Monday, 12 March 2018



 Jonathan Bradshaw and Antonia Keung

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.

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