DSOs threatened by funding cuts
FUNDING cuts now pose a bigger threat than contract caterers to school meal direct service organisations (DSOs), local authority managers were told last week.
Richard Ware, head of catering for Havering Catering Services, said more school meals caterers would have to offer nil-subsidy services in order to survive, as councils grappled with reductions in central Government funding.
Mr Ware was addressing 300 delegates at the annual seminar of the Local Authority Caterers Association (LACA), held last week at the Moat House International in Stratford-upon-Avon.
He said his DSO had come to be seen as a leading light within the council's contract services division because of the progress it was making towards nil-subsidy.
At the end of 1991 the council had given the DSO just eight months to achieve nil- subsidy for secondary school meals. That had meant reducing staff hours by 40%, raising meal prices by 20% over three years and setting food cost targets.
On the other hand, sales figures for 1992/93 were 40% higher than for the previous year, and a further 20% higher in 1993/94.
The DSO was now working towards a similar goal for primary schools, where meal uptake had risen from 30% of pupils last September to 50% in December, said Mr Ware.
"At the start of the current contract, the subsidy for primary school meals was £800,000. By the end of the contract next April, it will be zero," he said.
But Jim Walker, managing director of contract caterer BET Catering Services, said a true definition of a nil-subsidy service meant making enough money from the sale of meals to cover the client's and the schools' costs rather than just those of the contractor.
Mr Walker said BET had achieved this situation in one of its 10 local authority contracts, but declined to reveal which one.
He warned DSO managers enjoying subsidies against complacency. "While you remain a cost to other parties who have the power to remove you, your service is at risk," he said.
Ann Wallis, catering client officer for Surrey County Council, argued against nil-subsidy contracts, saying they would have led to extortionate meal prices in her area.
She had successfully fought off the loss of subsidies, and had instead persuaded her senior officer to opt for a situation where the service had to be provided for the cost of the statutory service for free meals pupils.
Mrs Wallis said the rise in the number of free school meals, combined with the costs of energy and maintaining premises, meant her department was already straining to meet its budgets.
Removing subsidies would have led to a rise in meal prices that parents would have found unacceptable, she said.
