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Government Was “Surprisingly Unconcerned” About Companies Profiting From Free School Meal Vouchers, MPs say

Government Was “Surprisingly Unconcerned” About Companies Profiting From Free School Meal Vouchers, MPs say

The public accounts committee criticised the government over the contract with Edenred to provide free school meal vouches (PA)

4 min read

The powerful Public Accounts Committee (PAC) has accused the government of failing to ensure companies providing free school meals offered value for taxpayer money.

A damning report published today said the Department for Education seemed “surprisingly unconcerned” whether Edenred, the company contracted to manage the scheme, was profiting from vouchers.

The cross-party group of MPs concluded that despite massive teething problems when the free school meal scheme was extended at the start of the pandemic, officials "missed potential opportunities to reduce the cost or share in the profits”. The £78million agreement with the company was ultimately increased to £425million.

“There were serious problems in the early weeks of the scheme” and “unacceptable delays in Edenred processing orders from schools and getting vouchers to families,” the report said. 

The DfE “focused on firefighting the problems with the voucher scheme” at the expense of actively managing its contract with Edenred, the committee added, failing to establish how much profit the company had made from the scheme.

They said 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”, but as the firm bought the vouchers from supermarkets at a discount the government could have chosen to renegotiate how much it pay them and save the taxpayer money.

The DfE have hit back, saying there was “no evidence of any ‘profiteering’ through the national voucher scheme” and claimed they only paid out £384million, rather than the £424million figure in the PAC report, which was the maximum value of the contract.

Labour MP Meg Hillier, chair of the PAC, said: “Whether it’s getting life-saving equipment to frontline workers or food to hungry kids in poorer families, government’s failure to learn from its repeated contracting mistakes, over and over, large and small, is 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.”

The committee also accused the DfE of underestimating how many schools and parents would want to speak to someone on the phone rather than by email.

Calls to Edenred’s telephone helpline increased from 727 on 1 April last year to 3,940 a fortnight later, and an outsourced contact centre brought in to help was not put in place until 11 May.

The report also concluded 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”, and 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”.

Geoff Barton, general secretary of the Association of School and College Leaders, said: "It adds insult to injury to see the damning conclusion of this report that the DfE apparently missed potential opportunities to renegotiate the contract and reduce costs, and that it seems to have been pretty complacent on this front."

Paul Whiteman, general secretary of the NAHT school leaders' union, said: “Although the intentions behind the scheme were good, it is clear that the government's chosen delivery system was inadequate.”

Kate Green, Labour’s shadow education secretary, said: “Gavin Williamson has refused to extend free school meals over February half-term but has given millions to a private company profiting off food vouchers for hungry children.

“Despite delays with these vouchers which left children to go hungry during lockdown, the Education Secretary has rewarded the company responsible with bigger contracts and profits.

"Instead of throwing taxpayers' money to large private companies, the Government should trust parents by giving them the money for free school meals, ensuring every child receives the full value of their entitlement and ending obscene profiteering from outsourced contracts while children go hungry."

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.”

A spokesman for Edenred said it “rejects entirely any suggestion of profiteering from the free school meal voucher scheme”.

They added: “Edenred has handed back 1% 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."

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