Boris Johnson is considering plans to close pubs and restaurants within days amid mounting opposition from Sir Keir Starmer to the Government’s lockdown strategy.
Mr Johnson is expected to announce that hospitality venues in the worst-hit areas of the country will face closure as infection rates continue to spiral out of control.
Until now he has been able to rely on the support of Labour for measures to control coronavirus, but that support began to crumble after Sir Keir demanded to see the “scientific basis” for the current 10pm curfew.
The Labour leader made clear that he could withdraw the support of his MPs when the curfew is put to a vote next week, saying the measure should be reviewed if there is no firm evidence for it.
With up to 100 Tory MPs prepared to rebel against the Government on the curfew, it means Parliament could reverse Mr Johnson’s policy. It also throws other lockdown measures, including possible pub closures, into doubt because they must also be approved by the Commons.
Ministers are expected to offer Labour and Tory rebels a trade-off by promising to water down the 10pm curfew in areas that are not subject to local restrictions.
Matt Hancock, the Health Secretary, gave a clear hint that hospitality venues in areas with the highest Covid rates will face closure, as he told business leaders that latest data on sources of infection were “not good news” for the sector.
In Scotland, Nicola Sturgeon announced a 16-day closure of hospitality venues in the worst-hit areas, with pubs and restaurants in the rest of the country banned from selling alcohol indoors and closing at 6pm.
New local lockdowns could be announced before the weekend in areas including Nottingham, where the infection rate has rocketed from 59 cases per 100,000 to 382 in a week.
Mr Johnson is also expected to announce a new “traffic light” system of local lockdowns on Monday, with predetermined restrictions for low, medium and high risk areas.
A draft of the model - officially called Local Covid Alert Levels - includes pub and restaurant closures in the “red” section, but Downing Street said no final decision had yet been made on the exact restrictions that would be imposed.
Mr Johnson had been hoping to unveil the strategy as soon as Thursday, but has been struggling to agree the plan with senior Cabinet ministers. He also faces the danger of the policy being defeated in the Commons if he does not have Labour support.
Until now, Mr Johnson could rely on the backing of Sir Keir’s MPs to override any opposition from Tory rebels, but without that guarantee the plan could struggle to get through Parliament.
In a conference call with the CBI on Wednesday, Mr Hancock gave a clear warning that pub closures are being considered as he said: “Outside your household and socialising between households, the highest place in incidence of likely transmission, measured by where people have contacts, is unfortunately hospitality.
“Now obviously that finding is not good news in terms of the policy action we have to take for that sector.”
The Treasury is understood to have drawn up plans for extra funding for the hospitality sector if venues are forced to close for the first time since they were allowed to reopen in July. The Government is expected to hold back on any announcement on pub closures until it is ready to announce a financial package at the same time.
Cabinet “doves” in favour of tougher lockdown measures have urged Mr Johnson to close pubs in the north east and north west after “horrific” internal data showed infection rates among the over-60s rising to “seriously concerning levels” according to one source.
Another Whitehall insider said: “The picture is really difficult and stark. We are getting to a point where we are not far off seeing real strain on hospitals and that is worrying.”
Treasury officials are understood to have made clear to hospitality groups that they share their concerns over proposals to close pubs and restaurants and have asked them to submit evidence on the impact it will have on jobs and businesses.
It came as Greene King announced it will shut dozens of pubs with the loss of 800 jobs as it blamed the “continued tightening of trading restrictions” for a collapse in revenue.
Under a deal struck with MPs last week, Parliament must approve any national lockdown measures before they are brought in, meaning that the “traffic light” system, which is likely to include pub closures in the worst-hit areas, must be put to a vote.
Sir Keir on Wednesday signalled for the first time that the Government cannot rely on a guarantee of Labour support for its coronavirus restrictions as he questioned the legitimacy of the current 10pm curfew.
He asked the Prime Minister to publish the evidence that shows there is a scientific basis for the 10pm curfew for pubs, bars and restaurants, and to "review the rule" if he cannot do so.
He said 19 of the 20 areas subjected to local measures for two months had seen infection rates increase.
Official figures showed that as of 9am on Wednesday, there had been a further 14,162 lab-confirmed cases of coronavirus in the UK, with a further 70 people dying within 28 days of testing positive for Covid-19.
Sir Keir said: "The Prime Minister can't explain why an area goes into restriction, he can't explain what the different restrictions are, he can't explain how restrictions end - this is getting ridiculous.
"Next week, this House will vote on whether to approve the 10pm rule. The Prime Minister knows that there are deeply-held views across the country in different ways on this. One question is now screaming out: is there a scientific basis for the 10pm rule?"
A debate on the 10pm curfew which had been scheduled for Monday was pulled by the Government on Wednesday and instead the matter will debated by MPs next Wednesday and put to a retrospective vote. If MPs vote against the curfew it will force the Government to abandon it.
Tory rebels opposed to the curfew believe the Government is buying time to offer a compromise, which could help win support for pub closures in the worst-hit areas.
One senior Tory MP said: “Conversations are going on with the whips and I expect the Government will announce a compromise next week.
“We could end up with mandatory last orders to stop people buying drinks right up to 10pm and then all spilling out onto the streets at once, or we could end up with a later curfew time or staggered pub closures.
“But if the Government puts the 10pm curfew to a vote it will lose.”
A Downing Street spokesman refused to comment on whether pub closures were planned and said of the 10pm curfew: “The policy is kept under review but the curfew remains in place.”