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.