The furlough scheme will last for another month and hard-pressed businesses will also be able to access state-backed loans until March, the Treasury has announced.
The Coronavirus Jobs Retention Scheme, under which the state picks up 80 per cent of the furloughed worker’s wages, had been due to finish at the end of March 2021 but will now close at the end of April.
And companies will be able to access state-guaranteed loans until March 2021, rather than January.
The Treasury also said the next Budget will be held on 3 March and that this will “deliver the next phase of the plan to tackle the virus and protect jobs”.
The extension suggests the Treasury wants to dissuade firms from making any decisions on redundancies until after they have seen the Budget.
The Chancellor, Rishi Sunak, also said he would not, as previously planned, review the employer contribution to the furlough scheme in January, removing the possibility that employers would be required to pay a share of furloughed workers’ wages.
“We know the premium businesses place on certainty, so it is right that we enable them to plan ahead regardless of the path the virus takes, which is why we’re providing certainty and clarity by extending this support, as well as implementing our Plan for Jobs,” said Mr Sunak.
Data released earlier on Thursday showed that at the end of October 2.4 million workers were still furloughed, accounting for around 7.5 per cent of the workforce.
That had been the month that furlough has originally been intended to end. On 5 November Mr Sunak announced, in the face of new restrictions and lockdowns, that the scheme would be extended to March.