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Assessing some of the impacts from the Eat Out to Help Out scheme on the economy

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Eat Out to Help Out had a limited effect on footfall and recruitment. Similar policies need to be implemented at the right time to effectively accelerate the economic recovery.

The Eat Out to Help Out (EOTHO) scheme was introduced to support the recovery after the first national COVID-19 lockdown. It aimed to boost demand and protect jobs in the food service sector. Participating businesses in EOTHO offered a 50% discount from Monday to Wednesday in August 2020, up to £10 per person, on food and non-alcoholic drinks consumed on the premises.

Measures of footfall and recruitment suggest EOTHO had a limited effect on the economy

In recent work, my colleagues and I show that EOTHO induced 5%-6% more people to visit retail and recreation venues than would have been expected, and this rise was concentrated on specific days when the discount was available (Mondays to Wednesdays in August). However, the programme failed to encourage people to go out for other purposes or to eat out after the discount ended. Also, we observe a temporary increase in the number of jobs adverts by 7%-14% on the Indeed jobs website in the ‘food preparation and service’ category. As with footfall, we did not find evidence of an increase in the number of job posts in other industries, suggesting the effect on recruitment was concentrated on food establishments.

We looked at the impact of the programme on footfall using daily mobility data from Google and on employment using daily data on job posts from Indeed UK. Given the policy objectives of EOTHO, an increase in the demand for food services is likely to be reflected in higher levels of footfall in recreational activities and more jobs adverts as restaurants, pubs and cafes may hire more staff. Despite these not being ideal outcomes for measuring the direct impact of the programme on the economy, both indicators are timely and helpful to understand some of the effects of the scheme.

Figure 1: variation in take-up of EOTHO across the UK

Note: The figure presents the take-up rate by the end of the scheme on 31 August 2020 for every parliamentary constituency in the UK. The darker the colour, the higher the take-up rate. Source: Authors’ calculation with data from HMRC’s GitHub repository.

Our approach relies on the observed spatial variation in uptake, as not all eligible businesses participated in the programme. As Figure 1 shows, there were higher levels of participation in Scotland, Northern and South West England. We use this spatial variation to understand the impact of EOTHO, comparing locations with different levels of take-up before and after the introduction of the policy.

A deeper analysis is needed to conclude if the scheme was good value for money

Over 160 million meals were claimed by the end of September 2020, with government spending £849 million on EOTHO. While our results provide evidence on some of the economic impacts, they cannot alone help determine whether EOTHO was a good policy alternative. Several questions remain unanswered due to lack of more comprehensive data on key outcomes:

  • We do not know if job posts meant new jobs, and if so, whether the new hires remained in employment after the programme ended.
  • We also do not know if EOTHO increased turnover or the probability of firm survival.

Moreover, the footfall data from Google could be biased towards younger and better-off individuals, who may also be more inclined to go out. Similarly, online job posts may be biased towards larger businesses, which are also more likely to have capacity to hire more staff. If this is the case, our results may overestimate the overall impact of EOTHO. Detailed secondary data sources (e.g. the Inter-Departmental Business Register) will allow us to address these problems. But they have a reporting lag of at least a year, so cannot yet be used to measure the effect of the programme on firm survival, turnover and employment.

These issues, as well as the interaction between different policies (e.g. the Coronavirus Job Retention Scheme) complicate any cost-benefit calculation of the programme. On top of that, there is evidence indicating the increase in footfall due to EOTHO had an adverse effect on new COVID-19 cases. Thus, any economic gains from the scheme may have come at the cost of more infections. Further research –using administrative data– is needed to assess the overall cost-effectiveness of EOTHO and similar programmes aimed at supporting the economic recovery after COVID-19 lockdowns. This is crucial given the limited evidence available to guide policy responses, the high uncertainty of the context and the large amount of resources spent on many interventions.

Identifying the correct timing is key for implementing programmes similar to EOTHO

Lockdown measures, while needed to save lives, pose a major threat to the survival of firms and to employment of many people. The policy debate must consider how best to support the recovery once lockdown restrictions are relaxed. Policies from local governments aimed at shifting people’s behaviour, as EOTHO intended, need to carefully assess whether they are appealing for businesses and implemented at the right time. Only 25% of eligible food outlets participated in EOTHO, which is less than half of what the UK government expected. So, it is important to consider mechanisms for achieving a high take-up among businesses. This requires increasing awareness of programmes and facilitating the enrolment process. Encouraging people to go out in a sustained way needs considering if the conditions are appropriate. The rollout of the COVID-19 vaccine is likely to minimise risks and help improve confidence. Yet, it is not clear the pace at which this could happen and what restrictions will need to stay in place over the medium-term. Local policies designed with the correct mechanisms and implemented at the right time could be effective at (re)building the confidence of people for going out and ultimately accelerate the economic recovery.

Note: a version of the above blog was first published on the Centre for Economic Performance (CEP), London School of Economics (LSE) website