The chancellor has extended the furlough scheme until the end of March 2021.
The scheme, which came into force during the first lockdown, was extended until the end of November after a fresh England-wide lockdown was announced on Saturday.
Rishi Sunak noted that the effects of a lockdown on the wider economy were “much longer” than the lockdown itself, as he confirmed his plans to the House of Commons this lunchtime.
Employees will continue to be paid 80% of their salaries for hours not worked when on the furlough scheme, with employers paying only National Insurance and pension contributions.
He said the £1,000 bonus per employee offered to companies for keeping staff in work for the duration of the furlough scheme “falls away” and will be “redeployed” at the “appropriate time”.
He also confirmed the furlough scheme would be available to businesses in Scotland, Wales and Northern Ireland.
The chancellor also announced support for the self-employed, with the next income support grant for November to January increasing to 80% of average profits up to £7,500.
More:Furlough scheme used by majority of travel companies
Furlough extension ‘too late’ to avert planned job cuts
Sunak said the government was “right to go further” on furlough. He said: “As we saw from the first lockdown, the economic effects are much longer for businesses and areas than the duration of the restrictions. Given this significant uncertainty, a worsening economic backdrop and the need to give people and businesses security through the winter, I believe it is right to go further.”
Labour criticised the extension and said it came “too late” for many businesses. Shadow chancellor Anneliese Dodds said: “Businesses and workers have been pleading for certainty from this government but the chancellor keeps ignoring them until the last possible moment, after jobs have been lost and businesses have gone bust.”
Sunak said there was “no perfect moment” to enacted such measures.
Sunak’s statement comes after the Bank of England said it was pumping an extra £150bn into the economy.
The Bank warned the resurgence of Covid-19 would lead to a slower, bumpier recovery.
About £40bn has been spent on the furlough scheme since it was introduced in March.