Costs & benefits of expanding free school meals analysed

The Institute for Fiscal Studies (IFS) has published research on the options and trade-offs for potential expansions of free school meals in England.

The research finds that expanding eligibility to all state school pupils (primary and secondary) whose families claim universal credit could cost about £1 billion a year in the longer term, a 70% increase in spending on free school meals.
     
Instead offering free school meals to all state primary school pupils (as the London mayor will pilot from September) would also cost around £1 billion a year. This would benefit children in Years 3 through 6 as free school meals are already universal in Reception through Year 2. Offering free school meals to all state school pupils (Reception through Year 11) would cost about £2.5 billion a year, nearly trebling current spending. Neither of these reforms would directly impact the very poorest children, who are already eligible for means-tested free school meals.
     
Since 2014, the per-meal funding rate has lost 16% of its value in real terms. The funding rate currently stands at £2.41 per meal; if it had increased in line with inflation (as measured by the Consumer Prices Index), it would now be £2.87. Restoring the funding rate to its 2014 level would cost an extra £250 million a year in current prices.
     
These costs do not include any additional capital funding that would be needed to expand school kitchens and dining areas. As a rough guide, when universal infant free school meals were introduced in 2014, the government provided about £150 million in capital funding – roughly £100 per additional pupil brought into eligibility.
     
Just under a quarter of pupils in England are eligible for means-tested free school meals this year, compared with a long-run average of about one in six. The recent rise in eligibility is mainly the result of ‘transitional protections’ brought in to ease the transition from legacy benefits to universal credit. (These transitional protections are not taken into account in our costings, which focus on the long-run cost to government.)
     
Under the current system, free school meals are not ‘tapered away’ gradually. Parents who are earning near the £7,400 income cap therefore have a financial incentive to avoid earning a little more if it would mean losing access to free meals. For a single parent with two school-aged children, this ‘cliff edge’ means that earning £7,399 a year and keeping free school meals would be financially preferable to earning anything up to £9,400. That is equivalent to turning down an extra four hours of work each week at the National Living Wage.

Christine Farquharson, Senior Research Economist at IFS and an author of the report, said: "High levels of food insecurity among families on universal credit mean that policymakers such as the Mayor of London are once again consulting the policy menu for options to expand free school meals. The current system of means-tested free school meals is tightly targeted at the most disadvantaged families – so making existing provision more generous by, for example, reversing the real-terms cuts to the funding rate would directly benefit the very poorest."

Andrew McKendrick, Research Economist at IFS and another author of the report, said: ‘Universalising free school meals would affect children across the income distribution and might have wider benefits for health and educational outcomes, but it would also significantly increase existing spending. Expanding eligibility – for example, to include more families on universal credit – would focus more of the additional spending on low-income families, but still would not directly benefit the very poorest children, who are already entitled to free lunches."