Employees who work for UK firms forced to shut by law because of coronavirus restrictions are to get two-thirds of their wages paid for by the government.
The scheme will begin on 1 November and run for six months, with a Treasury source saying it could roughly cost hundreds of millions of pounds a month.
Chancellor Rishi Sunak said it would be a safety net for staff and businesses.
A restrictions update, which could see pubs and restaurants shut in the worst-affected areas, is expected on Monday.
Shadow chancellor Anneliese Dodds said Mr Sunak’s “delay in delivering support has caused unnecessary anxiety and job losses”.
Regional leaders have called for more help for struggling firms.
The support will be reviewed in January. Until November businesses that are asked to close can continue to use the furlough scheme.
The grants will be paid up to a maximum of £2,100 per employee a month and the Treasury said they will protect jobs and enable businesses to reopen quickly once restrictions are lifted.
Mr Sunak acknowledged his announcement came “in advance of what may be a difficult winter”.
In addition, for businesses forced to close in England, the chancellor announced an increase in business grants – with up to £3,000 a month paid every fortnight.
The Treasury says the devolved administrations in Scotland, Wales and Northern Ireland will receive increased funding allowing them to bring in similar measures if they choose to.
‘Range of options’
The chancellor described Friday’s announcement as “a very different scheme to what we’ve had before, this is not a universal approach, this is an expansion of the job support scheme specifically for those people who are in businesses that will be formally or legally asked to close”.
The support will only apply to businesses that have to close as a result of government regulations, but as yet it is not clear which firms may have to close.
Asked whether the announcement suggested the government was going to ask businesses, such as those in hospitality, to shut, Mr Sunak said: “The rise in cases and hospital admissions in certain parts of the country is a concern.
“It’s right the government considers a range of options… but it’s also right they engage with local leaders.
“That is what’s happening this afternoon and over the weekend so those conversations can happen and collectively we can decide on the appropriate response.
It is a sign of how quickly the coronavirus situation has soured that the chancellor is having to return to a policy he thought he’d parked less than two weeks ago when he announced his Winter Economic Plan.
The government insists this is not a re-tread of the furlough scheme, which is due to expire at the end of this month, but in all important aspects this is furlough mark two.
The crucial bit is that small employers will not have to make any contribution to their workers’ wages if they are legally forced to shut down.
Larger businesses will have to contribute around 5% of employee costs in the form of National Insurance and pension contributions.
That is much more generous than the expiring furlough scheme and way more generous than the Job Support Scheme Mr Sunak announced 10 days ago, which requires employers to pay 55% of active workers’ salaries.
The reason for that is simple – those measures applied to businesses that were allowed to be open. This new scheme only applies to businesses which are not.
Other questions are not simple – who will be eligible? What about businesses that were never allowed to reopen since March?
Will it be applied by postcode? Will you be able to walk 10 minutes down the road to go to the pub that is open but having to pay 55% of staff wages when it’s less than half full?
And perhaps most importantly for the expected “beneficiaries” of this scheme – the hospitality industry – how strong is the evidence on which this policy is based and can we see it in detail?