THE Government will pay two thirds of the wages of staff in pubs, restaurants and other businesses if they are forced to close under new coronavirus restrictions, the Chancellor has announced.

Rishi Sunak said the expansion of the Jobs Support Scheme would protect jobs and provide “reassurance and a safety net” for people and businesses across the UK in advance of a potentially “difficult winter”.

It comes as ministers are expected to outline a three-tier local lockdown system on Monday, which could see hospitality venues in coronavirus hotspots being temporarily closed to combat the spread of the virus.

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Firms whose premises are legally required to close because of restrictions will receive grants to pay the wages of staff who cannot work, with the Government paying two thirds of each employee’s salary (67 per cent) up to a maximum of £2,100 a month.

Employers will not be required to contribute towards wages, but will be asked to cover national insurance and pension contributions.

Businesses will be able to claim the grant when they are subject to restrictions and employees are off work for at least seven consecutive days.

The scheme will launch on November 1 and run for six months, with a review in January.

Businesses which are already legally closed, such as nightclubs, will also be eligible.

A Treasury source said the expanded Jobs Support Scheme would cost “hundreds of millions” of pounds a month.

Ministers will also increase cash grants to businesses in England which are forced to close to support with fixed costs, with the grants linked to rateable values.

Up to £3,000 per month will be payable every fortnight, the Treasury said.

Mr Sunak told reporters: “Throughout this crisis my priority has always been to protect jobs so today I’m announcing an expansion of our Jobs Support Scheme, specifically to protect those jobs of people who work in businesses who may be asked to close.

“If that happens those workers will receive two thirds of their wages for the time that they’re unable to go to work.

“I hope this provides reassurance and a safety net for people and businesses in advance of what may be a difficult winter.”

The Chancellor denied that it was just a rebranded furlough scheme, which he previously declined to extend arguing it was “fundamentally wrong” to hold people in jobs that only exist inside the scheme.

He said: “This is a very different scheme to what we’ve had before.

“This is not a universal approach, this is an expansion of the Jobs Support Scheme specifically for those people who are in businesses that will be formally or legally asked to close so in that sense it’s very different.

“I’ve always said that we will adapt and evolve our response as the situation on the health side adapts and evolves.

“That’s what’s happening.

“I think that’s the pragmatic and right thing to do.”

However, the new support is less generous than the furlough scheme, which paid 80% of millions of workers’ wages and warded off larger levels of job losses.

It ends this month and will be replaced by the less generous Jobs Support Scheme, where the Government will pay up to 22% of wages for workers who come back part-time.

Suzanne Watson, President of Bradford Chamber of Commerce and Managing Director at Approach PR, welcomed the decision - but argued that the Government must ultimately focus on getting to a stage where coronavirus restrictions, and the subsequent economic change that they bring, are no longer needed.

“The enhanced Job Support Scheme will provide some additional relief for businesses forced to close due to intensified restrictions. It is right that the Chancellor has responded to our long-standing calls for more local support, as so many areas across our region now face restrictions and closures.

"More generous cash grants will be of some help, but for most this will not be enough to offset a sustained cash crunch. As welcome as this new support will be for companies shut down by Government decree, additional local restrictions and lockdowns will have a material impact on many other firms, especially in supply chains and in town and city centres.

"Their cash flow concerns, and worries about future demand, must be heeded. At the end of the day, no fiscal support will ever be a substitute for an open, functioning economy.

"While the Chancellor deserves thanks for enhancing the support on offer, the goal of Government must be to get to a point where wide-ranging restrictions, and the economic disruption they bring, are no longer needed.”