Chancellor Rishi Sunak has announced a Job Support Scheme to top up the wages of employees unable to work full-time because of coronavirus restrictions over the winter.
The scheme - which is far less generous than the furlough system which supported more than 9 million workers during the first wave of Covid-19 - formed part of a Winter Economic Plan unveiled by the chancellor in the House of Commons.
In a statement which replaced the cancelled autumn budget, Mr Sunak also announced an extension of the Self Employment Income Support Scheme and said that more than one million businesses will be granted flexibility in paying back loans.
And businesses in the hospitality and tourism sectors will also benefit from a 15 per cent VAT cut.
In order to qualify for the Job Support Scheme, in place from 1 November and due to run for six months, employees must be working at least one-third of normal hours and be paid as normal for that work.
The government and employers will together increase their wages to cover two-thirds of the pay lost by reducing working hours.
The chancellor said his primary goal was to support jobs, but told MPs that this could not include maintaining workers who are unable to work at all under the coronavirus restrictions announced by Boris Johnson earlier this week.
He confirmed that the furlough scheme will be shut down as planned on 31 October.
“It is now clear - as the prime minister and our scientific advisers have said - that for at least the next six months, the virus and restrictions are going to be a fact of our lives,” said Mr Sunak.
“Our economy is now likely to undergo a more permanent adjustment. The sources of our economic growth and the kind of jobs we create will adept to the new normal and our plan needs to adapt in response.”
Acknowledging that large numbers of jobs will be lost with the withdrawal of the furlough, Mr Sunak said: “I can’t save every business, I can’t save every job. No chancellor could.”