Why is Wirral Council being charged £49,047.35 a month for VAT on school meals by Edsential Community Interest Company?

Why is Wirral Council being charged £49,047.35 a month for VAT on school meals by Edsential Community Interest Company?

Why is Wirral Council being charged £49,047.35 a month for VAT on school meals by Edsential Community Interest Company?

                                                   

Wirral West Constituency Committee 30th June 2016 Left Cllr Jeff Green Chair Right David Armstrong Assistant Chief Executive
David Armstrong (right) Assistant Chief Executive (a company director of Edsential Community Interest Company) at a recent meeting of the Wirral West Constituency Committee (30th June 2016)

Updated 15#47;8#47;16 following responses by Edsential and Wirral Council

Below is an invoice from Edsential Community Interest Company to Wirral Council for school meals in December 2015 and operation charges from December 2015 to March 2016.

Edsential invoice to Wirral Borough Council 2nd January 2016 Wirral Schools meals and operation charges £404084.10
Edsential invoice to Wirral Borough Council 2nd January 2016 Wirral Schools meals and operation charges £404084.10

I’m puzzled as to why the school meals element for £245,236.75 attracts VAT at 20%, when Her Majesty’s Revenue and Custom’s guidance note on VAT on school meals would seem to (at least by my reading) state that school meals (apart from those to staff and visitors) are exempt from VAT.

Therefore I’m puzzled why this element of the bill attracts VAT of £49,047.35, when surely the amount should be different than this (if it was just for staff and visitor meals)?

However Wirral Council’s paid the VAT on the school meals charge from Edsential. This is per a month (and some of December no school meals will be served because of the Christmas holidays), so over the year it means the VAT could be a few hundred thousand?

This is well below the level of materiality or triviality which is why it probably doesn’t get picked up routinely, after all Edsential is a relatively new arrangement.

But when the taxpayer is funding free school meals, what’s the correct tax situation?

Both Wirral Council and Edsential have been in touch since this article was written and their responses are below.

Wirral Council reclaim the VAT back from HMRC and state that no VAT is charged to pupils for school meals, Edsential claim the VAT they charge Wirral Council is correct.

Updated 13/8/16 A reader, h/t to Nigel Draper points out this explanation about how VAT on school catering works from a different local authority.

Updated: 12/8/16 some replies on Twitter state that if Wirral Council was providing these services to schools then the catering services would be exempt from VAT, however the issue of whether schools are exempt from paying VAT on catering services are in related to a limited company owned by two local councils rather than the Wirral Council itself.

Updated 15/8/16:

Ian McGrady (Managing Director) of Edsential has responded with, “As a matter of policy we do not comment on commercially confidential relationships with our customers. However, I can confirm that our management of VAT complies with all HMRC guidance appropriate to our status as a Community Interest Company.”

Peter Molyneux of Wirral Council confirmed that when Metro Catering (an arm of Wirral Council) were providing a school meals service then VAT was not chargeable. Now Wirral Council contract with Edsential, Edsential charge Wirral Council VAT which Wirral Council then claim back from HMRC.

So Wirral Council do pay the VAT, but then claim it back on their monthly VAT return.

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Police and Fire Collaboration Committee meet today to discuss consultation response and shared services

Police and Fire Collaboration Committee meet today to discuss consultation response and shared services

Police and Fire Collaboration Committee meet today to discuss consultation response and shared services

                                                                

Merseyside Fire and Rescue Authority Police and Fire Collaboration Committee 1st September 2015 Left Jane Kennedy (Police and Crime Commissioner for Merseyside) Right Sir John Murphy (Chief Constable, Merseyside Police)
Merseyside Fire and Rescue Authority Police and Fire Collaboration Committee 1st September 2015 Left Jane Kennedy (Police and Crime Commissioner for Merseyside) Right Sir John Murphy (Chief Constable, Merseyside Police)

The Police and Fire Collaboration Committee, which met last month and was adjourned is meeting again today to consider two items.

The first item is a response to the government’s Enabling closer working between the emergency services consultation, a consultation I previously wrote about on this blog under the headline Why is the government consulting on abolishing fire and rescue authorities in England?

The proposed responses to the consultation questions are part of the papers for the meeting. The same report and consultation response is also on the agenda for tomorrow’s meeting of the Merseyside Fire and Rescue Authority (agenda item 9).

Consultation question 2 deals with whether the functions of the Merseyside Fire and Rescue Authority should be transferred to the Office of the Police and Crime Commissioner for Merseyside. However in the proposed response to the consultation Merseyside Fire and Rescue Authority have made it clear that they are against this.

I am quoting from a longer proposed response to consultation question 2. FRS means Fire & Rescue Service. PCC means Police and Crime Commissioner.

“Merseyside Fire and Rescue Authority (MFRA) wish to make it clear within this response that they have no intention of ceding responsibility of the FRS to the PCC. MFRA believe that as a result of their in depth understanding and experience of the FRS they are best placed to provide the political leadership necessary to support the Service through the next round of budget cuts.”
  

