11-07-2025
Labour's ‘ludicrous' state-funded restaurants plan sparks backlash
Labour's plan to launch state-funded restaurants has sparked a backlash from hospitality chiefs who have branded the move 'anti-business'.
Hugh Osmond, a serial restaurant entrepreneur who co-founded Pizza Express, said plans for government-backed Second World War-style diners were a 'ludicrous idea', arguing the restaurants would 'cost a lot of money, provide absolutely terrible food and, in the end, fail'.
Luke Johnson, restaurant entrepreneur and chairman of Gail's, said the industry was already 'highly competitive', adding: 'The very idea that state-backed restaurants could operate more efficiently than the private sector is surely a bad joke.'
Ministers this week said they were trialling new state-funded restaurants that would serve meals for as little as £3 in Nottingham and Dundee. The diners, which have received £1.5m of taxpayer funding, will resemble the subsidised civic kitchens of the 1940s.
Peter Kyle, the Science and Technology Secretary, said the aim was to 'actively explore the best ways to get healthy food into the mouths of those who need it'. The trial could lead to the launch of similar schemes if successful.
While the restaurants are targeted at poor households who struggle to access nutritious food, Anna Chworow of Nourish Scotland, which is behind one of the schemes, told the i paper the restaurants were 'aimed at everybody – the way a bus, library or public park is'. It suggests state-backed restaurants could compete against private businesses.
Mr Johnson said: 'Politicians and civil servants should focus on their core activities like defence, law and order and education – and run them more effectively, rather than ludicrous displacement activity like 'state-sponsored diners'.'
It comes as many restaurants struggle to stay afloat in the wake of the Government's tax raid earlier this year.
Tough times for hospitality
Figures have suggested that more than one in 10 restaurants are at risk of closure this year following the Chancellor's decision to raise National Insurance contributions and push up the minimum wage in April. More than 4,000 restaurants were forced to shut last year.
UKHospitality has estimated that the Budget has cost the industry as much as £3.4bn extra each year.
Kate Nicholls, chief executive of UKHospitality, urged ministers to turn their attention to easing pressures for existing restaurants rather than setting up state subsidised rivals.
She said: 'You've got a third of the sector operating at a loss. The key thing here is the Government should focus more of its attention and resources on tackling the underlying causes of that.
'Fundamentally, the better way to help will be to get out of the way, and not add extra costs and regulatory burdens like packaging taxes, tourism taxes, employment taxes.'
It comes amid concerns that further regulation is on the horizon. The Telegraph recently revealed that Labour is drawing up plans to compel large restaurant chains and fast food giants to cut diners' calories.
The proposals are being looked at as part of a broader obesity strategy launched by the Government, which will also set new targets for supermarkets to stop shoppers buying so many sugary and salty snacks.
Under the new plans, large chains and fast food giants are expected to have to report how many calories customers consume on average, and show how they have reduced that number.
Ms Nicholls last month said the sector had been 'totally blindsided' by the plans.
Phil Thorley, boss of Kent pub chain Thorley Taverns, said ministers needed to 'give publicans and restaurateurs a chance'.
He said: 'Hospitality has been hit hardest by the National Insurance contributions and the increase in national minimum wage and the Government is now trying to run restaurants. They can't run the country.'
The boss of a restaurant group that operates dozens of locations across the country told The Telegraph: 'This is just another example of an anti-business government making ill-thought-through decisions. Ultimately this will cost the very people they are trying to help by reducing employment prospects in a sector that employs so many people.'
Another described the state-funded restaurants plan as 'totally ridiculous' and said it would 'cost a lot of money, be utterly s--- and fail miserably'.
A Government spokesman said: 'This is a complete misrepresentation of this project – which is a limited-time research pilot, exploring ways of getting low-cost nutritious food to those who need it most, to help people live healthier lives.
'The Government is backing hospitality businesses and permanently cutting business rates, including for restaurants, to help ease the pressure on the sector and help it grow as part of our Plan for Change.'
