Chancellor to unveil support package for businesses in Tier 2 areas

22 October 2020, 06:03 | Updated: 22 October 2020, 10:26

Rishi Sunak is set to unveil new measures
Rishi Sunak is set to unveil new measures. Picture: PA

By Maddie Goodfellow

Businesses under Tier 2 restrictions in England will be offered further financial support in a package set to be unveiled by the Chancellor on Thursday.

According to reports, Rishi Sunak will announce an update on Thursday to the Job Support Scheme (JSS) - which is set to replace furlough in November.

Watch live from 1130: Chancellor's statement to the Commons

The Telegraph reported that the new measures will be aimed particularly at pubs, bars and restaurants in Tier 2.

Under current government rules, hospitality businesses under Tier 2 can only take customers from the same household unless they sit outside, resulting in a large drop in customer numbers.

Because the tier two restrictions suppress demand without attracting additional government support, they have been described as the "worst of all worlds" by the hospitality sector.

Areas in tier two include London, Essex, much of the West Midlands, Leicester, Nottinghamshire, Cheshire, West Yorkshire and north-east England.

Businesses in Tier 2 have complained that staying open means they are entitled to lesser financial support than businesses in Tier 3 that have completely closed.

Currently, they can apply for a scheme that pays 55 per cent of staff wages, but companies in "very high risk" areas forced to close can get 66 per cent of wages paid for and £3,000 a month in business grants.

Mr Sunak's new plans come after complaints from local leaders and business owners that the tier system is putting thousands of hospitality jobs at risk in the run-up to Christmas.

With Coventry expected to move into Tier 2 this weekend, West Midlands mayor Andy Street spoke out against new rules and demanded extra financial support for businesses.

Explained: Which areas could be next for Tier 3 coronavirus restrictions?

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He tweeted: "Currently, there's no extra financial support available for our hospitality sector in Tier 2 which cannot possibly be right.

"I will continue to press Govt on this & I'm confident we will get a breakthrough soon."

Greater Manchester Mayor Andy Burnham said he would need to "looking closely" at the Tier 2 proposals coming today after he was embroiled in tension with ministers over his own support deal for moving the region into Tier 3.

On Wednesday, Boris Johnson confirmed Greater Manchester would get £60m in support, after Mr Burnham pushed for £65m, a figure rejected by the government.

Mr Burnham said: "Greater Manchester has been in 'high' alert for three months but our hospitality businesses haven't had any emergency support.

"We asked for this to be taken into account in Tier 3 negotiations. The government refused."

It comes as talks with local leaders in South Yorkshire were branded a "charade" as the area was confirmed to move up to Tier 3 this weekend.

On Wednesday, South Yorkshire leaders secured £41m in funding for "businesses and people".

Sheffield city region metro mayor Dan Jarvis said he "moved heaven and earth to secure the maximum amount of resource.

Sheffield City Council leader Julie Dore said it was clear Downing Street officials and ministers were "going through the motions" in 10 days of negotiations just to "try and prove they were listening".

Ms Dore was speaking after Sheffield City Region mayor Dan Jarvis, who led the discussions, admitted he could not have secured any more cash, saying he "moved heaven and earth to secure the maximum amount of resource that we could".

She said: "I can assure you that Dan has been fighting vociferously for the people of Sheffield and South Yorkshire, just like I have been, because we genuinely thought we were in proper discussions and negotiations."

It is understood talks to move parts of the North East into Tier 3 have been put on hold, but Coventry will be moved from up from the "medium" Tier 1 restrictions this weekend, joining other Midlands neighbours in Tier 2 after a rise in cases.

The chancellor's spokesperson said of Thursday's announcement: "The chancellor is due to update the House of Commons on the economic situation, in particular, and so far as it relates to the new restrictions.

"And what we have always said is that our package of support is always flexible and always up for review to make sure that it is dealing with the situation as it evolves."