Decision Maker: Cabinet

Outcome: Recommendations Approved

Is Key Decision?: Yes

Is Callable In?: No

Date of Decision: May 6, 2025

Purpose: Cabinet is recommended to consider the options for the Waltham Forest Catering Service’s SLA with schools.  

Content: Cabinet: (1)         noted that the Service Level Agreements (SLAs) with schools for the provision of school meals expire on 31st March 2026; (2)         agreed that the Local Authority cease offering catering services to provide school meals from 1st April 2026;    (3)         noted the support that will be provided to schools to enable them to consider either directly delivering school meals or sourcing an alternative provider; and (4)         Note the establishment of a working group to oversee the formal approval requirements, HR processes and communications to schools and other key stakeholders, for which the Director of Education will act as Senior Responsible Officer.   Options & Alternatives Considered A range of options have been considered and these together with recommendations are as follows: ·         Option 1: Full cost recovery from schools (including repayment of outstanding debt). ·         Option 2: Utilise other funding sources (Public Health Grant). ·         Option 3: Reduction and changes to the service. ·         Option 4: (recommended): Exit the traded catering market (service outsourced). ·         Option 5: Do nothing. Option 1: Full Cost Recovery from Schools (and full payment of all outstanding debt within six months). This would require a price increase significantly beyond the funded meal price, and payment of £1.8M of outstanding debt. To fully recover direct costs only, this would require additional charges to schools of £0.617M (an increase of 9% on existing school meals). This would still not allow for cost recovery of the Traded Management Team (charges would increase by a further 3% to cover these costs, which in total would be c.33pence more per meal), or any contribution to overheads, which would continue to require subsidy by the Council, at an increasing rate, when allowing for staff pay inflation. Effectively this option passes on the gap in income to schools and families, therefore this is not the recommended option. If we were to proceed with this option, it is likely that schools would simply give notice to exit the service (or choose not to renew) anyway and leave remaining schools with a greater overhead or an ongoing subsidy requirement from the General Fund. Option 2: Utilise Other Funding Sources (Public Health Grant). The Public Health grant is fully committed, and whilst there are one off reserves, these would be quickly exhausted and would require savings elsewhere in Public Health to fund. As we only currently provide meals for 5% of schools, given schools / the external market can deliver the service at a lower cost, this is not recommended as this would not provide value for money and would not address the current high levels of debt. Option 3: Reduction and Changes to the Service. Savings could be achieved by ceasing the match funding equipment of purchase and management; this puts service delivery at risk in some schools where equipment is nearing end of life, and the school isn’t in a strong financial position to wholly fund replacement themselves. The Local Authority could make savings by ceasing the offer to non-profitable schools – some schools, due to their size mean that they “cost” more for us to deliver. From a purely commercial perspective we could cease to offer to just some schools, but this would only marginally reduce costs, and conflict with the principles of the service. Whilst this option would deliver £0.150M of savings, this is only a small proportion of the overall subsidy, which will continue to grow year on year. The service would also become operationally difficult to manage, and therefore this option is not recommended. Option 4: Exit the Traded Catering Market (Service Outsourced) – Recommended Do not offer catering services as a traded service after March 2026*, when most SLAs with schools are due for renewal. This would allow schools to procure more cost-effective services from Commercial providers and reduce the financial burden on both schools and the Local Authority. A prompt decision to enable a nine-month notice and transition period would allow for timely communications with schools, staff, and unions, and enable a smooth transition to school direct delivery or schools’ procurement of a new provider. In addition, it is proposed that one role is retained within the Catering Team for a minimum of one year to mitigate risks and any negative impact on schools and ensure ongoing quality of food, menus and nutritional standards. After considering all the options, in context of the Council’s financial position, this is the recommended option. This option recommends a timeline of one-year to close the service, linked to the natural end of the current SLA period with schools (March 2026). A delay to July 2026 (to align with school holidays) or an acceleration to December 2025 (to align with Enfield’s timeline for closure of six months and enable faster delivery of savings) could also been considered. Changes to the timeline (from the current assumed closure at March 2026) would impact the timing of the revenue savings and impact operational management of the service. If the current SLA period with schools was extended, this could also result in a worsening financial position for the Local Authority in the short term as schools may choose not to agree to the extension and seek other arrangements anyway. A variation of the recommended option 4, would be for LBWF to a procure a single contract on all school’s behalf. This would require significant corporate capacity across services (including education, corporate procurement and finance) at a time where we are delivering widespread transformation, but more importantly it wouldn’t allow choice for schools, therefore this is not recommended.  Option 5: Do Nothing. The General Fund subsidy remains and continues to increase year on year, adding to pressures to the Mid-Term Financial Plan (MTFP) and the wider council budget gap will have to be addressed in other ways and given the level of outstanding debt from the service, this is not a realistic option. Therefore, this is not recommended considering the Council’s financial challenges and limited options to deliver savings, without reducing front line services and placing additional pressures on increasingly stretched funding for schools and related statutory services.