The second substantive item on the agenda of the meeting is what’s called the Emergency Services Collaboration Programme which according to section 13 of the report there is “the potential for significant impact on the staff of
both organisations”
. The organisations that refers to are Merseyside Police and Merseyside Fire and Rescue Service. Appendix 1 (Blue Light Collaboration Opportunity Assessment) to the report implies that some of the savings from shared services between the two organisations will come from staff costs within the two organisations.

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EXCLUSIVE: Wirral Council spent £16,412.04 on legal advice for Birkenhead Town Centre regeneration

EXCLUSIVE: Wirral Council spent £16,412.04 on legal advice for Birkenhead Town Centre regeneration

EXCLUSIVE: Wirral Council spent £16,412.04 on legal advice for Birkenhead Town Centre regeneration

                                                 

Indicative illustration of Neptune Development Limited's masterplan for Birkenhead Town Centre
Indicative illustration of Neptune Development Limited’s masterplan for Birkenhead Town Centre

Invoices published below for the first time today show that Wirral Council spent £16,412.04 with Weightmans on legal advice on proposals for redevelopment of Birkenhead Town Centre. Advice was given by Weightmans to Wirral Council on the preferred development agreement (later referred to as a lock out agreement) with developers Neptune Developments Limited.

Wirral Council’s Cabinet agreed last month to consult staff at Europa Pools, which might be relocated as part of the regeneration proposals.

Wirral Council invoice Weightmans £3,328.32 29th July 2013
Wirral Council invoice Weightmans £3,328.32 29th July 2013
Wirral Council invoice Weightmans £4,482 2nd April 2013
Wirral Council invoice Weightmans £4,482 2nd April 2013
Wirral Council invoice Weightmans £735.48 30th August 2013
Wirral Council invoice Weightmans £735.48 30th August 2013
Wirral Council invoice Weightmans £960 8th October 2013
Wirral Council invoice Weightmans £960 8th October 2013
Wirral Council invoice Weightmans £1929.60 28th June 2013
Wirral Council invoice Weightmans £1929.60 28th June 2013
Wirral Council invoice Weightmans £4976.64 27th March 2013
Wirral Council invoice Weightmans £4976.64 27th March 2013

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5 questions answered about the Lyndale School closure plans

5 questions answered about the Lyndale School closure plans

5 questions answered about the Lyndale School closure plans

                                              

The Wirral Globe has just arrived through my door and in it is a letter from a Keith Crowden of Upton titled “Any Answers?” although in the online version its “Any answers on Lyndale?” .

Keith Crowden of Upton asks:

1) How many pupils go to the school and how many teachers and other staff are there at present?

Wirral Council state that there are now 21 pupils on the roll at Lyndale School (as of yesterday 30th September 2014). However it is noted that a number of these will reach secondary school age next year and will not be directly affected by the proposed closure in January 2016.

Reference: section 8.1 of this letter from Surjit Tour published yesterday.

According to the Lyndale School website there are 19 teaching assistants and 3 teachers at the school. However this information might be out of date. It is possible there are other staff too that are not listed on its website. However only The Lyndale School could answer the actual current number about how many teachers and other staff are now employed on this particular day as this number fluctuates. My own guess is that the total number of staff is somewhere between twenty-two and thirty-five (I am assuming you are referring in your question to paid staff and not volunteers).

2) How many different schools are likely to be used for the transfer of the children if the school is closed and would the attention they receive now be diminished in another environment?

Stanley School and Elleray Park have already been named as alternative schools so at least two, however some parents have said they will not send their children to either of those schools if Lyndale School closes. So the number of different schools if it was closed that the children at Lyndale School would go to is likely to be a number between three and six. In theory it could be as high as twelve, but that’s highly unlikely.

In answer to the second part of your question, if the school was closed and the pupils were transferred to either Elleray Park or Stanley School, then Wirral Council plans to spend less money on a per pupil basis than Lyndale currently receives. Currently Lyndale School receives on average ~£33,000 per pupil, this would drop to between ~£17,000 per a pupil to ~£26,000 per a pupil depending on which one of five new bands that particular former Lyndale School pupil is assessed in based partly on their EHCP (Education, Health and Care Plan).

However if Lyndale School shut and the former Lyndale pupil/s was transferred to an independent special school, the amount received per a pupil would be uncapped. If the former Lyndale School pupil went to a special school outside of Wirral (bear in mind Lyndale School is in Eastham very close to the edge of Wirral so it is a possibility parent/s would choose placements outside of Wirral) the amount would also be uncapped based on the current policy.

This is because Wirral Council’s current policy is to not have a cap on funding for independent special or out of borough special placements, but they intend to introduce a cap for special pupils in schools on the Wirral Borough from next year assuming they get agreement to this from the various decision-making bodies.

This reduction in funding will probably lead both to less staff time available per a child and/or a reduction in other costs that the school has. That is the view of the parents, some councillors, staff and other people replying to the consultation. However Wirral Council takes a different view on this point.

I do not think it is realistic to state that education would remain the same as they receive at Lyndale School although Wirral Council would disagree with me on that point.

3) Would all children find places nearer or further away from home as at present and would transport be provided for them to go and come back from school each day?

