Free School Meals should be extended to all households on Universal Credit. This is a good way for Conservative party leader candidates to tackle the cost of living crisis while improving work incentives.
The country’s next Prime Minister needs to demonstrate an appreciation of the policy detail we cover in this blog post if they are to show they can successfully help families on the lowest incomes.
By resolving one of the few remaining poverty traps in Universal Credit the new Prime Minister will also demonstrate the ability to work cross-party, whilst also supporting the calls of education and teacher union leaders.
Free School Meals should be extended to all households on Universal Credit to remove the poverty trap
Families currently lose entitlement to Free School Meals once their earnings rise above £7,400 a year, creating a poverty trap. Families earning just above the threshold can be significantly worse off than those earning just below the threshold.
The annual cost of a free school meal to the government is different to the cost for families. Households will pay a higher cost for a meal because of their reduced ability to benefit from the economies of scale. The table below shows the cost of Free School Meals (FSM) to the government and households based on the number of children.
Households on UC also see their earnings withdrawn in line with the taper rate which means that families keep 45p of each £1 earned. This means that the cost of one school meal for parents earning over the threshold is £5.20, whereas the cost to the government is £2.34.
Some UC claimants might also pay tax and national insurance on their earnings as well. For these families the cost of a free school meal is £5.98 which is almost three times the cost to the government. Our table shows how these daily costs of school meals add up for a family with one to two children over one academic year.
Our analysis shows that a family with two children earning just above the earnings threshold would need to earn an additional £2,331.44 to make up for the loss of free school meals worth £912.60. This is five additional hours of work per week for a family on minimum wage.
One in five families can’t meet extra costs during school holidays
In a previous blog we explored the financial impact to the household of covering these extra costs during school holidays. One in five families were unable to meet their priority costs during school holidays without additional support. 4% of families on Universal Credit were pushed into a cash shortfall without Free School Meals. Being in a cash shortfall means that families were unable to afford essential costs like rent, food, clothing or water.
Many of these families also lose out on additional support measures that are provided in conjunction with FSM, such as free school transport, school uniforms, or music lessons. This poses large additional costs, especially for large families whose outgoings will increase significantly due to the rise in the cost of living. For these families, the withdrawal of free school meals introduces cliff edges in support.
On a practical level, it means that some working parents will struggle to put food on the table for their children. It also means that the goal of Universal Credit, which is to make work pay, is not being realised for many families on the lowest incomes across England.
312,000 more children in Wales are now eligible for Free School Meals
In 2021 Policy in Practice conducted research for the Bevan Foundation on extending FSM provision in Wales. We modelled the costs of universal FSM provision to all households as well as the extension of provision to all households on Universal Credit, for primary and secondary school children.
Our analysis for Wales found that:
- Extension of FSM to all households on Universal Credit would increase costs to the Welsh government by just 27%, from £38.9 million to £49.4 million
- 16,400 households or 312,000 children would become newly eligible
- If FSM were extended to all UC households, 99% of low-income families were eligible for FSM, up from 78% under the present eligibility criteria
Universal provision can improve take up of Free School Meals and improve children’s educational outcomes. Simply put, hungry children cannot learn.
Providing Free School Meals to all households on Universal Credit would ensure all children from low-income households can have a nutritious lunch to fuel them during the school day. It would also minimise the stigma associated with receiving benefits for children from low-income households. One study finds that some children would rather go without lunch than risk bullying due to receiving a free school meal.
Local economies also stand to gain from the extension of Free School Meals to all households on UC. It would be a practical step for reducing food insecurity for low income households that would have been pushed into a cash shortfall without this support. It might also increase the working hours of catering staff at schools, and support local supply chains when food is sourced locally.
Since the publication of this research the Welsh government announced that Free School Meals will be rolled out to all reception class children in Wales from September 2022. Wales now joins Scotland in the universal provision of Free School Meals. Given that the earnings threshold for UC in Northern Ireland is £14,000, England now has the least generous FSM policy of the UK nations.
Government can do more for families on Universal Credit in England
These examples show that the extension of FSM to all households on Universal Credit is not only possible but also beneficial. It is unrealistic to expect families to meet an additional £1,165.72 per year in a cost of living crisis where purse strings are doubly tight from soaring fuel costs and inflation.
The government is well placed to step in, take advantage of the economies of scale and achieve a favourable outcome for 40-60% less per annum than families.
Our solution: change the FSM threshold to reach 2 million children
Our previous analysis shows that the extension of Free School Meals to all children on Universal Credit could reach 1.32m households containing 1.87m children, and would cost the government roughly £692m. The cost to the government can be reduced through a range of mechanisms.
- This estimate assumes full take-up of the support.It is likely the costing will be lower since take-up for Free School Meals is between 76% and 88%
- Instead of completely withdrawing the cost of free school meals for families above the £7,400 threshold, parents might contribute a portion of the costs
- Universal Credit work allowances might be drawn on for households, which choose to partially fund school meals. In effect, these families make their contribution to school meals through the reduction to their work allowance
The extension of Free School Meals to all households in England would show that the government is committed to removing one of the few remaining poverty traps in Universal Credit, making work pay for households on the lowest incomes.
Policy in Practice is committed to helping families receive much-needed support, including free school meals, through our data analytic tools, and our policy work. Our Low Income Family Tracker (LIFT) uses Household Benefits and Council Tax Support data to identify the households that are eligible but not claiming free school meals.
We join with the school and education union leaders to say that Free School Meals should be extended to all households on Universal Credit now.