The furlough scheme, which was set up as a result of the national lockdown in the spring, will end on October 31.
We've put together everything you need to know about the new scheme - and how it affects you.
What are the key points from Rishi Sunak's announcement?
- Chancellor Rishi Sunak said a new job support scheme would see the Government “directly support” the wages of people in viable jobs working at least a third of their normal hours. It will run for six months, starting in November.
- The Chancellor said he was extending the self-employed grant on similar terms as the next job support scheme.
- Mr Sunak announced a “pay as you grow” scheme to allow firms to repay bounce back loans over a period of up to 10 years.
- The Chancellor also said he would keep VAT at 5 per cent for hospitality and tourism until March 31, 2021.
What did the Chancellor say?
The resurgence of coronavirus poses a threat to the UK’s “fragile” economic recovery, Rishi Sunak warned as he confirmed plans for the state to top up the wages of workers forced to cut their hours due to the pandemic.
As part of a package of measures, the Chancellor said the new jobs support scheme was aimed at protecting “viable” roles rather than all posts which have been kept going as a result of state support under the furlough programme.
Under the terms of the new scheme, the Government will top up the wages of people working at least a third of their normal hours.
They will be paid for that work as normal, with the state and employers then increasing those wages to cover two-thirds of the pay they have lost by working reduced hours.
He also extended the self-employment income support scheme and 15 per cent VAT cut for the hospitality and tourism sectors, and help for businesses in repaying government-backed loans.
Mr Sunak delivered his plans in the House of Commons, but Prime Minsiter Boris Johnson was not there to support him as he was visiting police recruits in Northamptonshire.
Downing Street denied speculation about a rift between at the top of Government, insisting there was “absolutely not” a problem between Mr Johnson and Mr Sunak.
The Chancellor told MPs: “The resurgence of the virus, and the measures we need to take in response, pose a threat to our fragile economic recovery.”
And he acknowledged “we can’t save every business” and “we can’t save every job”.