Rishi Sunak has warned a second national lockdown would create “significant damage” to people’s lives and livelihoods.
The Chancellor took a firm stance against a nationwide shutdown, claiming such a move would hit jobs, businesses, and children’s education while also causing “permanent damage” to the economy.
In turn, this would “undermine” funding for the NHS and public services in the long-term, Mr Sunak added.
He repeatedly defended the Government’s new three-tier alert level system for England after Labour pushed for a short circuit-breaker lockdown to help combat Covid-19.
Labour also demanded greater support for the north of England, the Midlands, Scotland, Wales and Northern Ireland as they deal with extra restrictions.
Watch: How will England's three-tier local lockdown system work?
The Opposition’s Commons motion added the job support scheme should be reformed to incentivise employers to keep staff on, fix “gaps” in support for the self-employed and extend the ban on evictions.
Mr Sunak last week announced workers in pubs, restaurants and other businesses forced to close under the new restrictions would have two-thirds of their wages paid by the Government under an expansion of the job support scheme.
Speaking in the Commons, the Chancellor said the “stark reality” of the economic and social impact of another national lockdown must be acknowledged.
He said: “The cost of doing so are not abstract, they are real.
“They can be counted in jobs lost, businesses closed and children’s education harmed.
“They can be measured in the permanent damage done to our economy which will undermine our long-term ability to fund our NHS and our valued public services, and they can be measured in the increase in long-term health conditions that unemployment causes.
“This is not about choosing one side or the other. It is not about taking decisions because they are popular.
“It is not about health vs wealth or any other simplistic lens we choose to view this moment through.
“The Prime Minister was absolutely right when he set out our desire for a balanced approach, taking the difficult decisions to save lives and keep the R-rate down while doing everything in our power to protect the jobs and livelihoods of the British people.
“And the evidence shows a regional, tiered approach is right because it prevents rushing to another lockdown.
“The entire country would suffer rather than targeting that support, preventing a lockdown in parts of the country where the virus rates are low.”
In an attack on Labour, Mr Sunak added: “We can’t just let the virus take hold but nor can we blithely fall into another national spring-style lockdown as the party opposite now wants to do, rather than following our regional tiered and localised approach.”
The Chancellor went on: “We need a balanced approach, we need a consistent approach, and we also want a cooperative approach. But any responsible party calling for a shutdown of our entire country should be honest about the potential costs – economic and social – of such a dramatic measure.
“At the very least they should have the integrity to acknowledge that what they’re proposing will create significant damage to people’s lives and livelihoods.
“I’ve never said there are easy choices or cost-free answers, this is the reality we face and it’d be dishonest to ignore that truth.”
Shadow chancellor Anneliese Dodds earlier warned blocking a short-circuit breaker lockdown does “not make sense for the health of our population and it does not make sense for our economy”.
She said: “If we continue as we are without taking control of the public health situation then we’ll see a worse situation for jobs and businesses in our country.
“It’s very clear that blocking a circuit-breaker does not make sense for the health of our population and it does not make sense for our economy, and I believe members on the opposite side need to have a reality check here.”
Ms Dodds added: “Every week of that inaction will hit business and consumer confidence, costing more jobs and livelihoods and with more businesses going to the wall.
“The question is not whether we can afford a circuit breaker, the question is whether we can afford to continue with a Government that ducks taking hard choices until it’s forced into them. A Government that seems unable to stand apart from its chaotic lurching from week to week, to assess what our country needs and take decisive action.”
The circuit-breaker must be used to fix Test and Trace and devolve it to local areas, Ms Dodds argued.
Watch: Can you catch coronavirus twice?