The catering arm of a London council that led the charge for universal free school meals has posted a £1.4 million loss amid soaring costs.
Accounts for Juniper Ventures Limited, set up by Newham Council in 2017, declare the borough’s meal service the “front-running example of a high impact primary school meals ‘ecosystem’”.
The borough has had a universal free school meals offer since 2011, but new figures reveal how “rocketing inflation in the supply chain” drove the company from a £38,000 profit in 2021-22 to a £1.4 million loss last year.
The loss would have been more than £1.6 million but was offset by a profit made by Juniper Pursuits Limited, a subsidiary of Juniper Ventures.
School food campaigner Andy Jolley said the “really worrying figures highlight two things: the threat posed to catering firms by the chronic underfunding of school meals; and the profligacy of Newham Council in pushing ahead with a supposedly flagship policy without properly considering the practicalities”.
Government funding fails to keep up
Spiralling food, staffing and energy costs in recent years have prompted repeated warnings from the catering industry that funding for school meals is not keeping pace with actual costs.
Central government funding for universal infant free school meals and means-tested lunches for older pupils sits at £2.53. Funding for Sadiq Khan’s extension of free meals to junior pupils in London is £2.65, rising to £3 from September.
Meals in Newham, meanwhile, cost the council £3 each, and this will rise again next year as a 10 per cent living wage increase takes hold.
“This organisation has and continues to lobby the government for an ongoing inflationary review of this amount and contributed to a paper recommending the meal price be raised in line with inflation which would bring it today to £2.97 as a minimum,” accounts state.
Data from the Office for National Statistics shows average food prices have risen by 27 per cent in the last two years.
A council report from last year warned food costs exceeded forecasts by £409,000 in the 2022 calendar year. Juniper’s wage costs were also “significantly affected by the need to use agency cover to manage sickness”. This resulted in an overspend of £622,000 in 2022.
‘Food inflation’ hits free school meals
Inflation caused “huge issues” in 2022-23, and although rates stabilised and then began to reduce, “food inflation remains high, with the impact on the cost of raw materials continuing to be a challenge.”
Accounts show that although Juniper’s turnover increased by 0.4 per cent last year, cost of sales rose 5.9 per cent and admin expenses increased by 33.6 per cent.
Because it is wholly owned by Newham Council, funding from the borough keeps Juniper afloat where commercial providers might have gone bust.
Councillors also approved a deal last year which converted an existing £4 million capital loan it made to the company into shares. This can be used to balance the books.
The company is now forecasting a “major change in direction for the business with growing profitability”.
A statement said: “The losses made in 22-23 are anticipated to be reduced by over 50 per cent in 23-24 with further improvements leading to profitability and sustainability over the following two years.”
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