Labour has warned that parts of England under the most stringent coronavirus restrictions will be stretched to “breaking point” without the support of a key business grant.

Shadow chancellor Anneliese Dodds is set to urge her opposite number Rishi Sunak to bring forward additional help and will suggest the Government extends its Additional Restrictions Grant (ARG) in Tier 3 areas.

ARG funding was given to local authorities when they entered Tier 3 under the first regionalised lockdown restrictions, and was available to all other areas when England entered a national lockdown last month.

But the Chancellor has not announced an extension of the scheme ahead of the reintroduction of the tier system next week, and Labour is warning that it will force some local authorities to stretch the grants further than others.

The one-off ARG funding – which equates to £20 per person in an area – is designed to help closed businesses that do not directly pay business rates, as well as those that do not have to close but are affected by restrictions.

Labour said not extending it could mean that Lancashire, set to face Tier 3 restrictions again, would have to stretch the funding over nine weeks, while the Isle of Wight would spread it over just four weeks.

In an address to the party’s online regional conference – Connected North West – on Saturday afternoon, Ms Dodds will say: “It is completely irresponsible for the Government to leave Tier 3 areas in the lurch like this again.

“The run-up to Christmas is a critical period, and local authorities are going to be stretched to breaking point trying to help.

“The Government’s approach is fundamentally unfair and risks a gulf in support opening up across the country.

“The Chancellor must make the responsible choice and come forward with a clear system of business support for the hardest-hit areas.”

A Department for Business, Energy and Industrial Strategy spokesman said: “This analysis is misleading and fails to take into account a host of other support measures that we have made available, including grants of up to £3,000 for businesses that are required to close due to Tier 3 restrictions.

“We understand the pressure businesses are currently under and have acted to support them through the pandemic with a £280 billion support package, which is among the most generous in the world.”