LABOUR is calling on the government to use cash not distributed by councils under its coronavirus business support grants schemes to help firms in areas facing local lockdowns.

It estimates that there is a £170million underspend in the government’s Covid-19 grants programme for enterprises in boroughs under new restrictions including East Lancashire, Greater Manchester, Leicester and West Yorkshire.

Shadow business minister Lucy Powell believes that rather than claw back the cash for the Treasury, ministers should use it for a Hospitality and High Streets Fightback Fund in the affected areas.

Labour analysis suggests that in East Lancashire the underspend is £23m which could help save 2,161 jobs if redeployed to help struggling employers.

It estimates that in Blackburn with Darwen the underspend is £6.27m, equivalent to 571 jobs; in Burnley £4.51m - 400 jobs; in Hyndburn £4.26m - 411jobs, in Pendle £4.75m - 439 jobs and in Rossendale £3.40m - 317.

Mrs Powell MP said: “It’s a week since local restrictions were put in place in Greater Manchester, and Lancashire yet there has been zero extra support for struggling businesses caught up in this public health crisis. 

“We’re seeing a wave of redundancies across the high street, threatening jobs and livelihoods, which could lead to ghost towns, as businesses are forced to shut up shop.

“Unless Ministers take action to provide extra help to firms, that wave will turn into a tsunami leading to lasting damage, and the loss of many thousands of jobs, weakening our economy and our ability to recover from the crisis.”