U.K. Plan to Help Restaurants May Cost More Than Estimated
U.K. Plan to Help Restaurants May Cost More Than Estimated
(Bloomberg) -- Chancellor of the Exchequer Rishi Sunak’s plan to help get customers back into U.K. restaurants after the coronavirus lockdown may cost more than the 500 million pounds ($660 million) initially estimated by the Treasury, a person familiar with the matter said.
The “Eat Out to Help Out” initiative pays for 50% of the cost of meals eaten in restaurants, up to a maximum of 10 pounds, on every Monday, Tuesday and Wednesday in August. Statistics released on Tuesday showed that in the first three weeks of the program, 64 million claims totaling 336 million pounds had been made.
The official, who declined to be named discussing yet-to-be processed data, said that because of a lag in restaurants applying for the funding, the eventual sum may exceed the Treasury’s estimate when announcing the policy in July. The person said officials are “delighted” because every pound spent in restaurants gives a better chance of protecting millions of jobs in the hospitality sector.
There are already some rumblings of discontent in the Conservative Party after the government’s coronavirus assistance programs helped push the national debt over 2 trillion pounds for the first time, and Sunak will be under pressure to show how he intends to rein in spending when he unveils a budget in the fall.
But the support for restaurants represents a drop in the ocean of the total the cost of government aid to workers and businesses to weather the coronavirus pandemic. The Office for Budget Responsibility estimates the cost at 192 billion pounds so far, and Sunak has warned of “tough times” and “difficult choices” ahead as he begins to unwind the various assistance programs.
And the Treasury had already made allowances for the restaurant program to go over budget, indicating when it announced the policy that the final cost could be “lower or higher” than its central estimate, based on take-up of the program.
©2020 Bloomberg L.P.