Chancellor Rishi Sunak has revealed a successor to the furlough scheme as he bids to avert a winter jobs crisis following tougher restrictions to combat coronavirus.
Wage subsidies form part of a package of new measures to support the economy through the latest phase of the COVID-19 pandemic – with the focus on topping-up the pay of people working at least a third of their normal hours.
The chancellor told MPs the Job Support Scheme would cover “two-thirds of the pay they have lost”.
The scheme will begin in November.
Mr Sunak was forced to act amid widespread warnings that fresh curbs on business activity this week to combat the disease, that could last for six months, would spark waves of redundancies as the current Job Retention Scheme is wound down.
That has already cost the taxpayer almost £40bn to date and while Treasury-backed business loans of £57bn have been handed out.
Mr Sunak said: “The government will directly support the wages of people in work, giving businesses who face depressed demand the option of keeping employees in a job on shorter hours rather than making them redundant.”
His other measures included a “pay as you grow” extension to the Bounce Back Loan scheme, allowing businesses to repay them over ten years rather than six.
He confirmed the VAT cut to 5% for hospitality and tourism would be extended until the end of March.