Chancellor Rishi Sunak has unveiled plans for employers to start paying towards their furloughed staff and extend reduced support to self-employed workers.
Changes to the Coronavirus Job Retention Scheme will enable businesses to bring back staff part time from July and introduce a taper requiring firms to contribute to their salaries from August onwards.
In the face of growing calls, Mr Sunak has announced that financial help would also be extended for sole traders for a further three months, although the grant available would be reduced by 10% to 70% of their profits.
The government also announced the furlough scheme will close to new entrants on 30 June.
The moves come as ministers seek to get people safely back to work and restart the stalled economy, as the coronavirus lockdown is eased.
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Earlier, Environment Secretary George Eustice told Sky News that people could not be furloughed "indefinitely".
But fears will persist that the reduced level of support for workers could lead to a wave of redundancies as the economy heads into a deep recession.
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Announcing the latest measures, Mr Sunak said: "Our top priority has always been to support people, protect jobs and businesses through this crisis.
"The furlough and self-employment schemes have been a lifeline for millions of people and businesses.
"We stood behind Britain's businesses and workers as we came into this crisis and we stand behind them as we come through the other side.
"Now, as we begin to re-open our country and kick-start our economy, these schemes will adjust to ensure those who are able to work can do so, while remaining amongst the most generous in the world."
The job retention scheme has so far helped a million businesses cover the wages of 8.4 million staff unable to work during lockdown, at a cost of £15bn.
In June and July, the existing support will continue with the government still paying 80% of furloughed employees' salaries, capped at £2,500, with firms not required to pay anything.
However, from 1 July – a month earlier than previously announced – firms will be able to bring staff back part time, but will be responsible for paying their wages while in work.
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The main changes kick in from August when the level of government support will begin to reduce and businesses will have to start to contribute.
This means:
- August – The government will pay 80% of wages up to a cap of £2,500, but employers will start to pay national insurance and pension contributions
- September – The government will pay 70% of wages up to a cap of £2,190, with employers paying 10% of wages as well as contributions
- October – The government will pay 60% of wages up to a cap of £1,875, with employers paying 20% of wages plus contributions
Mr Sunak also announced that support for the self-employed would also be extended, although at a reduced rate.
The Self-Employment Income Support Scheme has so far seen 2.3 million claims worth £6.8bn.
Those eligible will be able to claim a second and final grant in August, although this will be only cover 70% of their profits over a three month period, capped at £6,570, rather than the previous more generous payment which covered 80%, capped at £7,500.
Applications for the second grant will open in August.
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