The furlough scheme will be extended until the end of September, Rishi Sunak will announce in today’s budget.
The Chancellor will confirm that the lifeline jobs support scheme will continue into the autumn when he sets out his Budget in the Commons.
Around 4.7 million people were furloughed at the end of January, where the Government pays 80% of an employee’s wages.
But employers will be asked to start contributing 10% to the scheme in July, and 20% in August and September as the economy reopens after lockdown.
Boris Johnson ’s lockdown roadmap aims to lift all remaining restrictions on daily life from June 21 if the virus continues to be suppressed.
Mr Sunak will also announce a fourth self employed grant scheme from next month, allowing people to claim up to £7,500 or 80% of three months’ average trading profits.
The Treasury said more than 600,000 people will be able to claim the cash grants, using tax returns from 2019/20.
Ahead of the Budget, Mr Sunak said: “There’s now light at the end of the tunnel with a roadmap for reopening, so it’s only right that we continue to help business and individuals through the challenging months ahead – and beyond.”
Mr Sunak will promise to use “fiscal firepower” to protect jobs when he sets out a three-point plan to support people through the crisis, to fix the public finances and to build the future economy.
He will vow to do “whatever it takes” to help the nation through this “moment of crisis”.
Bridget Phillipson, Shadow Chief Secretary to the Treasury, said the confirmation of the furlough extension should have been made months ago to give businesses and workers much-needed certainty.
She said: “Announcing it the night before shows the focus is on Rishi Sunak getting his moment in the sun rather than protecting jobs and livelihoods.”
Hospitality bosses welcomed the move but expressed concern over asking pubs and restaurants to contribute so soon after reopening.
“This means it is more important than ever that the Government sticks to its plan to allow full reopening of venues on the 21st of June,” said UKHospitality Chief Executive Kate Nicholls.
Expecting businesses to contribute to the scheme from the end of July is a worry, though.
“It will place unnecessary pressure on fragile businesses just as they are beginning to get back to their feet.”
But CBI’s chief economist Rain Newton-Smith said extending the scheme will keep “millions more in work and give businesses the chance to catch their breath” as lockdown lifts.
“It’s common-sense to keep the scheme going while business resilience remains fragile for some months yet,” she said.
Torsten Bell, chief executive of the Resolution Foundation, said: “It’s welcome that the furlough scheme that has seen British workers through this crisis will remain in place until restrictions are lifted, playing a critical bridging role between the lockdown and the recovery.
“The phased tapering off over the summer will also avoid a risky cliff-edge.
“But the peak of unemployment is ahead rather than behind us. We also need to see wider economic stimulus to drive the recovery this autumn, and support for the millions of people who have been without work for long periods during this crisis.”