Monday 30 November 2020 / 10:30 PM Business / Lucy Powell

Business grants scheme ‘betrayal’ will level down, Labour warns

Regional inequalities will widen, and some of the poorest areas of the country will be ‘levelled-down’ by one of the Chancellor’s business grants scheme, Labour is warning today as Shadow Business Minister Lucy Powell MP accuses Boris Johnson and Rishi Sunak of ‘betraying’ voters in some of the most deprived communities in the country.

Analysis of the government’s Additional Restrictions Grant – a one-off £20 per-head payment to local authorities – and government data on deprivation revised by the House of Commons library shows that some of the most hard-pressed areas of the country will receive the same allocation as the richest, despite the fact that many face the prospect of significant restrictions for longer.

Labour’s investigation clearly shows the unfairness of the government’s approach, with wide disparities as a result of the Chancellor’s design of the system including:

  • Despite being ranked the most deprived area (1), Tier 3 Blackpool will receive less than affluent South Oxfordshire in Tier 2 – ranked 450th
  • Nottinghamshire areas Ashfield (111) and Bassetlaw (182) in Tier 3 will receive less than Elmbridge in Surrey ranked 460th
  • Despite being ranked the third most deprived area, Manchester in Tier 3 will receive the same amount of funding as Tier 1 Cornwall – ranked 142 and Blackburn (25th) in Tier 3 will receive the same as Tier 2 East Herts council (457)

Labour argues that the formula is unfair because it does not recognise the amount of time a local area is in a higher Tier, meaning that poorer communities in Tier 3 will not get the additional support they need compared to wealthier regions under Tier 1 or Tier 2 restrictions. As such, the scheme risks failing communities in those places the government has promised to level up.  Labour’s Shadow Chancellor Anneliese Dodds, has called on the Chancellor to make the responsible choice and come forward with a clear system of business support for the hardest-hit areas.

Lucy Powell MP, Labour’s Shadow Minister for Business and Consumers, 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.

“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.”