Recommendation 2

The Department was surprisingly unconcerned about whether Edenred was profiting from the voucher scheme at taxpayers’ expense, and missed potential opportunities to reduce the cost or share in the profits. The Department’s policy team worked with commercial colleagues and the Crown Commercial Service in managing the contract with Edenred. Despite extending the contract twice, and increasing its value from £78 million to £425 million, the Department did not seek to renegotiate any of the terms or introduce any profit-sharing element. The Department considered it achieved good value for money because it did not pay Edenred anything more than the face value of the vouchers issued to families. However, Edenred bought the vouchers from supermarkets at a discount, and the Department could have chosen to try and renegotiate how much it paid Edenred per voucher and so reduce the cost to the taxpayer. Although the contract included an open book arrangement, the Department did not use this to check on Edenred’s income and costs until after the end of the scheme. The Department now says that it is “very comfortable” with the level of profit Edenred made from the scheme, but has provided no figures or explanation of any kind to back up that judgement. Recommendation: The Department should strengthen its commercial skills, taking advice from the Crown Commercial Service, and take opportunities to renegotiate terms when it changes or extends contracts, in order to secure better value for the taxpayer.