London would need more than £400m a month from the government if it is plunged into Tier 3 and if the city makes the same funding requests as Manchester, according to a top think tank.
The Centre for Cities has calculated the capital would need £112.4m for every week it is in the top band of restrictions if mayor of London Sadiq Khan made the same funding requests as Greater Manchester mayor Andy Burnham.
Burnham had a very public row over the past week with Downing Street as the mayor fought for increased emergency funding in exchange for him consenting to new Covid restrictions.
Burnham – who had originally requested £100m for his city – turned down the government’s offer of £60m extra funding for Greater Manchester, however Boris Johnson still imposed stringent restrictions on the area yesterday.
The Prime Minister confirmed today that the city would still get the £60m in funding, despite saying yesterday it would get just a third of that.
The spat has fuelled speculation that Khan could have a similar conflict with central government if London is deemed as needing new Tier 3 restrictions.
The Centre for Cities said that if Khan asked for the same as Burnham – enough money so that furloughed workers get 80 per cent of their pay – it would cost almost almost the central government almost half a billion pounds.
This would add to the already raging conflict City Hall is fighting against Johnson around a second TfL bailout.
Workers can go back onto the furlough scheme if their areas are placed into Tier 3, but they only get two-thirds of their wages paid.
The Centre for Cities’ senior analyst Elena Magrini said: “On support for workers in tier 3 cities specifically, we endorse proposals for an 80 per cent furlough scheme.
“It would make a large difference for many lower income workers who could be left in financial difficulties as a result of these new restrictions and may help lessen the long-term damage done to London’s economy.”
London’s Covid rate is currently well below that of Manchester, Liverpool and Sheffield – all in the “very high” Tier 3 alert level.
Just 45 people died of coronavirus in London last week, according to City Hall numbers.
A source close to Khan said City Hall was not expecting London to go into Tier 3 “for some time, if at all”, but that “if it happened, there would be a need for greater recompense”.
Carsten Jung, senior economist at the left-leaning Institute for Public Policy Research think tank, said the government needed to take a countrywide approach to Tier 3 funding.
“This regional patchwork is far more complicated than have a single solution that applies to all the regions,” he said.