Hertfordshire County Council's school meals company made loss of £1.2m

A Company set-up by Hertfordshire County Council to provide school meals made losses in excess of £1 million in 2022/23, according to latest published accounts.

Hertfordshire Catering Limited was set up by the county council in 2013 – supplying “healthy and nutritious” meals to hundreds of schools within the county.

And any profits generated by the company are invested into other council services.

But the latest available accounts show that in 22/23 the company made an annual loss of £1,272,883.

According to the accounts – which have been filed with Companies House – the “extraordinary” cost and trading challenges in 22/23 represented “the biggest pressure on HCL’s operational finances since the company was established in 2013”.

However the Local Democracy Reporting Service understands that accounts for the 2023/24 financial year – which have not yet been published – will “show a much improved position”.

The strategic report attached to the published accounts highlights a range of factors that impacted on the company in 2022/23, including the war in Ukraine, inflation and Brexit.

According to the report, the conflict in Ukraine pushed UK inflation to a 41 year high – with “specific spikes in food costs, fuel and energy prices”.

There were, it says, “huge spikes and volatility” in key areas such as the cost of eggs, cheese and pasta – as well as increases relating to cleaning materials and repairs.

And government funding for universal infant free school meals, it says, “only” increased by 2.9 per cent in September 2022 – “falling short of the inflationary pressure on all areas of cost”.

The report points to the impact of increases in the National Living Wage – which “have driven up labour costs” – and pressures to recruit and retain staff.

It says Brexit, lockdowns and changing working patterns have “eroded the UK’s hospitality workforce”.

Also highlighted is the impact of ‘unplanned’ closures for the Platinum Jubilee and funeral of Queen Elizabeth II, plus some closures due to snow and others as a result of the teaching unions’ strike action.

According to the report, the company sought to absorb cost increases and “redesign services” to minimise price increases for customers.

But it says that “due to the unprecedented nature of inflationary pressures, it was necessary to increase charges to customers to maintain levels of service and quality”.

A spokesperson for the council highlighted the “significant cost and trading challenges over the last few years”.

But they said the accounts for 2023/24 were expected “to show a much improved position”.

“The county council set up Hertfordshire Catering Limited to provide healthy and nutritious meals to pupils in schools and colleges across Hertfordshire and beyond, with any profits being invested into other council services,” they said.

“Like many businesses, HCL has experienced significant cost and trading challenges over the last few years, with factors including inflation, the impact of the conflict in Ukraine on food prices, and below inflation increases in government funding for school meals combining to put enormous pressure on the company’s finances.

“We continue to support HCL as it moves to a sustainable financial position while continuing to provide healthy and nutritious meals.”

The 2023/24 financial year is now complete, but accounts are not yet finalised or publicly available.