.

“It did not pay Edenred a management fee or any costs for administering the scheme, and there were no financial incentives or penalties linked to performance,” the watchdog said of DfE. “Edenred generated revenue from the scheme by buying vouchers from supermarket chains at a discount on their face value.”

Schools were responsible for approving the allocation of vouchers and Edenred was not provided with details about the pupils to avoid the need for the firm to handle “a large volume of sensitive personal information”.

NAO head Gareth Davies said the voucher scheme – which launched at the end of March, 18 days after being given the go-ahead – overcame initial problems with pupil registration and order processing over the next few weeks, following the intervention of ministers.

“DfE got the voucher scheme up and running quickly to support vulnerable children who would no longer be receiving free meals at school,” he said.

“Problems at the start of the scheme led to a frustrating experience for many schools and families, but DfE and Edenred worked hard to get on top of these issues. Performance steadily improved as the scheme progressed.”

As of January this year, 1.44 million children in England were eligible for free school meals. At the start of the voucher scheme, DfE estimated that its maximum cost would be £473m. Its October estimate of the actual cost is 81% of that figure. 

Edenred is the sole supplier to government departments and public bodies under a Crown Commercial Service framework covering the provision of employee benefit and recognition schemes, including vouchers, through an online platform. 

DfE awarded an initial contract for the voucher scheme to Edenred on 28 March, which it extended twice. Edenred is contractually obliged to pay the CCS a 1% management charge on the value of vouchers issued.

The NAO said that although the department aimed for as much of the country as possible to be covered by the voucher scheme, rural areas were recognised as having limited access to participating supermarkets.

It said that at the start of the scheme, 11% of schools were more than 5km from the nearest participating store and choice was limited for a further 6% of schools where there was only one participating supermarket within 5km. 

Six supermarket chains accepted coupons at the beginning of the scheme – Asda, Marks and Spencer, Morrisons, Sainsbury’s, Tesco and Waitrose – but the number of participating chains had risen to 10 by the end of June.

The additional four retailers were Aldi, Iceland,  Company Shop Group and newsagent RS McColl .

The NAO said Asda was the most in-demand supermarket for vouchers based on a week-by-week analysis, followed by Tesco and Aldi.

Schools did not have to participate in the voucher scheme, and had other options to access DfE funding to support pupils who needed free school meals during the lockdown.

Children and families minister Vicky Ford said DfE had taken “substantial action” to make sure children did not go hungry during the pandemic, including expanding eligibility for free school meals to more children than “any other government in decades”. 

“The NAO has recognised the swift action we took so that eligible children could access this important provision while schools were partially closed,” she said.

“Since then we have announced a cross-government package of support that builds on this, extending our successful holiday activities and food programme to benefit thousands more children and launching a Covid winter grant scheme to make sure families get the help they need at this time.”

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