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 460^th
• 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 (25^th) 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.”

ENDS

Notes to editors:

• When the whole country went into lockdown, ARG funding was then given to every local authority. The Government described the grant as ‘a one-off lump sum payment amounting to £20 per head in each eligible Local Authority when LCAL 3 [Tier 3] or widespread national restrictions are imposed. Local authorities can use this funding for business support activities.’ https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/935130/additional-restrictions-grant.pdf
• The government provided Lucy Powell MP with the Additional Restrictions Support Grant allocations for each local authority area in England. Where Combined Authority data was provided, local authority estimates have been included by using population data by local area multiplied by £20 per-head (the government’s formula).

• This ARG data was then mapped against deprivation data for higher and lower tier local authorities ranked by a House of Commons library review of government index of deprivation data. Local authority average ranks are calculated by taking a population weighted average of LSOAs (small areas) in that local authority. The Library sorted the upper and lower tiers by average rank and gave them a new overall rank. It is important to note that there is a lot of overlap between upper tier and lower tier (district) local authorities. In fact, many upper tier local authority are exactly the same as lower tier authorities, which means for example, that some areas are counted twice.

• The table below shows the wide disparities arrived at by the government’s use of a one-off £20 per-head allocation.

Additional Restrictions grant data https://www.theyworkforyou.com/wrans/?id=2020-11-11.114197.h&s=speaker%3A25165#g114197.q0

Population data source for combined authority estimates https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationestimates/datasets/populationestimatesforukenglandandwalesscotlandandnorthernireland

Index of multiple deprivation data https://www.gov.uk/government/statistics/english-indices-of-deprivation-2019