DfE ‘unconcerned’ over suspected large profits at free school meals provider

The Department for Education (DfE) was “surprisingly unconcerned” with suspected large profits made by a private contractor at the centre of a free school meals fiasco and failed to reduce the costs, parliament’s spending watchdog has concluded.

A report by a cross-party committee found that Gavin Williamson’s department failed to renegotiate the terms of a contract with Edenred to run the national voucher scheme, despite a five-fold increase in public spending from £78m to £425m.

When asked by the public accounts committee to disclose the profits made by Edenred, the DfE declined to do so on the grounds of “commercial confidentiality”.

MPs also voiced concerns that the troubled scheme was set up in just 18 days and without a tendering process, despite the government’s own assessment that the French company’s UK arm did not have the financial standing required for the scale of contract.

Kate Green, the 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 eecretary has rewarded the company responsible with bigger contracts and profits,” she said.

Teaching unions said the report has uncovered an “absolute shambles” surrounding the management of the voucher scheme which increased pressure on schools already reeling from the pandemic.

Geoff Barton, general secretary of the Association of School and College Leaders which represents most secondary school and college heads, said: “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 National Association of Head Teachers, said: “It is clear that the government’s chosen delivery system was inadequate.”

The government set up the national voucher scheme in March 2020 in response to the pandemic so that children eligible for free school meals could continue to receive support. Edenred was appointed to run the scheme using an existing government framework contract, as it was already a supplier to a number of government departments.

Within weeks, problems began to emerge, with schools across England complaining of problems in registering for the £15-per-child weekly vouchers. School staff worked into the night to try to log on to Edenred’s website and parents waited up to five days for their vouchers. Calls to Edenred’s telephone helpline increased rapidly, from 727 on 1 April to 3,940 on 14 April. An outsourced contact centre was brought in to help but this was not until 11 May, the report said.

The report concluded that the DfE was so focused on “firefighting” problems with the scheme it failed to seek value for money as it increased spending with Edenred. “The department extended the contract twice, increasing its value fivefold, from £78m to £425m, but it failed to take the opportunities those extensions presented to renegotiate the terms and secure better value for money for the taxpayer,” the report said.

A spokesman for Edenred defended the company’s record, saying: “With 95% 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% 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.”

Last month, the government relaunched the Edenred voucher scheme after pictures of meagre food parcels sent to families from catering firms caused an outcry on social media and an intervention from the footballer Marcus Rashford.

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.

Committee chairwoman Meg Hillier said the government’s failure to learn from contracting mistakes 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,” she said.

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 £47m worth of eCodes redeemed as of Wednesday – 96% of parents say they are happy and satisfied.”