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Regions Under Tier 2 Covid Restrictions Are Demanding Millions From The Treasury To Save Their Businesses

Regions under Tier 2 restrictions want millions from the Treasury to save businesses (Credit: PA)

5 min read

Tier 2 local authorities will this week ask the Treasury for millions of pounds to help their businesses cope with the fallout from tighter coronavirus restrictions and run local contact tracing.

The West Yorkshire Combined Authority and Sheffield City Region, which the government is due to place into the high risk category from Wednesday, have asked for a financial package for businesses and more money to help them run a local track and trace system.  

Mayor of the West Midlands, Conservative politician Andy Street, is also set to ask for more cash from central government this week to help the region's hospitality sector. 

Seven local authorities in the North East and the North of Tyne mayor are also asking for more help for local businesses while they are in Tier 2.

Downing Street is due to hold a call with council leaders and metro mayors later this week to discuss the restrictions for their area.

So far only those regions placed into Tier 3, where pubs, restaurants, gyms and betting shops must close, are getting additional support from the Treasury. On top of the existing Job Support Scheme, VAT defereal and business rates relief, the government has said they will pay two thirds of employees’ salaries to try and protect jobs and give busineses cash grants of £3000 a month for Tier 3 areas.

Leeds City Council leader Judith Blake told PoliticsHome that she was extremely concerned that  Tier 2 categorisation does not come with additional funding to help businesses who she said are at risk of "failing".

She said they will naturally make less money if only single households can visit pubs and restaurants. Surrounding shops may also struggle because of the lack of footfall. 

"What we're really disappointed about is we don't get the support until we are in Tier 3, and at Tier 2 it's a moment where we can really demonstrate that we can support on the health side.

"If we don't get more financial support businesses will fail and we won't have the necessary means to do the test and trace, and support work for self isolation to help up to reduce infection rates."

One of the regional mayors said they may have been "suckered" into agreeing to Tier 2 restrictions, adding that talks with government about specific financial support could have been more productive.

"There was an assumption that Tier 2 would come with added support, and there is a school of thought at the moment that they are not going to put any more resources in as an incentive to go into Tier 3," they said.

It was noted that Chief Financial Secretary to the Treasury, Stephen Barclay, did not mention any more resources for the authorities when he spoke in the Commons today, however local councils are likely to put in a "shopping list" of requests regardless.

"We're not being told to close, but businesses are on the floor," they said.

Regional leaders have another call with the prime minister's senior adviser Sir Edward Lister this Friday.

West Yorkshire wants grants of up to £5,000 every three weeks for retail, leisure and hospitality businesses that have lost at least 25 percent of their income. 

They are also demanding the continuation of furlough with government contributing to wages, £3.7 million for businesses reopening and adapting to coronavirus restrictions, and £30 million to pay for contact-tracing, community engagement, enforcement, support for those self-isolating and other measures. 

South Yorkshire City Region, where Dan Jarvis MP is elected regional mayor, is asking for the cap at which the government stops its contribution to the Job Support Scheme contribution to be raised from  £697.92 a month to £1,400 a month.

They are also calling for their local directors of public health to manage test and trace in the area, suggesting they could ramp up house-to-house drop off and collection of testing kits, and plug the gaps in tracing contacts who have been missed by the national system.

Jarvis described it as a "local lockdown lifeline" and that regardless of which teir a region is places in, they need more resources to help save more lives and stop "business being put in peril".

Tory backbenchers are also unhappy about Tier 2 restrictions being brought in without extra support for pubs, bars and restaurants.

Alec Shelbrooke, MP for Elmet and Rothwell, wants the £3000 grants available for Tier 3 extended to Tier 2 regions, claiming the “industry is dying”.

Matt Vickers, Tory MP for Stockton South, said the new rules were challenging for the hospitality sector, and Julian Sturdy, MP for York Outer, said there must be more support for businesses “stuck” in Tier 2.

Chief secretary of the Treasury, Stephen Barclay, said: “We have sought to ensure, first, that they can continue trading through tier 2, while having alongside the package of support for jobs, which the Chancellor set out in our winter plan to back those jobs with Government support, as well as a cash flow package."

He said the government had also invested £12 billion in test and trace so far, and had made targeted interventions” in support of businesses in tier 2, but the government needs to balance that against a “wider fiscal position”.

An HMT spokesperson said: “We’ve put in place a comprehensive package of support to ensure people and businesses across the UK are supported over the coming months. We will continue to engage with local leaders and do what is necessary to ensure we get through the outbreak.”

The temporary VAT reduction for hospitality, accommodation and attractions is being extended to the 31 March 2021.

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