Manchester City Council Report for Information Report to: Finance Scrutiny Committee - 26 November 2015 Subject: Report of: Free School Meals Director of Education and Skills Interim Head of Finance Children and Families Summary This report provides information as requested by members on the impact of free school meals (FSM) for all primary age pupils on schools budgets and the impact that providing universal infant free school meals for reception and year 1 and 2 pupils has had. Recommendations The Committee is asked to note the contents of the report. Wards Affected: All Contact Officers: Name: John Edwards Position: Director of Education and Skills Telephone: 0161 234 4314 E-mail: j.edwards@manchester.gov.uk Name: Simon Finch Position: Interim Head of Finance Children and Families Telephone: 0161 234 5016 E-mail: s.finch@manchester.gov.uk Background documents (available for public inspection): None Item 6 Page 1
1.0 Purpose 1.1. At a previous meeting, the Committee requested a report on the impact of free school meals (FSM) for all primary age pupils on schools budgets and the impact that providing universal infant free school meals (UIFSM) for reception and year 1 and 2 pupils has had. 2.0. Background 2.1 Free school meals is a means tested entitlement based on household income. Eligibility is set by central government. A child is eligible for FSM if the parents are on income support/allowances, child tax credit and have annual gross income of no more that 16,190. The system requires parents to apply. 2.2 UIFSM arrangements and grant were introduced in September 2014 and require all schools to provide a FSM to any pupil in Key Stage 1 (reception, year 1 and year 2 aged pupils), regardless of eligibility for FSM under the previous income threshold. 2.3 Following the introduction of the grant, there was nationwide concern that the numbers of pupils eligible for the Pupil Premium Grant (PPG) that is paid to schools, which also uses FSM within the criteria, would dramatically reduce. This was because it removes the parental incentive to apply for FSM when all Key Stage 1 pupils are automatically entitled. 3.0. UIFSM Delivery Arrangements 3.1. After discussion with schools, caterers and local authorities, the Department for Education (DfE) decided to allocate schools a flat rate of 2.30 per meal taken, based on actual take-up by newly eligible infant pupils. 3.2. Manchester Fayre commenced the delivery of the UIFSM initiative in September 2014. This resulted in the successful delivery of circa 1 million additional meals at 99 primary schools and academies, where Manchester Fayre is the catering provider. Based on the latest data available, the take up figure for UIFSM is running at 89%, in the schools and academies in this contract. 3.3. To ensure the smooth and successful delivery of the initiative, a significant amount of advanced planning took place to identify the employee resources, additional kitchen equipment and increased food provisions required. As part of that process, 141 Manchester residents were recruited to Catering Assistant roles, on the Manchester Living Wage, to deliver the additional meals. This was a significant challenge in itself and involved close support and collaboration with colleagues in the Economic Development Unit, Regeneration and Human Resources. 3.4. To support and promote the initiative Manchester Fayre worked closely with the schools and produced a number of communications for children and parents promoting the benefits of the free and healthy meals. Item 6 Page 2
3.5. The increased meal volumes and associated economy of scale supported Manchester Fayre in being able to reduce the price of its primary school meal by 6 pence to 2.20 in the 2014/15 financial year. This reduced price has been subsequently held for the 2015/16 financial year. 4.0. Funding Arrangements 4.1. Pupils are eligible for the PPG if they are recorded on the school census and are known to have been eligible for FSM in any of the previous six years. This is known as being Ever6 FSM. 4.2. The number of pupils eligible and registered for FSM impacts on Primary School Budgets in two ways: Through the local formula via the deprivation factor at 493 per pupil using Ever6 FSM. Information on the proportion of pupils that are included, based on October census, is provided by the DfE in December each year. Through the Pupil Premium Grant (PPG) which is allocated to schools based on the Ever6 FSM count at 1,320 per pupil. Information on actual numbers, based on January census, is provided by the DfE in June. 4.3. The UIFSM grant is allocated to schools on a per pupil basis for all pupils that are not Ever6 FSM at 437 per pupil and offsets the cost of service by compensating schools for lost income from those ineligible for FSM. Schools therefore receive either funding through the formula or the UIFSM grant with a difference of 56 per pupil. At an individual school budget level, there would therefore be some adverse financial impact in terms of formula funding or UIFSM grant, if pupils eligible for FSM are not registered. 4.4 The main financial impact on school budgets of the automatic eligibility for UIFSM is however the potential loss of PPG if parents cease to register an eligible child for FSM, which would be 1,320 per pupil. 4.5. It is estimated that 14% of pupils nationally are eligible but not claiming FSM. http://researchbriefings.files.parliament.uk/documents/sn06700/sn06700.pdf A November 2012 research report commissioned by the DfE compared data on benefit receipt and FSM figures and estimated that nationally around 200,000 children aged 4-15 appear to be entitled but are not claiming FSM. This implied that around 14% of pupils entitled to FSM are not claiming them. The rate was highest for those at either end of this age range with 21% of 4 year olds and 22% of 15 year olds. It was also higher in less deprived areas; 23% in the South East and Eastern regions and more than 30% in some local authorities. 5.0. Primary Schools Eligible Numbers 5.1. The table below shows, for the last three years, information on the primary school population including the total population per the October census, the Item 6 Page 3
