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Rishi Sunak reveals tier two rescue package just days after Manchester talks collapse over £5m

Rishi Sunak - JESSICA TAYLOR/UK PARLIAMENT HANDOUT/EPA-EFE/Shutterstock
Rishi Sunak - JESSICA TAYLOR/UK PARLIAMENT HANDOUT/EPA-EFE/Shutterstock
Coronavirus Article Bar with counter ..
Coronavirus Article Bar with counter ..

It was only on Tuesday afternoon that Boris Johnson refused to meet Andy Burnham's demands for an extra £5 million to help Manchester through weeks of punishing tier three restrictions.

So it was hardly surprising that the Labour mayor was on Thursday struggling to contain his disbelief, as the Chancellor Rishi Sunak rode to the rescue with a multi-billion pound rescue package to help firms through the winter months.

Just 48 hours after talks between the Prime Minister and Greater Manchester collapsed, Mr Sunak rose to the dispatch box to unveil a fresh cash injection for those struggling to stay afloat under tier one and tier two restrictions.

Worth an estimated £13bn over six months, Mr Sunak’s package included a revamped wage support scheme to help firms cling onto more workers part-time, as well as a new round of funding for the self-employed.

Workers will now receive 73 per cent of their salary for completing a fifth of their normal hours, with employers contributing just five per cent towards unworked hours, down from 33 per cent originally.

Hospitality, leisure and accommodation businesses who have seen their trade severely restricted by the 10pm curfew and ban on indoor mixing will also be able to claim up to £2,100 per month in cash grants.

The grants will apply retrospectively, meaning a £22 million boost to Manchester, where businesses have faced additional local restrictions since July, according to Treasury estimates.

The timing of the announcement and the decision to backdate payments to firms was not lost on Mr Burnham, who claimed it had been exactly the type of action he had been calling for.

“Honestly, [I] can barely believe what I’m reading here,” he wrote on Twitter. “Why on earth was this not put on the table on Tuesday to reach an agreement with us?

“I said directly to the PM that a deal was there to be done if it took into account the effects on GM businesses of three months in Tier 2.”

It comes just days after Mr Burnham claimed that ministers had refused to agree to Manchester’s demands for £90 million of extra support on the basis that there was “no money left.”

Government sources later insisted the refusal to agree a compromise of £65 million had been due to the need to keep funding consistent with other tier three areas.

Downing Street sources also moved to quash any suggestion that Mr Sunak and the Prime Minister were not acting as one, insisting they had "worked hand in hand" on the package.

But on Thursday critics suggested their real motivation had been to deny Mr Burnham the ability to claim victory in the negotiations.

Meanwhile, Mr Sunak also came under attack from Anneliese Dodds, the shadow chancellor, who suggested he had only felt compelled to act after London was placed under tougher restrictions.

"The Chancellor has only caught up and listened to the anxieties of workers and businesses when it looks like these restrictions will be affecting London and the West Midlands,” she told MPs.

"Will he apologise to those who have already lost their jobs, seen their businesses slip through their fingers in those areas which have not had that support until now?"

While Mr Sunak insisted he would make “no apology for responding to changing circumstances”, his decision to brief business leaders on the plans at a Franco Manca restaurant in central London just hours beforehand only served to fuel claims that ministers were yet again catering to the needs of London.

However, Mr Johnson later denied that the announcement to backdate the money was a tacit acknowledgement that the north of England had been neglected.

Asked why he had been prepared to collapse the talks with Mr Burnham knowing that billions of pounds of additional support was in the pipeline, he reiterated that caving to Manchester’s demands would have thrown it out of kilter with other tier three areas.

"The issue is really one of basic fairness between various parts of the country that are having to experience regional restrictions, that's what we were trying to achieve in the last 10 days,” he told the Downing Street press conference.

"What we are doing now is bringing forward measures that are designed to help businesses that can't trade as they normally would and who are experiencing a fall in income.

"And we are doing it across the whole country, it's backdated to August."

"This is simply about fairness,” Mr Sunak added. “It's about treating people the same wherever they live and whatever their situation."

Rejecting suggestions that he was prioritising London over other parts of the country, Mr Sunak pointed out that people from both Merseyside and North Yorkshire had dialled in to that morning’s briefing remotely.

"I wouldn't take anything from the fact it happened in London," he added.

Defending the decision to bring forward another support package so soon after the last, he said the original version of the job support scheme had been drawn up at a time when restrictions were being eased.

"It was done over the summer with a view to the economy being open and restrictions being lifted. Obviously the last few weeks, that has not been as those businesses had expected," Mr Sunak said.

"Those restrictions were coming back, they were having a cumulative effect on the ground, particularly in Tier 2 areas, particularly in hospitality.”

Confirming that the schemes will last at least six months, with a review point held in January, he added:"We know this is something that will be a fact of our lives for some months to come.”