Introduced in 2020 to help improve the fortune of the hospitality industry, “Eat Out to Help Out” (EOTHO) proved very popular. Should it be brought back for the start of the new academic year?
Compared with 2019, bookings between Monday and Wednesday were up by more than half (53 per cent). On the final day of the scheme, bookings were up by over triple (216 per cent) compared to 2019. Businesses applauded the scheme too, with 80 per cent saying that it improved trade, and 71 per cent saying that they would like to see it repeated in the future. On a political level, it made Rishi Sunak very popular, earning him the nickname “Dishy Rishi”.
But should it be repeated? Much to the surprise of readers, no, it should not be. Compared with August 2020, the UK’s finances are in a much worse situation, and also the UK’s recovery is strong enough without this. Furthermore, while such a scheme would be popular, particularly among students, those who go out are likely going to be spending money anyway.
Firstly then, the UK’s financial situation. It is safe to say that is much worse than it was this time last year, due to the extra borrowing to continue initiatives like the furlough scheme. Furthermore, businesses have been shut for longer, meaning that they have been unable to make the same level of profit, and thus the government has not been able to collect the same level of tax. Between April 2020 and April 2021, the government borrowed nearly £300 billion, which is the highest since records began in 1946. Borrowing is expected to be less this year but is likely to be over £200 billion. This level of borrowing has pushed overall debt to £2.2 trillion, which is 99.7% of GDP.
Looking at EOTHO specifically, the scheme was forecast to cost £500 million by the Treasury, however, the scheme cost over £800 million by the time it was over. Ignoring the fact the forecast was off by 300 million, the UK simply can’t afford another scheme like EOTHO. Manifesto breaking tax rises show this even more damningly, and there may yet be more rises in tax.
Secondly, while it would undoubtedly save students money, they do not need extra incentive to go back out, and neither does anyone else. As soon as pubs opened on April 12 people flocked back, and when indoors hospitality opened on May 17 there was a second rush of people. According to Lumina Intelligence, the UK eating out market will exceed pre-pandemic levels by the end of 2022. And even though the Government should not run EOTHO to hasten this goal, it does not mean they are not helping in other ways. Back in July, the government released a new hospitality strategy, which was praised by both Kate Nicolls (CEO of UK Hospitality) and Emma McClarkin (CEO of British Beer and Pub Association).
Looking at the recovery of the UK more broadly, the Organisation for Economic Co-operation and Development announced that between April 1 and June 30, the UK had the fastest GDP growth in the G20 at 4.8 per cent. Results for the 3third quarter (July 1 to September 30) are yet to be released, but they are bound to show similar promise. This would suggest schemes like EOTHO are unnecessary.
Finally, while this scheme had a positive impact on customers, it is important to note the impact it had on staff as well. There were stories of “increased hostility towards staff” and because of the higher demand, it led to a surge in staff feeling under physical and mental stress. Now, couple this with the naturally busier time that freshers is, no doubt staff would feel even more under pressure.
Since the majority of bar and restaurant staff are students and young people, many of whom will be going through the process of starting or returning to university, is it worth putting them under strain, just so half-price meals could be enjoyed? No, it is not.
Mental health, the worsened state of the UK’s finances, and the fact students do not need extra encouragement to contribute to the economic recovery mean that EOTHO should not be brought back. The scheme would be an unnecessary inclusion to the UK’s post-pandemic recovery, and this time around may cause unintended consequences.
This is an opinion piece and the author’s views do not necessarily reflect the views of Platform Magazine.
Lead image: Get Wavy.