Health Secretary Matt Hancock has defended the level of compensation payments for people who have to self-isolate, but a council leader in one of the pilot areas has branded them “a slap in the face”.

The Government has confirmed payments of up to £182 will be given to people in areas with high incidences of Covid-19, with a trial beginning in Blackburn with Darwen and Pendle in Lancashire, as well as Oldham in Greater Manchester.

As of Tuesday September 1, people in those areas on either Universal Credit or Working Tax Credit, who are required to self-isolate and are unable to work from home will benefit from the new payment scheme.

Eligible people who test positive for the virus will receive £130 for their 10-day period of self-isolation, while other members of their household, who under the current rules have to self-isolate for 14 days, will be entitled to a payment of £182.

Asked if payments representing £13 a day were enough, Mr Hancock said they were “in addition” to other benefits that people on low incomes receive.

When it was put to him that people self-isolating would be losing income from their jobs, Mr Hancock told BBC Breakfast: “Only in some cases, but absolutely we acknowledge that.

“It’s set at the level of statutory sick pay in order to make sure that people don’t lose out from doing the right thing.”

The figures that the Government have introduced are really a slap in the face

But Pendle Borough Council leader Mohammed Iqbal said the level of financial support is “not acceptable”.

The Labour councillor told BBC Radio Four’s Today programme: “The figures that the Government have introduced are really a slap in the face for those people who sadly test positive and there is no incentive in my opinion for those people to self-isolate.

“If you’re a manual worker who’s not able to do their job from home, normally getting paid the living wage or the minimum wage, the Government are now going to say to you we’ll pay you £4.55 an hour. Not acceptable.”

The current national living wage and national minimum wage for people aged 25 and over is £8.72 an hour.

Oldham Council leader Sean Fielding, also of the Labour party, said while he is pleased the Government is going to provide financial help it does not go far enough.

“Sadly this offer is nowhere near enough to provide real support, and it shows how out of touch with ordinary people this Government is,” he said.

Mayor of Greater Manchester, Andy Burnham, said while he is pleased the Government has “at last acknowledged this issue”, he is “sorry to say this move goes nowhere near far enough”.

He added: “For many workers in Greater Manchester, this will not provide the support people need to cooperate with NHS Test and Trace.”

Anneliese Dodds, Labour’s shadow chancellor, raised concerns the scheme would only apply to a limited number of areas.

She said: “The instruction to self-isolate applies to everyone in the country, so everyone should get the support they need to self-isolate.”

Mr Hancock said there is potential for the new payments to be rolled out beyond initial pilot areas after it is established that “the systems work, that we can get the money fast to people”.

He told BBC Breakfast the payments were being introduced in areas which have “the most acute need” and added: “We’ll see how that goes and we’ll get the feedback, with the potential to roll it out further.”

My position is clear; these restrictions are confusing and are not working

He said local lockdowns were “working” but further support was required to help encourage those contacted by NHS tracers to stay at home, acknowledging that the Test and Trace system is “not quite there” in terms of meeting its target of reaching 80% of contacts and getting them to self-isolate.

He told LBC radio: “Bringing in extra support, in addition to the Universal Credit they get, if people self-isolate is one of the things that people have been asking for to get those rates up because it really matters that the people that need to self-isolate do because that’s how we stop the spread of the virus.”

In other developments:

– Thursday saw the UK’s highest number of positive cases since June 12, with 1,522 people testing positive.

– The NHS Test and Trace system in England once again failed to meet Government targets, with 75.5% of close contacts of people who tested positive for Covid-19 reached in the week ending August 19, shy of the 80% goal.

– Switzerland, Jamaica and the Czech Republic were removed from the Government’s exemption list due to a rise in coronavirus cases, with quarantine restrictions taking effect from 4am on Saturday.

The next announcement on restrictions in parts of Greater Manchester, east Lancashire and west Yorkshire was due to take place after a meeting on Thursday of the Joint Biosecurity Centre (JBC), chaired by Mr Hancock and England’s chief medical officer Professor Chris Whitty.

Last week Mr Hancock announced a more targeted approach to restrictions, in which the views of MPs would also be sought to gain “the maximum possible local consensus”.

People living in specific wards in Pendle and Blackburn as well as Oldham were told not to socialise with anyone outside their household from midnight on Saturday, and only to use public transport if essential.

Labour’s Shabir Pandor, leader of Kirklees Council in West Yorkshire described the restrictions in place as “confusing”, saying people can go to a pub full of strangers but not meet relatives in the garden, and urged the Government to lift restrictions for the whole of Kirklees.