Bosses who bring back furloughed staff and keep them on the payroll until January next year will get a bonus of £1,000 per employee, Chancellor Rishi Sunak has said.
Sunak made the announcement during his coronavirus economic update in the House of Commons today (8 July).
Employees brought back from furlough must remain on the payroll until the new year and be paid at least £520.
Sunak said: "This would be a £9bn policy to retain people in work. If you stand by your workers we will stand by you."
The Chancellor announced a raft of job-focused plans to help boost the post-lockdown economy. These included tax changes, such as a pause on stamp duty, and policies to encourage companies to hire younger workers where the government pledged to give firms £2,000 each to hire apprentices. Firms will also get £1,500 to hire apprentices over 25.
Sunak said he would not accept unemployment as an "inevitable outcome" but said the UK had suffered a 25% economic contraction in just two months.
He added the government's "extraordinary" economic support measures had been among the largest in the world but the country still faced "profound" challenges and "significant job losses".
Sunak was clear that the Job Retention Scheme could not go on forever.
"Furlough has been a lifeline for millions. But the truth is calling for endless extensions is just as irresponsible as it would have been to end the scheme overnight back in June.
"The longer people are on furlough their skills could fade and it is harder to find new opportunities.
"Furlough will wind down flexibly and gradually, supporting people and businesses through to October," he told MPs.
Sunak added: "I believe in the British people's fortitude and endurance. And it is that value, endurance, more than any other, we need to embody now.
"We will not be defined by the crisis but our response to it."