Appendix 1: Free School Lunches and Milk, and School and Early Years Finance (Amendments Relating to Universal Credit) (England) Regulations 2018 (SI 2018/148)
Additional Information from the Department for Education
Glossary
- FSM: Free school meal(s).
- Legacy benefits: the benefits replaced by Universal Credit. These include Job Seeker’s Allowance (JSA), Housing Benefit (HB), Working Tax Credit (WTC), Child Tax Credit (CTC), Income Support (IS) and income based Employment and Support Allowance (ESA).
- Passported benefits: the receipt of some benefits, or entitlement to certain schemes, are determined by whether or not you receive certain welfare benefits.
- Legacy benefit system/previous benefit system: this refers to how the benefits system would have been, in the absence of Universal Credit.
- UC: Universal Credit. UC is a social security benefit introduced in 2013 to replace income based Jobseeker’s Allowance, Housing Benefit, Working Tax Credit, Child Tax Credit, income based Employment and Support Allowance and Income Support.
- UC rollout: when local authorities and Jobcentre areas will transition to the Universal Credit full service and existing benefit and tax credit claimants are migrated across to Universal Credit14.
- PSM: Policy Simulation Model—a static micro-simulation model that calculates the effects of tax and benefit policy on a random sample of households from the 15-16 Family Resources Survey
- INFORM: INtegrated FoRecasting Model—a dynamic micro-simulation model that generates estimates of monthly flows across and between the legacy benefits and UC
- FRS: Family Resources Survey—a continuous household survey which collects information on a representative sample of private households in the United Kingdom.
Purpose of this document
Before the introduction of Universal Credit (UC), the receipt of certain passported benefits determined a child’s entitlement to free school meals15 (FSM). UC replaces six existing benefits with a monthly payment that gradually reduces as earnings increase, to ensure people are better off in work. It is targeted at people who are looking for work or who are on a low income and it aims to create a greater fairness in the welfare system.
When UC was introduced in 2013, a temporary measure was put in place that gave FSM entitlement to all children in households in receipt of UC. This was because the UC pathfinders were receiving out of work benefits, and so their children would have been eligible for FSM under the legacy system16.
Last year, around 1.1 million of the most disadvantaged children were eligible for and claimed a free school meal17, which corresponds to approximately 14% of children in state-funded schools. If this temporary measure were to continue for the full rollout of Universal Credit, around half of all children would become eligible for FSM18 so that meals would no longer be targeted at those who need them the most. For this reason, the government explored replacing this temporary measure with a net earned income threshold to determine eligibility. This approach is consistent with how other government departments and devolved administrations have approached amending criteria for passported benefits under Universal Credit, for example the Help with Healthcare costs scheme (covering prescription charges) administered by the Department of Health and Social Care; and free school meals in Scotland19.
In collaboration with the Department for Work and Pensions (DWP), the Department for Education (DfE) undertook analysis to determine the impact of different income thresholds on the number of children in receipt of FSM. Additionally, we considered operational feasibility, legal frameworks and technological capabilities. We decided to consult on implementing a net earned income threshold of £7,400.
Methodology
The analysis undertaken by DfE uses outputs from two DWP models20:
- Integrated forecasting model (INFORM)—a dynamic micro-simulation model that generates estimates of monthly flows across and between the legacy benefits and UC. The specific outputs used by DfE gave estimates for the number of children in households moving between the main legacy benefits and UC. The outputs are split by the legacy benefit received and broken down on a monthly basis.
- Policy simulation model (PSM)—a static micro-simulation model that calculates the effects of tax and benefit policy on a random sample of households from the 15-16 Family Resources Survey (FRS). Future years are modelled by simulating announced policies consistent with growth in relevant variables from economic forecasts.
Whilst these modelling outputs have their limitations, they are considered the best available sources for modelling benefit entitlement and the flows between different benefits.
The outputs of these models are used by DfE in the following ways:
- INFORM allows us to estimate the volumes of children in households moving onto UC split by the corresponding legacy benefit type on the legacy system.
- PSM allows us to estimate the earnings and age of the children in those households moving onto UC, and calculate whether or not they will be eligible for FSM after the transition. It tells us whether they would have been eligible for FSM if they had never moved across to UC.
By combining this information, we are able to estimate:
- how many people will move onto UC by January 2022;
- whether or not they will have household earnings below or above the threshold of £7,400; and
- whether or not they would have FSM eligibility if they were still on legacy benefits.
Using this, we can estimate the difference in size between two groups of children who are in UC households in January 2022:
- children who would not have been eligible for FSM under the legacy system, but will be under the proposed eligibility system; and
- children who would have been eligible for FSM under the legacy system, but will not be under the proposed eligibility system. It is important to realise that no child will lose their free school meals during the rollout of UC due to the protections outlined in the consultation response.
The government is introducing transitional protections to ensure that existing recipients of free school meals will not lose their entitlement following the introduction of new eligibility criteria. When calculating the effect of the threshold, we decided it was important not to account for protections in order to better understand how the number of children who meet the eligibility criteria change. These protected children are therefore not included in this analysis of the additional pupils eligible for FSM.
We take into account the fact that not every entitled household will claim for FSM. We do this by applying a “claiming rate” to the numbers described above. Our basis for this assumption comes from a DfE report into the proportion of pupils not claiming FSM21. This report found that there is an under registration rate of around 11%, suggesting a claiming rate in the region of 89%.
Our modelling does not attempt to anticipate behavioural responses that may result due to policy changes.
Results
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.
This figure does not include children that retain free school meals as a result of the transitional protections we are introducing during the rollout of Universal Credit. Under our proposals, no child in England should lose their free school meal during the transition to Universal Credit. In addition, any protected pupils who still receive free school meals once the transition is complete should continue to receive protection until the end of their current phase of education (e.g. primary, secondary school).
It is important to note that this number looks only at the net change in cohort size due to the eligibility criteria. The transitional protections (as outlined in the consultation response) mean that no child will actually lose their free school meals during the rollout of UC.
As new economic forecasts are released and underlying data (such as the FRS) are refreshed, the outputs from both the PSM and the INFORM will change. In turn, the output of the analysis outlined in this document will change.
DfE will continue to publish statistics on free school meals as part of its annual publication ‘Schools, pupils and their characteristics’.
February 2018
14 Details of the rollout schedule can be found here: https://www.gov.uk/government/publications/universal-credit-transition-to-full-service
16 https://publications.parliament.uk/pa/cm201213/cmhansrd/cm130417/text/130417w0004.htm#130417w0004.htm_spnew23
18 https://www.gov.uk/government/consultations/eligibility-for-free-school-meals-and-the-early-years-pupil-premium-under-universal-credit