The Guardian view on ‘eat out to help out’: junk policy

Among the commandments of economics is that there is no such thing as a free lunch. But how about one that’s half price? Starting this week, that’s the deal Rishi Sunak, the chancellor, is offering the public: eat in at a restaurant between Monday and Wednesday and enjoy 50% off every meal, up to a maximum of £10 each. The cheesily titled “eat out to help out” scheme is intended to get a coronavirus-ravaged country used to the notion of dining out once again, and to keep a fast-sinking hospitality industry afloat. As politics, it has the rare dual advantage of being novel and easy to understand. As policy, however, it is glib, gimmicky and, even Mr Sunak admits, a waste of millions of pounds. Junk, then, served up by a politician who should know much better.

Treasury officials recoil from “picking winners” and bailing out individual sectors, yet after the 2008 crisis they threw billions at the banks. This time the hospitality sector is receiving emergency treatment. They certainly need it. The day after Mr Sunak launched his new scheme, Pizza Express announced that it is to shut up to 70 of its outlets and shed up to 1,100 workers. More than half – 56% – of all workers in the restaurant and hotel industry are furloughed, according to the latest figures from the Office for National Statistics, while over one in three companies only have enough cash in reserve to last until early October.

Even before the pandemic, British high streets had plenty of chains that sold pretty much the same thing at the same price. And some of the biggest names were loaded up with debt by their private-equity owners. But now is certainly crunch time. With city centres still almost empty of commuting workers looking for lunch, or revellers on an evening out, the sector cannot hold on much longer.

Hence the chancellor’s attempt at a kickstart. But his error is in treating the slump in trade as driven by cost, rather than caution. Discounts and VAT cuts (which the Treasury has also given to the hospitality sector) will not lure out those diners who are worried that they may pick up a lethal virus, or that they may be about to lose their job. Others will take up the government’s offer by enjoying a slap-up meal at a discount on a Wednesday night rather than at full price on a Friday, thus defeating the entire purpose of the policy. This issue and others is why the UK’s top taxman, Jim Harra, wrote to Mr Sunak last month to warn of “the uncertainty surrounding the value for money of this proposal”. The chancellor replied, “I recognise the Managing Public Money issues”. Astonishingly, his public admission that a good chunk of half a billion pounds of public money might be wasted this month has had hardly any attention.

Five hundred million pounds could be spent far more usefully than to earn Mr Sunak a couple of waiting shifts in front of Fleet Street photographers. His government had to be shamed into funding a far smaller scheme to feed poor children over the summer holidays. If No 11 wants to preserve workers’ living standards, it should listen to unions, businesses and economists, and extend the furlough scheme rather than bringing it to an abrupt halt. As it is, this dining scheme leaves a nasty aftertaste.