Hard-pressed schools are warning of extra pressures from the rising cost of outsourced contracts as companies grapple with national insurance hikes, minimum wages and food costs.
Caterers say they may have to stop serving smaller schools or make redundancies, and that a return to the school meal standards of the 1990s is on the cards if funding for free meal is not increased.
Food prices rose by 3.3 per cent in the year to February and could reach 5 per cent by the end of the year. At the same time, the national living wage has increased by at least 6.7 per cent, and national insurance contributions by 9 per cent.
Trusts and schools say they face possible redundancies to balance their budgets this year, with overall funding only rising by 0.5 per cent nationally once other pressures are taken into account.
Leaders say the rising costs of external contracts are making things even harder.
‘Really hammered’
Lucia Glynn, an academy trust funding consultant, says trusts will be “really hammered” with any people-heavy contracts such as IT, catering, or cleaning.
She works with Newham Community Learning Trust in east London, which faces a £50,000 increase in its catering contract.
She points to the living wage rise and hiked NICs contributions. “Academy trusts are having to make sure they stay compliant with that. Costs are going up, but the funding equivalent isn’t, which is making it very, very difficult.”
Tim Monelle, the director of trust services at the Lighthouse Schools Partnership, says his catering costs have increased by £200,000 this year to service 13,000 pupils across 33 schools in the west of England.
Most pupils are not on free school meals and his trust has been forced to raise charges 10p a meal to mitigate the costs.
A grant to cover the rise in national insurance contributions fell “short”, “and that’s even before we take into consideration the increases to our key outsource partner contracts, such as catering and cleaning”.
He says while the caterers have been “very good” in absorbing some of the rising costs, budgeting has been “incredibly challenging”.
“We haven’t gone through it yet, but we will have to look at menu rationalisation, and some schools where a school kitchen is not viable may have to have it delivered from a bigger school.
“It’s been weeks and weeks of going through every budget line for every school, every single cost reviewed. What can we do differently? We need to make sure that pupils are fed a healthy and nutritious meal.”
Trish Abbott, the chief operating officer at Bishop Hogarth Catholic Education Trust in the north east, says she is short £32,400 to fund her catering staff.
Overall costs for all support staff at the trust, which has 30 primaries and five secondaries, has increased by an average of 11 per cent since 2023 – with a further shortfall of £111,500 for the NI increase.
“This feels like a hidden tax on schools.”
“Our catering staff are valued members of our school community who love cooking and serving meals for our pupils, and they deserve their pay rises.
“But, like most trusts, we are struggling to fund these pay awards … and the shortfall in funding to cover next month’s NI increase only makes this more difficult.”
She says the trust has worked hard to keep school meal costs down, “but not only is the cost of our catering team increasing, food inflation of more than 20 per cent over the last three years has made our ingredients significantly more expensive”.
Free school meal funding has also failed to keep pace with inflation: in 2023 the Institute for Fiscal Studies found it had lost 16 per cent of its value in real terms since 2014.
Glynn says the quality of food is “really important, because in areas like Newham, it might be the child’s only meal of the day”.
‘I feel dreadful about it’
Caterers say stagnating funding for free school meals could compromise the quality of food.
Julie Belford, who runs Kingswood Catering Limited, says her company is considering telling smaller schools it can no longer provide a catering service based on the £2.58 per meal set by the DfE.
A former teacher for 15 years, she says pupils know the difference between good and cheaper food.
“They know the difference between a decent fish finger and one that hasn’t got any fish in it.
“The bottom line is this is going to affect smaller schools. They will either have to pay more per meal or pay a management fee to ensure a financially viable service.”
Belford says she takes the situation “really personally…I feel dreadful about it. I think a lot of caterers will take this personally too”.
She also warns a return to 1990s-style school catering if funding is not increased.
“If you start to compromise on quality, children won’t eat their lunch. Parents will be unhappy about food quality and more parents will send packed lunches from home instead of ordering a hot school meal.
“We don’t want school food standards to slip back to those of the early 1990s. Funding for school meals needs to be increased to ensure this doesn’t happen.”
Glenn Campbell, the founder of Cohesion Consulting, which helps schools with their catering contracts, claims some schools are already cutting back on food standards.
“It’s literally catering versus teaching at conversations we’re having, and at procurement stage that’s heartbreaking. This is the reality of the situation where schools are facing increasing pressures.”
“There’s a lot of menu engineering, like replacing chicken breast with diced chicken or diced chicken thigh. The pressure is getting much worse.”
Labour has so far resisted calls to increase funding for free school meals or extend them to more pupils, instead focusing on its breakfast clubs programme.
LACA, the professional body representing caterers, says free meals funding needs to rise to £3.16 to meet costs.
Judith Gregory, LACA’s chair, says caterers are “struggling to squeeze rising costs into an already overstuffed envelope. The added pressure of national insurance increases may be the tipping point.
“Members have reported that, in some cases, the cost of providing each meal will rise by more than 9p this year, exacerbated by suppliers passing on their own cost increases.”
Catering is highly price-sensitive, which leaves “little room to raise the cost of paid meals to subsidise free school meals.
“This puts families in a difficult position, often leading them to forego a nutritious, hot meal for their children.
“We are increasingly concerned that these financial pressures will impact staff hours and could even result in redundancies. This, in turn, creates a vicious cycle, pushing more people on to benefits as they fall below the low-income threshold.”
