Agenda item

Agenda item

Withdrawal from school catering provider market

Report of the Strategic Director attached

 

This report informs of the current financial and operating position of Manchester Fayre, which provides catering services to 80 sites across the City.  The report outlines the forecast cost of the service in the current year and the additional budget requirement that will be needed to continue operating the service.

Minutes:

The Committee considered the report of the Strategic Director, Neighbourhoods that informed the Committee of the current financial and operating position of Manchester Fayre, which provided catering services to 80 sites across the City. The report outlined the forecast cost of the service in the current year and the additional budget requirement that will be needed to continue operating the service.

 

The main points and themes within the report included: -

 

·                     Providing an introduction and background to Manchester Fayre;

·                     Describing the current operating position;

·                     Detailing the current budget position;

·                     Staffing implications; and

·                     Proposed transition arrangements.

 

It was also reported that the Council was not required to provide a school meals service and the subsidy now required to continue to operate the service to a minority of Manchester schools was significant.  This subsidy would have a consequential impact on other service reductions that would be required.  It was also commented that the market for school meal providers in Manchester was competitive and alternative providers could service the demand without the subsidy that would be required for Manchester Fayre.

 

Some of the key points that arose from the Committees discussion were:

 

·                     Rebutting the assumption that the jobs and employment terms and conditions of staff would be protected under TUPE (Transfer of Undertakings (Protection of Employment) Regulations 2006) arrangements if transferred to alternative providers, and noting that the limitations within those legal protections meant that in the current economic climate, TUPE was highly unlikely to be effective and might actually incentivise redundancy;

·                     Did any other local authorities in Greater Manchester have a service that was not loss-making, and if so, how had that been achieved;

·                     What consultation had been undertaken with Trade Unions, noting that concerns had been expressed by the Trade Unions regarding the consultation process, and suggesting that industrial relations were not being adequately maintained;

·                     Expressing the need to explore every option to protect the jobs and wages of the lowest paid workers, with more than one member commenting that it was a service predominantly staffed by relatively low paid, female workers;

·                     Noting that this proposal had been made repeatedly over a number of years, and questioning whether the communications strategy to sell the service was adequate;

·                     Noting that Manchester Fayre had been independently identified as a very good service, providing high quality and nutritious food and noting the importance of this for the children of Manchester;

·                     Commenting that the proposals amounted to an outsourcing of services;

·                     The Council should give consideration to using capital funding to deliver this service;

·                     Questioning the argument regarding the inability to deliver the service at economy of scale, noting that other providers had expressed an interest in delivering this service;

·                     Seeking clarification on the cost charged by Manchester Fayre to provide a school meal, commenting that there were different figures on the Council’s website;

·                     Had consideration been given to delivering a Greater Manchester service to schools; and

·                     What was the actual budget of the service, commenting that the loss incurred during the pandemic should be disregarded as it has been for other Council services.

 

The Director of Commercial and Operations responded to the comments and questions from the Committee by stating that consultations had been undertaken with local Trade Unions in accordance with agreed protocols and process. He advised that staff would be transferred to any new provider under TUPE arrangements. He stated that the service could not compete with alternative providers due to the economy of scale, noting that approximately six schools per year were opting out of the service and the financial loss incurred by the service next year was anticipated as a minimum of £600k. He further clarified the cost to a school for a meal provided by Manchester Fayre, however the cost charged to the pupil was determined by the individual school, commenting that the information on the Council’s website would be revised to ensure the information provided was correct.

 

The Director of Commercial and Operations stated that discussions had been undertaken with other local authorities, and that Salford had a more profitable service, but that school finances were arranged differently in Salford.  Due to the different local funding arrangements and each school managing their own budget for this function in Manchester, this presented a significant challenge. He stated that previous attempts to re-recruit schools had stopped as the tactics used were not proving successful. The conversations would continue in addition to the local service manager and nutritionist promoting the Manchester Fayre service to Manchester schools, noting the positive comments on the service identified by the independent report.

 

The Deputy Chief Executive and City Treasurer confirmed that in some cases capital receipts could be used to fund transformation programmes where there was a financial payback.  However caution needed to be taken when using capital funding to finance a transformation project and some local authorities had got into difficulties from it.  , It was also noted that it was the schools and their governing bodies that had decided to opt for alternative providers to deliver schools meals as they retained and managed this budget.

 

The Executive Member for Skills, Culture and Leisure addressed the Committee and stated that the report did not propose any job losses and did not impact on the provision of Free School Meals. He stated that the budget to provide school meals had been delegated to individual schools and it was their decision as to how they procured this service, commenting that of the 185 schools in Manchester 110 of these had opted for alternative arrangements. He stated that the financial situation was such that it was unjustifiable to continue to subsidise this service. He stated that the report detailed the alternative options that had been considered and reiterated the point that this report did not propose any job cuts. He concluded that the money saved by not continuing to subsidise this service could be used to protect jobs and services when considering the broader budgetary pressures the Council was experiencing. 

 

The Leader stated that the decision had been taken some time ago by the Council to delegate this budget to individual schools, noting that any surplus achieved was retained by the school. He commented that 63% of schools currently procured school meals from other providers and nutritional standards had not deteriorated, adding that in many cases the menu variety had improved, and produce had been procured from local providers. He stated that there was no evidence to indicate workers’ pay and conditions for those who had transferred to other providers had been adversely affected in his ward. He concluded by stating that the Council could not afford to continue to subsidise this service. 

 

Decisions

 

The Committee: -

 

(1)       Recommends that the proposals described within the report are not progressed.

(2)       Accepts that Manchester Fayre may not be sustainable in its current form but recommends that alternative options are considered to maintain the offer of Manchester Fayre and protect jobs, including delivering a service with other Greater Manchester local authorities to achieve economies of scale and be a competitive provider of school meals.

Supporting documents: