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What action is the Welsh Government considering and why?

The Welsh Government is considering the issue of the Transitional Protection Order (TP). In Wales, the introduction of an earned income threshold for families in receipt of Universal Credit (UC) from 1 April 2019, reserved entitlement to free school meals for those with annualised net earnings from employment or self-employment of less than £7,400. The TP order, brought in alongside the income threshold, aimed to protect households migrating to Universal Credit from losing their free school meal entitlement despite their household earnings remaining the same. Providing TP alongside an annualised net earnings threshold of £7,400 therefore aimed to provide stability for families by ensuring that no child would lose their entitlement to free school meals during the schedule for rollout of Universal Credit as it was then understood.

To protect the families identified, TP was enacted within legislation from 1 April 2019 (The Free School Lunches and Milk (Universal Credit) (Wales) Order 2019: Article 3 Transitory Provisions), with a prescribed end date of 31 December 2023, by which point it was anticipated that Universal Credit would be fully rolled out across Wales. The protection applies to all learners in maintained schools eligible for free school meals through qualifying benefits (eFSM), including nursery age children that attend full days. The current transitional protection policy can be summarised as follows:

Any child or young person who is eligible for free school meals up to and including 31 December 2023 will continue to have their free school meals protected until the end of their current school phase (for example, primary education or secondary education). This applies even if their circumstances change, and they no longer meet the eligibility criteria.

As part of the 2022 Autumn statement, the UK Government announced that the full roll-out of UC will be delayed until September 2028. In February 2023 the Department for Education (DfE) extended TP in England to 31 March 2025, by which all tax credit cases are anticipated to have moved to Universal Credit. Therefore, consideration is needed to assess what action, if any, is required to address the delay to the UC roll out for families past the end date of the current TP Order.

This IIA is therefore specifically considering the impact of a decision to extend TP until 31 March 2025 or not. Should DWP timelines for migrating families with children onto UC slip again, it would be necessary to consider if revising this IIA is required to understand how a change of extension date will impact on different groups.

Our estimates of the transitionally protected cohort figures in Wales are based on those estimated for England by the Department for Education. An outline of their methodology and the data sources used is available on the GOV.UK website. As this document was published in 2018, more recent data/forecasts than those mentioned have been used. We have taken a proportionate share of the figures for England, based on Pupil Level Annual School Census (PLASC) FSM caseload data. The estimates derived using this approach have been compared to our PLASC outturn figures for the number of transitionally protected pupils, in particular comparing the growth between years. This produces similar results to the alternative of growing the number who are transitionally protected in line with the trend seen to date. As such, this suggests that the estimates are reasonable.

Our estimates are surrounded by a high degree of uncertainty, which is reflected in upper and lower ranges of +/- 20%. These estimates are also subject to change as new data becomes available and forecasts are updated.

For context, learners in maintained schools in Wales are eligible (Education Act 1996 (legislation.gov.uk)) for Free School Meals if their parents receive any the following support payments:

  • Income Support.
  • Income-based Jobseeker’s Allowance.
  • Income-related Employment and Support Allowance.
  • Support under Part VI of the Immigration and Asylum Act 1999.
  • Child Tax Credit (as long as they don’t also get Working Tax Credit and their annual income is £16,190 or less before tax).
  • The guaranteed element of Pension Credit.
  • Working Tax Credit run-on, paid for 4 weeks after they stop qualifying for Working Tax Credit.
  • Universal Credit: their household earnings must be less than £7,400 a year after tax. This does not include any income from benefits.

Under the existing TP policy, once children become eligible for free school meals, they are protected from losing their entitlement even if their circumstances change. A detailed breakdown of this cohort including those with protected characteristics is included in the Children’s Rights IA (Annex A) and the Equality IA (Annex B).

The cohort of learners and their families eligible for the proposed action

The delay to the UC rollout presents a potential risk for some legacy benefit customers to lose their entitlement to free school meals (FSM) solely because of migrating to UC after our current transitional protection order ends on 31 December 2023 (mainly those in receipt of Child Tax Credit (CTC) and earning above the £7,400 threshold at the point of migrating). However, not all children are impacted by the UC delay equally, as families with children will be migrated to UC by 31 March 2025. Most year groups will be afforded sufficient protections through our current TP policy until the end of the phase of education being taught in on 31 December 2023 (primary or secondary).

Impact of the Universal Credit delay (year group being taught on 31 December 2023)
Year group: full time nursery to Year 5
  • Protected by current TP policy until: at least end of summer term 2025 (by which point the families would have migrated to UC)
Year group: Year 6
  • Protected by current TP policy until: end of summer term 2024
Year group: Year 7 to Year 10
  • Protected by current TP policy until: at least end of summer term 2025 (by which point the families would have migrated to UC)
Year group: Year 11, Year 12, and Year 13
  • Protected by current TP policy until: child leaves secondary phase of education (FSM would naturally end at this point in any case)

Therefore, the main cohort at risk because of the UC delay is children being taught in year 6 on 31 December 2023, living in CTC households with earnings over £7,400 when they migrate to UC between the end of summer term 2024 and March 2025. This is a cohort that has therefore been considered in the drafting of this IIA.

Using data from DWP and PLASC, it has been estimated that around 2,800 children being taught in year 5 on school census day in January 2023 are entitled to FSM through receipt of a legacy benefit and this, therefore, represents the maximum number of children potentially at risk once they leave their primary phase of education.

Applying several assumptions to this figure, including the rate of migration of these cases to UC and the percentage of these cases that would remain entitled to FSM once migrated, it is estimated that if TP is not extended to March 2025, around 1,000 pupils being taught in year 6 on 31 December 2023 could lose free school meals solely because of transferring from legacy benefits to UC between the end of their primary phase of education in July 2024 and 31 March 2025 (date by which DWP anticipate that families with children will be migrated to UC).

In addition, children that become newly eligible for free school meals from 1 January 2024 or retain their entitlement to eFSM as the progress in secondary school will no longer be protected if their circumstances change. Although this group of learners are not who the originally policy was introduced to protect, they are a group that would be impacted by a decision not to extend. This is a cohort that has therefore been considered in the drafting of this IIA.

Conversely, it is projected that an extension (aimed primarily at protecting the 1,000 strong cohort identified in the preceding paragraph) would see around an additional 8,0005 pupils transitionally protected in January 2026 when compared to not extending. This includes supporting families where household circumstances or earnings have improved significantly, potentially such that they no longer receive a qualifying benefit with support and, in these cases, sitting outside of the original policy intent. However, if a decision was made not to extend, then not all 8,000 of these pupils would be impacted equally.

Of the estimated 8,000 pupils identified, approximately 2,000 pupils will be primary school age, meaning in the absence of an extension to TP they would continue to receive a free school meal through the UPFSM offer if household circumstances changed and so would not be negatively impacted by a decision not to extend.

A decision not to extend therefore disproportionately impacts the remaining 6,000 secondary school age pupils, who would no longer be protected if their circumstances changed, which would include the 1,000 pupils being taught in year 6 on 31 December 2023 that could lose free school meals solely because of transferring from legacy benefits to UC between the end of their primary phase of education in July 2024 and 31 March 2025.

Given the value for money and cost implications of extending the policy, acknowledging that most children are afforded sufficient protections through our current TP policy, and recognising the low number of children (proportionally) at risk by not extending, it is considered that the impact for at-risk families could be better mitigated by exploring options for local authorities to use their discretionary powers not to charge for school meals in specific circumstances.

Whilst it could be argued that there are clear benefits of extending TP to March 2025, a decision to do so must be considered in the context of the policy’s original intent, the current financial circumstances, and be guided by our principles to protect core public services as far as possible and continue to target support towards those with the greatest need.

The Five Ways of Working of The Well-being of Future Generations (Wales) Act 2015 (futuregenerations.wales)

Prevention

Currently, if a family is eligible for TP (up to 31 December 2023), they will continue to have their free school meals protected until the end of their current phase of education (primary or secondary), even if their circumstances change and they no longer meet the eligibility criteria.

Extending the transitional protection of free school meal entitlement past the current order end date of 31 December 2023 would help some additional families financially (families of pupils that become newly eligible for free school meals between 1 January 2024 and 31 March 2025), by keeping money in their pockets as their circumstances change. It would also offer transitional protections for children being taught in year 6 on 31 December 2023, living in CTC households with earnings over £7,400 when they migrate to UC between the end of summer term 2024 and March 2025. This latter group were part of the cohort the policy was originally introduced to protect. This could support our efforts to eradicate child poverty and play a role in tackling child hunger. Access to adequate nutritious food can play a key role in the prevention of health inequalities which are more likely to be experienced by people, and children in particular, living in socio-economic disadvantage.

The 2022 to 2023 National Survey for Wales reported that 6% of households had received food from a food bank or had wanted make use of one in the past 12 months. The extension of TP could therefore help to alleviate some financial pressure on some families and increase access for children to receive a healthy nutritious meal at school each day.

However, the overwhelming majority of children currently eligible for a free meal are already afforded sufficient protections through our current TP policy, and the low number of children in the target cohort the policy was introduced to protect could be supported by local authorities using their discretionary powers not to charge for school meals without the date of the TP order being extended. Furthermore, as household income/earnings are not recorded or reviewed under the TP policy, it is possible that an extension to the provision itself could unintentionally widen inequalities by increasing the potential for a wider group than just those considered in greatest need to be supported, for example, those who continue to have their meal protected through TP arrangements despite household earnings increasing substantially.

Integration

The extension of TP would align to ambitions within the draft Child Poverty Strategy for 2023, which includes the following two aims: 

  1. to reduce costs and maximise the incomes of families
  2. to support child and family wellbeing, including those with protected characteristics

It also supports the UN Convention of the Rights of the child. The Welsh Government is committed to considering children's rights as set out in the United Nations Convention on the Rights of the Child (UNCRC) in all that it does (as considered in detail below in Annex A). The UNCRC provides a minimum standard, a floor for which, no child should fall below. In particular, it requires that the best interests of the child shall be a primary consideration.

In 2011, Wales became the first administration in the UK to enshrine the UNCRC in domestic law, through the Rights of Children and Young Persons (Wales) Measure 2011. The Measure embeds consideration of the UNCRC and the Optional Protocols into Welsh law, and places Welsh Ministers under a duty to have due regard to the requirements of the UNCRC when making their decisions.

Every child has the right to be treated fairly, have equal access to support and opportunities to make the most of their lives and talents. No child should endure poor life chances because of discrimination or inequitable ability to claim their rights.

It is important for this proposal to link directly with various Programme for Government policies and the well-being goals for a more equal and healthier Wales, including but not limited to:

Additionally, it has the potential to contribute to several of the wellbeing goals by building resilience, reducing inequalities, and helping ensure a more prosperous and healthier Wales.

In the absence of dedicated TP provision, these aims, policies, and duties remain, and the Welsh Government would aim to fulfil them by working with partners to draw on and integrate support available to families through other means. This would include eFSM policy generally, UPFSM, the existing support offered through the transitional protection policy as it stands (in the absence of a further extension), encouraging local authorities to use their discretionary powers not to charge for school meals in certain circumstances, as well as promoting support available through the voluntary sector, charitable means, and private sector offers of support aimed at tackling child hunger.

Collaboration

Close collaboration with partners and key stakeholders will be required to maximise support for the families that could benefit from an extension to the TP policy, regardless of whether an extension is made or not.

The delivery of free school meals to children that are traditionally eligible through benefit related criteria or transitionally protected, requires close collaboration with our key delivery partners and those representing the interests of children and young people. This includes schools and local authorities, as well as the Welsh Local Government Association (WLGA) and the Local Authority Catering Association Wales (LACA Wales).

By working closely with our key delivery partners, this collaborative approach would better support Welsh Government in reflecting and responding to emerging issues, in monitoring the situation, as well as providing proactive support to address any issues that may arise during delivery.

Furthermore, continued collaboration with colleagues and stakeholders working on eradicating child poverty is required to help ensure cohesion and better identify opportunities for cross referencing with, or signposting toward, the various packages of support available to eligible families, maximising take-up of the support available to them.

Impact

TP plays an important role in ensuring children of protected families have at least one healthy nutritious meal at school and therefore helping to prevent health inequalities. A decision not to extend could increase the risk of inequalities associated with socio-economic disadvantage, such as health inequalities and attainment, for cohort of families.

Whilst it could be argued that there are clear benefits of extending TP to March 2025, a decision to do so must be considered in the context of the policy’s original intent (supporting families who migrate to UC from losing their free school meal entitlement despite their household earnings remaining the same), the current financial circumstances, and be guided by our principles to protect core public services as far as possible and continue to target support towards those with the greatest need.

The main cohort at risk of not extending TP to 31 March 2025, in the context of a delay to UC roll out, are children receiving free school meals that are being taught in year 6 on 31 December 2023 and are living in CTC households with earnings over £7,400 when they migrate to UC between the end of summer term 2024 and March 2025.

It is estimated that if TP is not extended to March 2025, around 1,000 pupils being taught in year 6 on 31 December 2023 could lose free school meals solely because of transferring from legacy benefits to UC between the end of their primary phase of education in July 2024 and 31 March 2025.

Although an extension of TP to 31 March 2025 would protect these children, it would also protect an additional 8,000 by January 2026 when compared to not extending. Whilst in the main, this is likely to support in work households that are more likely to be living in relative poverty, it would also include:

  • That have not migrated from legacy benefits and so are not at risk of losing free school meal entitlement because of a move to UC.
  • That have claimed UC for the first time since the introduction of the £7,400 threshold and so are not at risk of losing free school meal entitlement due to the introduction of the earnings threshold.
  • Where circumstances have changed, and the household is no longer receiving a qualifying benefit.
  • Where earnings have increased substantially and, in some cases, has removed them from the welfare benefit system completely.

Of the estimated 8,000 pupils identified, approximately 2,000 pupils will be primary school age, meaning they would continue to receive a free school meal through the UPFSM offer if household circumstances changed and so would not be negatively impacted by a decision not to extend.

A decision not to extend therefore disproportionately impacts the remaining 6,000 secondary school age pupils that would be protected by an extension to March 2025, which would include the 1,000 pupils identified as at risk due to the UC delay. A more targeted approach would be to explore options for local authorities to use their discretionary powers not to charge for school meals in specific circumstances as a means to support this 1,000 pupils.

However, this is likely to continue to bring forward challenge around the inequality of provision in secondary schools and the adequacy of the £7,400 threshold. The threshold has not kept pace with the increases in the national living wage and is also lower than the £8,040 minimum earnings requirement imposed through the Universal Credit claimant commitment (families with work search requirements earning under £8,040 per annum are required to search for additional hours/better paid work or risk sanctions).

In the absence of an extension to TP, Welsh Government has a duty to build resilience and reduce inequalities in this cohort and would continue to work with partners to draw on and integrate support available to families through other means. However, it is important to note that the first line of defence for providing subsistence funding for families to ensure children are fed lies with the UK Government, and its administration of the social security system.

A further explanation is provided in the Equalities Impact Assessment (Annex B).

Costs and Benefits

There are no immediate financial implications over and above the costs of the original policy. However, the latest projected costs of the TP policy are above the £6m (Welsh Government made an additional £7m available through the Settlement in 2019 to 2020 to help cover the estimated costs associated with transitional protection (circa £6m) and the increase in pupils eligible for free school meals under the revised criteria (circa £1m) and this has been absorbed into the RSG baseline) made available annually through the Local Government Settlement (RSG) since 2019 to 2020 to cover the estimated costs associated with transitional protection, creating a short-term pressure on local government budgets.

In the absence of an extension, the number of TP pupils is expected to start reducing by PLASC in January 2026. However, it is projected that an extension to TP until March 2025 to align with the DWP’s current plans to migrate all families in receipt of tax credits onto Universal Credit, would see approximately 8,000 additional pupils transitionally protected in January 2026 when compared to not extending. This would include supporting families where household circumstances or earnings have improved significantly, potentially such that they no longer receive a qualifying benefit.

This increase will be driven by:

  • Providing protection to pupils that become newly eligible for free school meals between 1 January 2024 and 31 March 2025, with this protection covering the period up to the end of the school phase as of 31 March 2025.
  • Providing protection to Year 6 pupils receiving free school meals in Dec 2023 (through eFSM or TP) until the end of secondary school instead of end of primary school.
  • First pupils losing their protections by reaching the end of primary education phase being delayed from July 2024 to July 2025.

Whilst there has not been a specific call from local authorities to provide additional funding to date, the recent revalidation exercise undertaken for PLASC 2023 is likely to highlight the continued increase in the number of transitional protected pupils. This is a particular risk in the context of the position from local authorities that the £2.90 unit rate for Universal Primary Free School meals is not sufficient to cover the cost per meal incurred.

Should TP be extended, and with no additional budget assigned to this activity in the Revenue Support Grant, funding may need to be found within the current Education MEG and the reallocation of funding from other programmes/policies. Any such cuts to core services would potentially have serious consequences and negative impacts on all children across Wales. This needs to be considered against the positive impact the policy has on low-income families, mainly in terms of how the provision puts money back in families’ pockets.

Costs will vary depending on actual take-up and the cost per meal rate, however central estimates of the transitional protection costs for the period January 2024 to January 2028 (assuming a take up rate of 77% and meal rate of £2.41) is £48.3m, demonstrating a £24.3m shortfall in funding via the RSG when accounting for the annual £6m TP budget over the same period. This estimate is subject to a high degree of uncertainty and is also subject to change as new data becomes available and forecasts are updated.

The cost and resource required for Welsh Government to bring forward legislation to support these 8,000 additional children (in an attempt to protect the low numbers of pupils at risk by not extending TP) is considered disproportionate in the context of the current fiscal position.

It should be noted, in the longer term, as the cost of TP starts to reduce and ultimately end altogether, local authorities will continue to benefit (year on year) from the additional £6m of funding provided in 2019 to 2020 that has since been absorbed into the RSG baseline.

Mechanism

Local authorities have a statutory duty to provide free school meals to those children eligible through qualifying benefits or through the TP order. An extension to the policy would increase the number of children eligible for free school meals through the policy, however the mechanism for delivery would remain the same.

Conclusion

How have people most likely to be affected by the proposal been involved in developing it?

This specific proposal to consider extending the TP order has not been consulted upon, however the introduction of a UC earnings threshold and the associated TP policy, was consulted upon in 2018.

Numerous respondents at the time, welcomed the transitional protection plans, stating that they were fair and would enable the impact of the policy to be monitored effectively, whilst ensuring that children who were no longer eligible for free school meals under the new eligibility criteria would not be disadvantaged, particularly considering the uncertainty regarding the numbers of families who will lose eligibility under the new criteria.

Other comments highlighted that transitional protection plans could lead to inequality for families that have the same circumstances and earnings, with some receiving FSM through transitional protection and others not able to receive FSM because they have never previously been eligible, with calls for transitional protection to be reviewed annually to ensure that all who need it receive it, rather than continuing eligibility for those whose employment situation has improved.

We have also gained insight from the pre-consultation engagement activity on the new Child Poverty Strategy for Wales. This pre-consultation exercise has included engagement with 3,358 children, young people, and families with lived experience, including 1,953 with protected characteristics. Food poverty was a common theme, with the cost of food, particularly healthy food identified as an issue and evidence about use of Food Banks and other free or low-cost food offers. Additionally, the Children’s Commission for Wales report Ambitions for Wales survey highlighted that food was a major concern amongst the 8,000 children and young people surveyed, for example, 44% of children aged 7 to 11 and 25.9% of children aged 11 to 18, are worried about having enough food to eat. 

In addition, local authorities who deliver the order on behalf of Welsh Government, raised concerns about the increased administrative burden of the transitional policy during research that informed the development of a best practice toolkit for simplifying application processes for local authority administered benefits. Several local authorities report that their current processing systems struggle to manage FSM claims that are transitionally protected. As a result, some have resorted to managing their caseload manually using spreadsheets which can be labour intensive and increases the risk of error within the eFSM and TP data sets.

What are the most significant impacts, positive and negative?

The people most likely to be affected by this proposal are children and young people (the specific cohort potentially affected is identified earlier in this IIA).

Positive impacts by extending the order would include:

  • Some additional children having the ability to access a meal during the school day, preventing poor physical and mental health.
  • Reduced anxiety for some families and reduced food insecurities for some children.
  • Some parents would be better able to provide essential needs for children.
  • Some families and children not having to ‘go without’ other necessities. For example, heating the house, parents and other family members going without food, ability to access opportunities.

In the absence of an extension to TP, all those currently protected by the policy would continue to be protected to the end of current stage of their education, and most children in primary school would continue to access a free meal through UPFSM, with this position extending to all primary school children from September 2024.

If TP is not extended, this will disproportionally impact secondary school children, specifically the estimated 1,000 pupils entering year 7 in September 2024 that could lose FSM eligibility solely due to migrating to UC, around 2,600 children that will lose their transitionally protected free school meal entitlement in summer 2024 as they reach the end of their primary education, as well as the secondary school children that become newly eFSM from 1 January 2024 or retain their eFSM as they transfer from primary school as they will no longer being protected if their circumstances change including if household earnings increase above the £7,400 threshold.

This threshold has not kept pace with the increases in the national living wage and is also lower than the £8,040 minimum earnings requirement imposed through the Universal Credit claimant commitment (families with work search requirements earning under £8,040 per annum are required to search for additional hours/better paid work or risk sanctions).

In line with the Programme for Government commitment, work has been undertaken to review the eligibility criteria for free school meals including the £7,400 threshold. This work is nearing its final stages and has encompassed reviewing the secondary school meal offer, alongside our policy on TP. It has also involved consideration of other aspects of food in schools’ delivery and the wider food in schools offer.

In light of the impacts identified, how will the proposal maximise contribution to our well-being objectives and the seven well-being goals and/or avoid, reduce or mitigate any negative impacts?

The most significant impact of extending the order would be to help ensure that children and young people in Wales are potentially not going hungry during the school day. The policy would represent a further step to reaching our shared ambitions of tackling child poverty and contribute significantly to the well-being objectives of a healthier Wales by working towards reducing health inequality (see 2.5), and a more equal Wales as set out in the specific impact assessments on equality and socio-economic disadvantage. It also may support the Welsh Government’s well-being objective “eliminate inequality in all of its forms”. However, given the small number of families at risk as a result of not extending TP, a more targeted approach would be to explore options for local authorities to use their discretionary powers not to charge for school meals in specific circumstances.

The Programme for Government commits us to continue to meet the rise in demand for Free School Meals resulting from the pandemic and review the eligibility criteria, extending entitlement as far as resources allow. This work is underway with the immediate focus on extending entitlement via the roll-out of Universal Primary Free School Meals. In rolling out the offer we are learning valuable lessons that will inform any future plans in relation to expanding the free school meal offer further.

Beyond the identification of sufficient budget, several other challenges mean an expansion of provision in secondary schools would require extensive preparation before delivery could commence (minimum 12 months). These include: the potential need for a new Wales eligibility checking system if adopting a different threshold compared to the UK Government, significant logistical and capacity challenges for schools and local authorities (who are focused on the roll-out of UPFSM), unknown estimated capital costs and the need for the development of workforce, communications, and investment plans.

Alongside this, and to further reduce the risk, the Welsh Government continues to support people with the increased cost-of-living by providing targeted help to those who need it the most and through programmes and schemes which put money back in people’s pockets. This ranges from free prescriptions and free swimming to helping hundreds of thousands of people with their council tax bills. Welsh Government provides cash payments to people facing financial emergencies and fund money and debt advice and credit unions. During 2022 to 2023 and 2023 to 2024, this support was worth more than £3.3bn. This approach continues to assist low-income households, by increasing their disposable income which can then be redirected to feed their children during the holiday period.

The Welsh Government has also recently concluded its consultation on the Draft Child Poverty Strategy, which set-outs five objectives and outlines a suite of action Welsh Government is taking to deliver on these, Objectives 1 and 3 are of particular relevance:

  • Objective 1: to reduce costs and maximise the incomes of families.
  • Objective 3: to support child and family wellbeing and make sure that work across Welsh Government delivers for children living in poverty, including those with protected characteristics, so that they can enjoy their rights and have better outcomes.

However, it is important to note the that the main source of income for these families is through the UK benefit system which provides financial support at a subsistence level. There are also some Welsh Government financial support packages available. Alongside this, Social Services, and other core welfare functions, will step in if children are at risk and in need of support.

How will the impact of the proposal be monitored and evaluated as it progresses and when it concludes?

The proposal is to take no further action and to not extend the TP order beyond 31 December 2023. The Welsh Government will continue to work closely with key delivery partners and those representing the interests of children and young people including schools and local authorities, as well as the WLGA, to monitor the impact of this decision alongside our cross-government approach to child poverty. TP numbers will continue to be measured and monitored and continued dialogue with local authorities and schools will help provide local intelligence to further understand the impact of the proposal.