The Government's job retention scheme will pay workers' wages until the end of October

The government’s coronavirus wage subsidy scheme for workers will be extended until the end of October as the British economy is gradually reopened, Rishi Sunak has announced.

Following pressure from employers groups to avoid a wave of job losses this summer, the chancellor said the furlough programme would run for a further four months, up to the end of October. First launched in March, it had been due to close at the end of next month.

Sunak said there would be no changes in the system, whereby the government pays 80% of furloughed workers’ wages up to £2,500 per month, until the end of July. From August, the scheme will continue for all sectors and regions, but with greater flexibility for firms to bring staff back to work. Under the current scheme furloughed employees cannot work.

The chancellor also said that from August employers would need to “share with the government the cost of paying salaries” in an indication that the level of state support would gradually taper away. The scheme is currently costing the government about £14bn a month.

Sunak did not outline in detail how the government support would be wound down, but said there was an expectation that employers would share the burden of paying 80% of furloughed workers’ wages, meaning staff would not have their incomes cut.

Concerns had been rising over the cost of the furlough scheme following rapid take-up, with a price tag almost as much as the monthly bill for running the NHS.

The scheme has been much more widely used that initially expected by the Treasury. Almost a quarter of all workers in Britain were furloughed by their employers within the first two weeks of the scheme’s launch in mid-April.

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