PPG cohort based on January census and the associated % of the primary population and the change year on year. The difference in census dates is noted but not expected to significantly impact on the analysis. Census Number of Primary Pupils Census Registered Ever6FSM for PPG PPG (%) Oct 2012 40,250 Jan 2013 19,466 48.4% Change Oct 2013 41,846 Jan 2014 19,789 47.3% -1.1% Oct 2014 43,879 Jan 2015 20,466 46.6% -0.7% 5.2. The table indicates the PPG cohort within the total population ranges from 46-48% (acknowledging the different census dates). Between October 2012 and October 2014, overall pupil numbers in primary schools increased by 3,629. In the period January 2013 to January 2015, the PPG cohort increased by 1,000, the increase in the PPG cohort is lower than might be expected. 5.3. The PPG cohort did increase over the last two years but as a proportion of the primary school population fell by 1.1% between January 2013 and January 2014 and 0.7% in the subsequent year. The introduction of UIFSM in September 2014 may be a contributing factor to the latter. The January 2016 census information will be an important checkpoint when available. 5.4. It is unlikely that the reduction in the proportion of the primary population who receive PPG (prior to UIFSM) significantly reflects changes in circumstances for pupils who were previously eligible, because of the use of Ever6 FSM in the funding system. The more likely factors are parents not applying for FSM (pre UIFSM) and the introduction of UIFSM in September 2014 impacting on the January 2015 census. The decrease in take up of FSM trend is however also in line with the downward trend in child poverty although these are different measures (FSM is also taken into account in measuring child poverty but household income is the biggest factor). If the proportion falls again when the next census data is available, almost 18 months post implementation of UIFSM, there will be more evidence to support concerns about the potential consequent impact on PPG. If 1% of the 2014 population were eligible but not registered for PPG the financial loss to the collective schools budget would be in excess of 0.5m. 5.5. The table indicates the rate of reduction in the proportion has slowed. A contributing factor to this may be the raised awareness of the importance of targeting parents and pushing them to apply for FSM in order to maximise school income from the PPG. The Council has contacted schools on a number of occasions informing of the risks associated with the reduction in FSM numbers and this may have encouraged schools to contact parents requesting that they apply. In addition the Benefits Service place specific focus on this (see Section 6. below). 5.6. A seconded Civil Service officer is on site with the Council until March 2016 reviewing PPG with lines of enquiry covering PPG take-up, schools reporting (%) Item 6 Page 4
arrangements and comparisons across local authorities. Part of the brief includes arrangements to work with 10 schools with the most significant decline in the proportion of school population receiving PPG to ascertain reasons (where possible) for the drop in eligible PPG numbers. A report will be available at the conclusion of this study. 5.7. The main outcomes of this piece of work will be to To develop a communications strategy for schools across the city to highlight good practice expectations to all schools around communication to parents and budget planning in relation to Pupil Premium. Research and consider implementation of the Department for Educations' e-fsm process as a replacement or additional system within the council including how this links into current systems, business processes and performance management information. Support the procurement and implementation of this system if appropriate Appraise the Council's website and make improvements especially in relation to the links between free school meal applications and pupil premium funding. Research national best practice in terms of schools and governor involvement, make recommendations and produce specific guidance to head and Chairs of Governors so that they can be assured that the PPG money is used to best effect. 6.0. Benefits Perspective and Claim Process 6.1. To maximise entitlement and avoid duplication, the Council uses a combined process for housing benefit, Council tax support and free school meals and therefore picks up on-going entitlement from the initial claim (usually housing benefit as this has the biggest impact on household income) and keeps paying as families move around. An annual exercise is undertaken with schools to keep data up to date. Families do not need to submit separate claim forms. 6.2. The Council s integration of FSM assessment with other benefit claim processes and assessment means that people with children who claim Housing Benefit or Council Tax Support are automatically considered for free meals. There is very strong correlation between entitlements to these benefits: people who receive the qualifying incomes for free meals are almost certain to need help with rent and/or Council Tax and this gets picked up by DWP when they apply for DWP means-tested benefits so they are likely to get directed to the Benefits Service. People who don't have to pay rent or rates (for example because they live with relatives or friends) don't get picked up in this way and need to apply. Item 6 Page 5
6.3. The gaps are likely to be in extended family groups, for example when there are adults with their children living with grandparents who are the liable person(s) for rent and Council Tax purposes. 6.4. The Council will be undertaking exercises to identify these potential missing groups. Within this group there are the following potential scenarios, One being where the grandparent's are claiming benefit. The non dependent and their child would not automatically be assessed for FSM as they are not the claimant. In this scenario the Benefits Service has the family's details (income details/age of children) and could do some work to identify potential claimants and invite a claim. Another is where the grandparent's do not claim any benefits from the Council. In this case the Benefits Service would not have any details. A campaign could be undertaken to identify these families. 7.0. Conclusions 7.1. The report outlines the financial risks to schools budgets of the introduction of UIFSM and specifically the potential to lose out on PPG because of reduced parental incentive to apply for FSM for children who are automatically entitled. 7.2. The proportion of the primary school population receiving PPG is in decline and the next census update will provide a clearer signal whether the introduction of UIFSM will increase the rate of decline. The decrease in take up of FSM trend is however also in line with the downward trend in child poverty. 7.3. The Benefits Service currently use a combined process for housing benefit, Council tax support and free school meals to endeavour to pick up entitlement and work closely with schools on data. Work is also commencing with a sample group of schools to understand better the decline in the proportion of school population receiving PPG and where appropriate to take remedial action and this will be reported back in due course. 8.0. Recommendations 8.1. The Committee is invited to discuss the content of report. Item 6 Page 6