Labour is set to demand more money for councils in Tier 3 as its price for backing Boris Johnson’s route out of lockdown in the Commons.
Anneliese Dodds, the shadow chancellor, will warn on Saturday that communities in the highest restrictions will be “stretched to breaking point” and miss out on millions of pounds in financial support.
It is understood that Labour’s support for the Prime Minister’s proposed measures would be dependent on whether the Government decided to extend the Additional Restrictions Grant (ARG).
Sir Keir Starmer, the party’s leader, is expected to make a decision on whether to back the winter plan next week and his support could be crucial with up to 80 Tory MPs expected to rebel.
Labour analysis has found that local authorities in the North and Midlands are most likely to miss out on ARG funding.
Birmingham would see support fall by £2.4 million weekly, with Leeds the next worst affected, missing out on £1.7 million in funds for every seven days it is in Tier 3.
The ARG, a one-off payment of £20 per head, was made available to local councils to distribute if businesses could prove the restrictions had severely damaged their revenues. It was originally given to councils in parts of the country in the highest tier, acknowledging the fact that businesses in areas subject to tougher restrictions would need additional support.
When the whole country went into lockdown last month, it was given to every local authority. However, the Department for Business, Energy and Industrial Strategy (BEIS) has confirmed that the payment will not be topped up and can be used until the end of the 2022 financial year.
Labour analysis claimed that County Durham – which contains key “Red Wall” Tory seats – would miss out on £1.3 million weekly without an expansion, while Manchester would see a fall of £678,000.
In an address to Labour’s online regional conference, Connected North West, Ms Dodds will say that “a gulf in support” is opening up across the country and call for the ARG fund to be extended.
She will add: “It is completely irresponsible for the Government to leave Tier 3 areas in the lurch like this again. The run-up to Christmas is a critical period, and local authorities are going to be stretched to breaking point trying to help.
“The Government’s approach is fundamentally unfair and risks a gulf in support opening up across the country. The Chancellor must make the responsible choice and come forward with a clear system of business support for the hardest-hit areas.”
Ms Dodds will also call for support to be paid retrospectively to areas such as Liverpool and Greater Manchester – which entered the highest restrictions weeks before the national lockdown – to make up for the shortfall in the ARG payment.
A BEIS spokesman said: “This analysis is misleading and fails to take into account a host of other support measures that we have made available, including grants of up to £3,000 for businesses that are required to close due to Tier 3 restrictions.
“We understand the pressure businesses are currently under and have acted to support them through the pandemic with a £280 billion support package which is among the most generous in the world.”
Meanwhile, Nickie Aiken, the Conservative MP for the Cities of London and Westminster, met Alok Sharma, the Business Secretary, this week to examine whether the capital was being “short-changed” by the grant.
Businesses had raised concerns that the one-off fund is allocated per head despite many London boroughs containing more businesses than other parts of the country. Six of the 10 areas receiving the lowest payments per business are in London, including Westminster, Camden, Kensington and Chelsea, Islington and Hackney.
Ms Aiken said: “The meeting with the Business Secretary was extremely positive. He completely understood the issue with the formula for central London. He has given me assurances that he will speak to officials to see what can be done.”