NEW FREE SCHOOL MEALS
CRITERIA
We had been waiting a long time for the government to decide
who is going to be eligible for free school meals (FSM) after Universal Credit
is rolled out. At present in England children are entitled to FSM if their
family is on income support, income based jobseeker’s allowance, income related
employment and support allowance, pension credit or child tax credit with an
annual taxable income of £16,190 or less and if they are not eligible for
working tax credit. Last year, around 1.1 million children were eligible for
and claimed a free school meal, which corresponds to approximately 14% of
children in state-funded schools.
Up to now the very small number of families with children
receiving Universal Credit were all entitled to free school meals. But the
Government has now baulked at the £600million costs of maintaining this policy
as an increasing number of families with children are rolled onto UC.
On 16 November 2017 the Department for Education issued a
consultation on Eligibility
for free school meals and early pupil premium under Universal Credit
proposing a net[1]
earnings threshold of £7,400 per year starting in April 2018 and they estimated
that an extra 50,000 children would become eligible for free school meals,
compared to today’s number of claimants. During the rollout of Universal Credit
existing recipients of free school meals will not lose their entitlements. Para
4.4 says “Under our proposed threshold, a number of low-income households who
are not currently entitled to free school meals will become newly entitled, and
the vast majority (around 90%) of pupils currently eligible for free school
meals will continue to be eligible. However, although we are increasing the
number of eligible children, some households (particularly those working fewer
hours but with higher incomes) will have earnings above the new threshold, and
would therefore stand to lose eligibility.” This has been clarified in a note
“We estimate that by 2022 around 50,000 more children will benefit from a free
school meal compared to the previous benefits system. This figure represents
the difference between those that gain eligibility under UC to those that would
have been eligible under the old system but will not now be eligible under UC.
It also takes account of the fact that not everybody claims their meal.”
In February 2018 the Department for Education published the response
to the consultation. Basically they intend to go ahead with their proposals.
As CPAG
has said the new earnings threshold introduces a new poverty trap[2]
or cliff edge into universal credit which risks undermining incentives to
work. “The operation of an income
threshold is also likely to create serious practical problems making fair implementation
of the policy almost unworkable, and no proposals have yet been put forward for
managing this.” The Children’s
Society have also commented on the same issues.
CPAG asked us to estimate who would be affected by the net
income threshold of £7,400. We used the Family Resources Survey 2015/16 (actually
the HBAI data set), the latest available. Net earnings at the bottom end of the
distribution will have increased by April 2018 with the increase in the
national living wage and the income tax threshold. However we applied the £7400
threshold using net earnings of the benefit unit (ENTERBNU*52) and the
dependent child weights (GS_NEWCH) to the 2015/16 data. Subsequently we
adjusted the £7400 downwards by 20% to £5920 - an estimate of the 2015/16 terms
level in 2018.[3].
The results based on this threshold are included in brackets. We found that
23.1% (19.9%) of dependent children in the UK live in benefit units with net
earnings less than £7,400 (£5920) per year. Of course not all these children are
in school.
There is a variable that gives the value of FSMs actually received
by the benefit unit (FSMBU). This was greater than zero for 22.1% of all children
and 41.2% (45.1%) of all children in benefit units with net earnings less than
£7400 (£5920). More significantly 16.3% (16.4%) of children were in benefit
units with net earnings over £7400 (£5920) but who were receiving free school
meals and this constituted 56.9% (59.4%) of all those receiving free school
meals. However most of those are children under eight who will continue to
receive the universal entitlement to free school meals. However 10.7% (11.4%)
of those currently receiving free school meals would be excluded by the new cut
off at £7400 (£5920).
It would be very useful to be able to establish the number
of children in schools who would be eligible for free school meals under the
new arrangements. Unfortunately the ages of children are presented in groups in
HBAI. We can identify the five, six and seven year olds who will continue to
get free meals automatically but we do not know what proportion of dependent
children are in post 16 non-school college education or training and not
eligible for free school meals. However
·
As above 23.1% (19.9%) of all dependent children
are in benefit units with net earnings less than £7400 (£5920).
·
For any children aged 8-19 it is 23.8% (20.5%)
·
For any children aged 8-15 it is 23.8% (20.5%)
It is reasonable to estimate that approximately 23.8% (20.5%)
of children are in benefit units with earnings less than £7400 (£5920) and eligible
for free school meals.
For CPAG and The Children’s Society we have also estimated
the number of children (and benefit units with children) aged 8-15 with net
earnings less than £7400 who would become worse off if they increased their
earnings and as a result lost their free school meals. Also we have estimated the
number with net earnings over £7400 who would be worse off than they would be
if they were receiving free school meals. We have adjusted the net earnings
upwards by 15.9% to take account of earning growth 2015-2022. We have also
adjusted the value of free school meals upwards by 14.9% an estimate CPI
movement by 2022. We have produced the estimates for England, because the new
free school meals threshold only applies to England, though it may be adopted
by the rest of the UK. In England about 293,000 children living in about 125,000
benefit units would be worse off by increasing their earnings above the
threshold and making themselves ineligible for free school meals. About 420,000
children in about 156,000 families would be better off reducing their earnings
and becoming eligible for free school meals. All these estimates assume that
free school meals are taken up – in fact only about 65% of those eligible claim
them[4].
For further discussion of the impact of this cliff edge see The
Children’s Society/CPAG The free
school meals poverty trap. How work
wont pay for 280,00 families. They have recommended that the best solution
would be to continue to use UC as a passport to free school meals.
[1] It
is actually the gross earnings as well as £7400 is below the tax threshold and
it is below the NI level (£157 per week, between £113 and £157 treated as
having paid NI. In April 2018 it is 18 hours work per week at the national
living wage of £7.83 per hour.
[2] A
single parent of two children, working 16 hours/week on the 2018 National
Living Wage of £7.83
per hour, would earn £6.514.20 a year and be entitled
to free school meals. If she increased her hours
to 20 hours/week on the same wage, her take-home pay
would rise to £8,143.20 and she would lose
entitlement to free school meals. She would gain
£1,629 in earnings, but lose £1,026 in withdrawn
Universal Credit and £800 in the value of free school
meals – a total of £1,826. She would therefore
be almost £200 worse off a year.
[3]
The minimum wage increased by 17% from £6.70 per hour in October 2015 to $7.83
per hour in April 2018. The income tax threshold increased by 8% from £10,600
in April 2015 to £11,500 in April 2018.
[4] https://www.channel4.com/news/factcheck/factcheck-labour-arent-telling-the-full-story-about-free-school-meals
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