Chancellor Rishi Sunak said it was unheard of for the UK government to step in to pay people’s wages.
He said: “Any employer, big or small, charitable or non-profit, will be eligible.”
Employers will be able to apply to HMRC for a grant for most of the wages of people who are not working but are kept on payroll rather than being laid off.
The amount will be 80% of the salary (up to £2,500 a month) of retained workers, which is just above median income and can be topped up further by the employer.
There will be no limit to the funding and the scheme will be backdated to 1 March.
“We said we would stand together with the British people and we meant it,” said Sunak. “There has never been a scheme like this before and we have to build it from scratch.”
While the grants will be available within weeks (before the end of April), Sunak acknowledged there would still be hardship, with some having already lost their jobs.
Elsewhere, he said no business will pay VAT until June, and they will have until the next financial year to pay it back.
“The government is doing its best to stand behind you (businesses) and I am asking you do your best to stand behind your workers,” Sunak said.
“I cannot promise you that no one will face hardship in the weeks to come, but I will always act to protect you if the worst happens.”
Elsewhere, universal credit standard allowance is being increased by £1,000 a year and working tax credit basic element by the same amount.
"I’m all strengthening the safety net of our self-employed too. Suspending the minimum income floor for everyone affected by the economic impact of coronavirus," added Sunak.
Self-employed workers can now access universal credit at a rate equivalent to statutory sick pay for employees.
The next self-assessment payments will also be deferred to Jan 2021.
"Taken together, I’m announcing nearly £7bn of support through the welfare system to strengthen the safety net and protect people’s income," Sunak said.
“When this is over, and it will be over, we want to look back on this moment and remember the many small acts of kindness done by us and to us.
“We want to look back on this time and remember that in the face of a generation-defining moment we took collective national effort and stood together. It’s on all of us.”
