Rishi Sunak, chancellor, is preparing to release tens of millions of pounds to persuade local leaders in Greater Manchester to take the region into the highest level of Covid-19 lockdown, ending days of deadlock.
Mr Sunak has told Prime Minister Boris Johnson that he will not stand in the way if more cash is required to “get a deal over the line” with Andy Burnham, Labour mayor of Greater Manchester.
Mr Burnham held what his office called constructive talks on Sunday with Edward Lister, Mr Johnson’s chief strategic adviser, raising hopes that an agreement to take the region into the tier 3 alert level was close.
“We have said that if a bit of extra cash will get them over the line, we won’t be a block to that,” an ally of the chancellor said on Sunday. “The important thing is getting the spread of the virus down.”
Mr Sunak has opposed Mr Burnham’s call for him to increase the generosity of a new local furlough scheme for workers whose businesses are forced to close from 66 per cent of wages to 80 per cent.
Instead, the chancellor is looking to offer the region a discretionary pot of money worth “no more than tens of millions of pounds” according to Treasury insiders. Local leaders could decide how to spend it.
Mr Sunak has been anxious not to set a precedent for huge extra expenditure as more areas are put into tier 3, which would see pubs, restaurants and many other businesses forced to close.
“Rishi made it clear to Number 10 that we can’t hand out loads of cash to everyone,” said one government official.
The possibility of the dispute being settled by additional Treasury funding was raised by the disclosure that the Liverpool city region — the first part of England to enter tier 3 — had received a further £30m to help local businesses.
Civic leaders agreed the region’s 1.6m people would be subjected to the highest, tier 3, measures, on Monday. But after other northern leaders refused to follow suit the government has increased its financial support.
Mr Burnham said he was holding out for more economic support for people whose livelihoods would be ruined by the move into tier 3, saying he was fighting for every part of the country.
“This is not just Greater Manchester’s fight,” he told the BBC’s Andrew Marr Show. He said it was “everyone’s concern because everywhere could end up in tier 3” over winter.
Michael Gove, Cabinet Office minister, said the government was willing to impose the toughest restrictions on Manchester, but insisted that the government wanted to reach local agreement if possible.
The impasse has caused increased political strains between north and south and within the Conservative party.
Some 20 Tory MPs, whose constituencies are little-affected by the virus, wrote an open letter to Mr Burnham and other regional leaders asking them to get the virus “under control” in Manchester to avoid the “pain” of a national lockdown.
Led by Jerome Mayhew, the MP for Broadland in Norfolk, they said: “We know you are calling for a national lockdown now but urge you to reconsider.” Some northern Tory MPs said privately the letter was sanctioned by Number 10 and was misguided.
Mr Burnham said: “I’m not sure a sort of ‘we’re all right Jack’ letter from a group of southern Conservative MPs is going to cut much ice here.”
Mr Gove said that many people would receive at least 80 per cent of their income because of top-ups from the universal credit system. He said the problem could have been settled days ago “if the political leadership in Greater Manchester had recognised the scale of the problem”.