MPs were told that “no decision” has been taken for now – after the government was unable to reach agreement on a financial help package.
The impasse is a huge setback for the prime minister, adding to the impression that local leaders have effectively been given a veto over lockdown decisions.
A dramatic meeting began with a health minister insisting Greater Manchester would move into tier 3, but negotiations broke down when she admitted no more money was on offer.
“The government wants tier 3, but local leaders are not willing to agree without more financial support,” on source said.
Lancashire will also remain in tier 2 – the “high” category, rather than “very high” – after similar clashes between Whitehall and council chiefs.
Andy Burnham, the Greater Manchester mayor had accused ministers of putting pressure on Northern regions to accept a “fundamentally flawed” system without the necessary help for either individuals or businesses.
Imposing tier 3 lockdown measures would “surrender people to certain hardship in the run-up to Christmas”, he said.
The furlough scheme – ends on 31 October – has seen government and firms together paying up to 80 per cent of wages, up to a maximum of £2,500 a month.
But its replacement, the job support scheme, will contribute only 77 per cent of their pay, with companies told they must pay the larger share.
In areas entering tier three restrictions, 67 per cent of wages will be paid by the government – but only to firms ordered to close completely.
Louise Casey, a former homelessness adviser warned that people face “destitution” and may have to “prostitute themselves” without more Covid help.
It means only Merseyside is in tier 3 for now – despite the government’s own scientists calling for a “circuit break” lockdown for two to three weeks, nationwide.
Tier 2, to be imposed in London from Friday evening, bars residents from meeting other households in their homes or other indoor spaces.
They will be urged to make as few journeys as possible, though they will not be told to ordered to stay off public transport.
Pubs, restaurants and shops will remain open, with the 10pm curfew for hospitality venues remaining in place. The “Rule of Six” limit on gatherings outside is unchanged.
