NEW action to protect jobs during the pandemic includes a Government pledge to top up wages for the next six months.

Rishi Sunak unveiled his winter economy plans in the Commons today, after the Government introduced new restrictions earlier this week to curb the spread of the coronavirus.

He announced a new Jobs Support Scheme to replace the existing furlough scheme when it ends on October 31 to subsidise the wages of people forced to cut their hours due to the pandemic.

Under the scheme, which would start in November and last for six months, businesses will be able to keep staff in a job on shorter hours, rather than making them redundant.  

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.

The measure is aimed at businesses that need it most - small and medium-sized firms – but only for big companies if turnover has fallen by a third.

Firms will be able to claim both the jobs support scheme and the jobs retention bonus, he said. 

Meanwhile, the self-employed grant will be extended on similar terms.

He also extended the self-employment income support scheme and 15% VAT cut for the hospitality and tourism sectors, and help for businesses in repaying government-backed loans.

He said that on current plans VAT would increase from 5% to 20% on January 13 but he said he was keeping a lower rate of VAT for hospitality and leisure firms until 31 March 2021.

The Chancellor also announced “pay as you grow” measures, to give businesses longer to repay state-backed business loans.

Companies now have 10 years to repay loands, rather than six, almost halving repayments.

He said interest-only payments can be made, while struggling firms can suspend their payouts.

All the government’s state-backed loan schemes will be extended until the end of this year.

The government is working on a new guarantee loan programme to begin in the new year..

The chancellor will allow businesses to spread their VAT bills over 11 separate payments.

"I can't save every business; I can't save every job," he told the Commons. "Many businesses are operating safely and viably but they now face uncertainty and reduced demand over the winter months."

Mr Sunak said the resurgence of coronavirus posed a threat to the UK’s “fragile” economic recovery.

As part of the package of measures, he 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.

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.”