Covid business grants scheme will “level down” poorest areas, warns Labour

Labour has warned that one of the business grants schemes to be introduced by the government in the Covid pandemic will “level down” the poorest areas and “betrays some of the most deprived communities under the toughest restrictions”.

Analysis of the ‘additional restrictions grant’, which makes a one-off £20-per-head payment to councils, alongside deprivation data has shown that some of the poorest areas in the country will receive the same or less than the richest.

Commenting on the data, shadow business minister Lucy Powell said: “The Tories’ approach betrays some of the most deprived communities under the toughest restrictions and does not recognise the additional pressures that many areas face.

“It can’t be right that richer areas in Tier 1 or Tier 2 receive the same funding as those most in need of extra help.”

The analysis from Labour has revealed that several more deprived areas, facing more severe Covid restrictions under the tier system to come into force on Wednesday, will receive less funding than their more affluent counterparts.

The party has highlighted that the most deprived area in the country, Blackpool, set to enter Tier 3 Covid measures, will receive less than the richer South Oxfordshire District Council, ranked 450th most deprived and set to enter in Tier 2.

Similarly, Ashfield and Bassetlaw councils, ranked 111th and 182nd most deprived respectively, will get less money through the scheme than Elmbridge local authority in Surrey, which is ranked as the 460th – despite all being in Tier 3.

Powell added: “Rather than widen regional disparities, and level down the country, the Chancellor should review this fund and ensure it works for those with additional needs because they have been in lockdown down for longer.”

Labour has argued that the formula being applied by the government to implement the additional restrictions grant is “unfair” and “risks failing communities in those places the government has promised to level up”.

The party has repeatedly criticised the Prime Minister over the failure of to act on his promise, made during both the 2019 general election campaign and in subsequent speeches, to “level up” poorer areas across the country.

Labour recently condemned the Tories for “turning their back” on the levelling-up pledge after data showed that three in four jobs in the automative industry, struggling in the pandemic, are in areas that the Conservatives vowed to protect.

Shadow Chancellor Anneliese Dodds criticised the government for “always running to keep up” after the Chancellor used his third economic update within a month to unveil more financial support for businesses in the second wave.

Following the U-turn on extending the furlough schemes, Dodds highlighted that while Rishi Sunak can “change his mind at the last minute” businesses cannot, and slammed him for causing avoidable redundancies by failing to let businesses plan.

Labour highlighted earlier this month that while the Chancellor declared that he was introducing bigger business grants upon the announcement of a second national second lockdown, of up to £3,000 per month, most firms will receive much less.

The local restrictions support grant, launched by the Chancellor for the second lockdown, has provided the smallest rateable value businesses eligible for the relief with just half of the weekly cash amount they received in March.

Businesses in the next largest group, those with a rateable value between £15,000 and £51,000, were eligible to receive less than a third of the weekly amount they were granted during the first lockdown earlier in the year.