Employers will be required to pay a quarter of the wages of their furloughed staff from August, the Chancellor is expected to announce.
Rishi Sunak will also set out details of how people will be able to start to work part time while still having their wages part paid by the Job Retention Scheme – for example, working a number of days or hours a week while still furloughed.
The Chancellor is planning to make the announcement either on Friday or over the weekend as he sets out a route for the economy to get going after the lockdown.
The furlough scheme allows the government to pay 80 per cent of wages for workers, up to a maximum of £2,500 a month. The Chancellor is expected to say that from August employers will be required to put forward 25 per cent of this amount – which means furloughed staff would receive the same amount as before while lowering the government’s share.
The scheme will also be closed to new entrants from the end of June, according to Treasury plans.
All employers using the scheme will be required to make the payments if they continue to furlough their staff, regardless of whether their business has been allowed to open.
A total of 8.4 million workers are now furloughed, to a cost of £15bn, according to the latest data from HM Revenue & Customs. This means more than one in three private sector workers are now having their wages paid by the state, with 2.3 million self-employed also receiving grants to cover lost income.
Mr Sunak warned last week the UK faces a “severe recession” on an unprecedented scale. The Chancellor said the lockdown is having a “severe impact” on the UK’s economy and that there will be “more hardship to come”.
Earlier this month Mr Sunak extended the Job Retention Scheme until the end of October, although said it would be altered from August to encourage more workers to gradually return to work.
The Treasury said at the time: “The scheme will continue in its current form until the end of July and the changes to allow more flexibility will come in from the start of August.”