Rishi Sunak has revealed he won’t be repeating his controversial Eat Out To Help Out scheme as the UK comes out of lockdown this year.
In evidence to MPs, the chancellor said that there was so much “pent-up” demand among consumers that there was no need to revive the meal subsidy scheme to get people spending in restaurants or pubs.
Sunak was asked by the Treasury Select Committee if he had any plans to revive the Eat Out To Help Out scheme, which entitled diners to half price meals last August.
The Treasury spent £849m subsidising 160 million meals, but later sparked a backlash from some critics who claimed it may have fuelled Covid-19 infections.
One LSE study claimed last month that any economic gains from the scheme “may have come at the cost of more infections”, and Sunak has failed to say whether any health risk assessment was conducted before launching the plan.
The chancellor said on Thursday: “I think we probably now have higher confidence that there will be consumption-led recovery even without intervention than we did before.
“Consumer confidence is at different levels and there’s actually a lot of pent-up desire.”
Under Boris Johnson’s “roadmap” out of lockdown, restaurants and pubs will be reopened for outdoor use from April 12, and then indoor use from May 17, with all restrictions removed by June 21.
Sunak told the committee: “What we saw last time around… there was an enormous worry that actually when things reopened last year that people wouldn’t have the confidence to spend even though they had the income to.
“Consumer confidence numbers back then were very bad. There was more an argument to being worried about that then. This time around, both in the UK and internationally we’ve seen you do tend to get quite a strong consumption recovery automatically.”
Experts have suggested middle and high-income households have saved a combined £180 billion since the pandemic and expect to spend at least 5%, or £9 billion, when restrictions ease.
Sunak said that by contrast, “unblocking” investment by business was his main priority in driving the recovery and said the “super-deduction” tax cut in his Budget was designed to achieve just that.
In other evidence to the committee, the chancellor also defended the government’s offer of 1% to NHS staff, claiming it was “proportionate, fair and reasonable”.
Asked if the Treasury had played a part in the offer, he stressed the policy belonged to the whole government, not just the department of health.