Government foodservice contracts under threat

A leading foodservice consultant has warned that some public sector foodservice contracts could become financially unviable if terms are cut by the Government.

Reacting to news that the government was calling in main suppliers to discuss ways of cutting the cost of their service contracts, Peter Backman, managing director of Horizons, warned: “The announcement that the coalition Government is calling in its main suppliers to look at ways of cutting some £3bn from their service contracts means that the large contractors servicing education, local authorities, prisons, the MOD and the health service could find some contracts become financially unviable to service.

“The public service market is said to be worth £80bn in the UK and while contracts are likely to come up for re-tender more regularly as clients seek to cut costs, the pressure on margins will be increased further and the customer base will be reduced as staff cutbacks kick in.

“The food and service management sector is about to undergo a massive change which could see the nature of contracts in this sector changing.”