The government will pay two-thirds of the wages of workers whose firms shut over autumn and winter due to local or national coronavirus lockdowns, Rishi Sunak has announced.

The chancellor on Friday expanded the UK-wide job support scheme he announced in September to the tune of hundreds of millions of pounds a month, ahead of an expected announcement on new local lockdown plans early next week.

Sunak will also boost the generosity of cash grants to businesses in England that are closed in local lockdowns, which the Treasury said could benefit hundreds of thousands of businesses including restaurants, pubs, nightclubs, and bowling alleys.

The announcement comes alongside “intensive engagement” with local leaders in areas, mainly in the north, that look set for tougher restrictions.

Greater Manchester mayor Andy Burnham last night insisted on “no restrictions without support”.

The new scheme will be open to firms that are legally required to close as a result of Covid-19 restrictions, and is intended to protect jobs.

From November 1, when the furlough scheme ends, the government will cover 67% of any worker’s salary up to a maximum of £2,100 a month at companies required to close, and they do not have to work any hours to be eligible.

Sunak said: “Throughout the crisis the driving force of our economic policy has not changed.

“I have always said that we will do whatever is necessary to protect jobs and livelihoods as the situation evolves.

“The expansion of the job support scheme will provide a safety net for businesses across the UK who are required to temporarily close their doors, giving them the right support at the right time.”

The new programme is more generous than the main job support scheme, which requires staff to work a third (33%) of their hours to qualify for a maximum of two-ninths salary support from the government, but that scheme is open to firms that are allowed to stay open.

Closed businesses will only be eligible to claim the more intensive support while they are actually subject to restrictions, and employees must be off work for a minimum of seven consecutive days before their employer can ask for cash. 

Larger firms will still be asked to pay National Insurance and pension contributions.

But the Treasury estimates this will only affect half of eligible companies, and that even these will on average be paying 5% or less of any worker’s salary.

The scheme will be in place for six months, with a halfway review point in January.

Meanwhile, the new cash grants will be payable every two weeks and linked to the business rate valuation of the company applying.

Companies will now receive up to £3,000 a month, rather than up to £1,500 every three weeks, and they will be eligible for payment after being closed for only two weeks rather than three.

Small businesses with a rateable value of £15,000 or below can now claim £1,300 per month; medium sized businesses with a rateable value between £15,000 and £51,000 can claim £2,000 per month; and larger businesses can claim £3,000.

The Federation of Small Businesses’ national chair Mike Cherry called the plans “game-changers”, adding: “It’s welcome to see them adopted today.

“We will work with government on clarity on where and when any new restrictions will apply, and clear, accessible small-business-friendly guidance to make sure this help gets to those facing a lockdown of their business premises.”

Director general of the CBI, Dame Carolyn Fairbairn, said: “The steep rise in infections in some areas means new restrictions to curb numbers feel unavoidable.

“The chancellor’s more generous job support for those under strict restrictions should cushion the blow for the most affected and keep more people in work.”