The chancellor has announced a new support scheme to help companies save “viable jobs” by helping them to cover some of the salary of workers whose hours have been reduced.

Rishi Sunak stressed that the next stage of government aid would be different to the first phase of coronavirus support.

The new Job Support Scheme comes into force on November 1 after furlough arrangements end and will run for six months.

It is designed to help businesses that are seeing lower demand due to economic uncertainty and restrictions imposed to limit the spread of the virus.

Companies that believe they have a viable future, but are facing temporarily depressed business volumes are being encouraged to reduce staff hours rather than making employees redundant.

Under the scheme, those companies will continue to pay the wages of staff for the hours that they work, but the government will pay a third of the employees’ lost income for the hours that have been cut, while the employer pays another third.

It means that employees who go back to work on reduced hours will still receive two-thirds of the income for their lost hours.

In order to qualify, employees must be working at least 33 per cent of their usual hours. 

The level of grant will be calculated based on employees’ usual salary, capped at £697.92 per month.

The Job Support Scheme will be open to businesses that have not used the furlough scheme.

Employers can use the scheme in conjunction with the Jobs Retention Bonus.

Sunak announced a new phase of the Self Employment Income Support Scheme under similar terms to the Job Support Scheme.

Self-employed taxpayers who have been adversely affected by Covid will be able to claim 20 per cent of previous average monthly profits from November to the end of January, up to a total of £1,875.

A further grant will be available from February 2021 to the end of April, but details of the latter phase of support will be finalised nearer the time.

Sunak also announced it will extend the temporary 15 per cent VAT cut for the tourism and hospitality sectors to the end of March next year. 

On top of this up to half a million businesses who deferred their VAT bills will be able to spread their payments over a longer time period in smaller installments.

Rather than paying a lump sum in full at the end March next year, they will be able to make 11 smaller interest-free payments during the 2021-22 financial year.

The government is offering self-assessment taxpayers an additional 12-month extension on both the July 2020 payment and the payment due in January 2021.

Businesses who took out a Bounce Back Loan, will have be able to extend their repayment term from six years to 10, which will cut monthly repayments by nearly half.

Those that are struggling with repayments will be able to switch to interest-only terms for up to six months or request a payment holiday.

Sunak pledged that lenders offering the Coronavirus Business Interruption Loan Scheme will be able to extend terms from six to 10 years.

Companies will be able to apply for the various different coronavirus loan schemes until the end of November. 

Sunak said: “The resurgence of the virus, and the measures we need to take in response, pose a threat to our fragile economic recovery…

“Our approach to the next phase of support must be different to that which came before.

“The primary goal of our economic policy remains unchanged – to support people’s jobs – but the way we achieve that must evolve.”