The first part of that answer is impossible to answer until a final decision over closure is made and a parental choice is made about alternative schools. However I remember one parent stating that they moved house so that they could be nearer to Lyndale School, therefore in some cases the places would be further away from their home.

SEN Transport can be provided for pupils to go and come back from school, however some parents choose to take their children to school themselves. If your question is would SEN Transport be provided at the new schools as a choice, then the answer if yes if it was requested. However SEN Transport is not compulsory and results in a cost to Wirral Council.

4) What would happen to the present teachers and other staff if the school was closed?

They would lose their jobs, that is to say they would be made redundant as the school had closed. It would then be down to the individual members of staff to apply for jobs elsewhere if they so wished to do so at that stage.

It is to be noted that Wirral Council made an error in the consultation document in relation to what would happen to the staff if the Lyndale School closed.

Despite how the unimplemented Cabinet resolution of 4th September 2014 is phrased, no jobs are guaranteed. Any decision over employing former Lyndale staff elsewhere would be up to that school’s governing body, the usual legal processes such as filling out application forms, criminal record background checks, interviews etc and the former Lyndale staff would be in a competitive process with other applicants for any new jobs created at other schools.

Due to the funding reduction, even if all the former Lyndale School staff applied for jobs at the places where the former Lyndale School pupils had been moved to, the funding reductions would mean that there would be a reduction in posts compared to current staffing levels at Lyndale School.

5) Would the real saving come from the sale of the Lyndale premises and site?

The land and buildings are valued at £2.7 million in February 2013 by Wirral Council. However it could not be sold unless:

(a) it was declared surplus to requirements (a decision that would have to be made by Wirral Council)
(b) a buyer was found
(c) there are other decisions that would have to be made by bodies outside Wirral Council in relation to the land and buildings before a sale could proceed as it is a school. It is unknown whether such bodies would agree to it or not. For example multiple approvals would be needed from the government in relation to the land and buildings before any changes such as a sale or change of use were made.
(d) in order to change its use planning permission would be required (a decision that would have to be made by Wirral Council)

It is to be noted at this stage that the Land Registry entry for Lyndale School refers to a conveyance agreement (if memory serves correct 1952) between Cheshire County Council, a limited company and an individual. I note that prior to the creation of Wirral Council in 1974, this piece of land was in the Cheshire County Council area. Although Cheshire County Council was abolished in 2009, in 2009 its functions were transferred to Cheshire West and Chester and Cheshire East.

I do not currently have access to a copy of this document, which is lodged with Land Registry, Birkenhead. Due to public service cutbacks I have to wait for an appointment with Land Registry in order to view and request a copy of it although either Chester West and Chester or Cheshire East should have a copy when the Cheshire County Council records were transferred.

I have given as full an answer as I can to the above questions, considering that some of the detail is either not known to me, would take too long to collate or would result in me having to make enquiries of others.

There will be a public meeting of Wirral Council’s Coordinating Committee on 2nd October 2014 starting at 6.00pm in Committee Room 1 at Wallasey Town Hall to discuss the recent Cabinet decision and decide what to do next.

At the moment implementation of the decision has been put on hold pending the outcome of that meeting.

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Cabinet to decide on 6-week consultation on closure of children’s centres

Cabinet to decide on 6-week consultation on closure of children’s centres

Cabinet to decide on 6-week consultation on closure of children’s centres

                                                    

Councillor Tony Smith (Cabinet Member for Children and Family Services) at the Cabinet Meeting of 4th September 2014 L to R Cllr Stuart Whittingham, Cllr Tony Smith, Cllr Bernie Mooney and Lyndzay Roberts
Councillor Tony Smith (Cabinet Member for Children and Family Services) at the Cabinet Meeting of 4th September 2014 L to R Cllr Stuart Whittingham, Cllr Tony Smith, Cllr Bernie Mooney and Lyndzay Roberts

Now for what I promised earlier with a story about children’s centres. Basically Cabinet is going to have to decide tonight whether or not to proceed to a six-week consultation on recommendations for the early years service and children’s centres.

The proposals which may/may not go out to consultation is to try to save £2 million. Staff at risk of losing their jobs (if a decision to go to consultation tonight) will also be consulted.

Admittedly the report has the odd type, for example at 6.1 it refers to the 2104 budget which should read the 2014 budget as Wirral Council officers don’t tend to consider the budgetary implications in ninety years time of their decisions! 😀

The proposals that may/may not go out to consultation would involve the closure of at least eight children’s centres with four being downgraded to satellite/outreach. The outright closure of some could result in a grant clawback of the money Wirral Council got to build them.

Of course if the Labour Cabinet does decide to go down this path of consultation on closure, eventually a decision will have to be made.

I’m sure at that stage or even before (if consultation is agreed tonight) the Conservatives will be reminding Labour of the election leaflets they’ve put out in recent years that told the people of Wirral that the children’s centres are not safe in Tory hands so please vote Labour. 😀

Oh dear, and what will the local newspapers make of it all?

The report on that item and revised appendix can be found by following these links.

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