Northern leaders write open letter to Government calling for lockdown financial support

Dear Colleague,

LOCKDOWN FINANCIAL SUPPORT

With the number of positive cases rising in most parts of the North, the health of our residents is paramount and we need to take whatever evidence-based measures are needed, so we understand why the Government is looking to clarify, simplify and possibly strengthen local restrictions in parts of the North.

Yesterday, in meetings with civil servants, Mayors and local leaders were updated on the government’s plans for restrictions in their areas. We welcome that and discussions with the Government on the final shape of restrictions for local areas are continuing throughout this weekend.

However, we were also told that the financial package announced by the Chancellor on Friday afternoon was final and was not open for negotiation.

We have great difficulties with that.

Despite many requests, it has taken a long time for the Government to recognise that a proper support package for people and businesses affected by local restrictions would be needed.

When it finally appeared late yesterday, it was not sufficient to protect our communities through the challenging period which lies ahead.

Specifically, we cannot understand why people whose place of work is forced to close by Government imposed restrictions are only being offered two thirds of their wages. While it may be possible for people on middle or higher earnings to live on two thirds of their salary, that is not the case for the low-paid staff who work in hospitality. They do not have the luxury of being able to pay only two thirds of their rent or their bills.

Earlier this year, the Government set its national furlough scheme at 80%. We can see no justifiable reason why the local furlough scheme should be set at 67%. To accept it would be to treat hospitality workers as second-class citizens and we think that is wrong. Many of these workers have already faced severe hardship this year.

On top of this, the timetable for the introduction of the scheme also presents a major problem. It will start in early November which means that payments will not be made until early December, six weeks after businesses have been forced to close.

We also have serious concerns that the local furlough scheme will be limited to businesses forced to shut. There are many other businesses who supply the hospitality sector who will see their own trade collapse if their customers are to close. In fact, the effect of restrictions might be to choke off footfall in many of our towns and cities and many more businesses and venues such as theatres, arenas and cinemas are likely to be impacted by new restrictions. We believe that any local furlough scheme should be much more widely available to businesses in areas with the highest level of restrictions who can demonstrate a severe impact on trade arising from them.

In addition, we believe that financial support should be extended to those areas in Tier 2. Many businesses and individuals will be impacted by the proposed measures included in Tier 2, and indeed by limiting financial support to Tier 3 only, it could create a perverse incentive for areas to move into Tier 3 to support local businesses.

It is also regrettable that there is no additional support on offer for people who are self-employed. Closure of hospitality businesses will have a severe knock-on effect on people working in the taxi trade and security. Many of those people are self-employed. We believe that there needs to be a local self-employment support scheme to recognise this.

Finally, we are also worried that the more general business support package is woefully inadequate. Whilst we acknowledge the Chancellor’s move in increasing the existing payment to businesses forced to close in lockdown areas, £3,000 per month – or less for many smaller businesses – may not be anything like enough to prevent businesses from collapsing after what has already been an extremely difficult year. Many are now on a knife-edge and this payment will not be enough to save them. Again, we fail to understand why a local lockdown does not attract a business support package equal to that provided during national lockdown given that the effect is the same. More broadly, tougher local restrictions will have an impact on businesses across the local economy and we believe that there is a strong case for a discretionary grant scheme under the control of local authorities to help them.

And while the ‘surge funding’ for local authorities is welcome, only £80m is left in the pot to share between local authorities across the whole country. Councils across the North have already been hit by millions of pounds in extra costs and lost revenue, with only around a third of that being covered by central Government so far.

For the reasons we have given above, to accept the Chancellor’s package at this point would be to surrender our residents, your constituents, to severe hardship in the run-up to Christmas. We are not prepared to do that.

It would also run the risk of significant redundancies and multiple business failures. That would cause long-term damage to the already fragile economies of large parts of Northern England and weaken the recovery when it finally comes. It would do the precise opposite of what the Government was elected to do and level down the North.

So we are asking you to work with your Parliamentary colleagues on all sides of the House to seek to improve substantially the financial package on offer. We believe the Government should bring forward a separate vote on the financial package to provide an opportunity to reject the current financial package and requiring the Government to return with an improved package taking account of the important points we have raised. We would ask that you use whatever routes might be open to you to bring about a vote in the House.

We are of course available at any time to speak to you at any point over the coming days.

Best wishes,

Andy Burnham

MAYOR OF GREATER MANCHESTER

Steve Rotheram

MAYOR OF LIVERPOOL CITY REGION

Dan Jarvis

MAYOR OF SHEFFIELD CITY REGION

Jamie Driscoll

MAYOR OF NORTH OF TYNE

Sir Richard Leese

LEADER OF MANCHESTER CITY COUNCIL