Video report by ITV News Political Correspondent Carl Dinnen
The government is set to pay two thirds of wages for workers who are legally unable to attend their jobs due local lockdown restrictions and forcing the business in which they work to close.
Any business in the UK forced to close their premises due to local restrictions will be eligible for cash grants worth up to £3,000 per month - up from the £1,500 every three weeks which was available previously.
Chancellor Rishi Sunak announces the new support for workers
Employees in these businesses will have two thirds of their wages paid by the government, up to £2,100 a month.
It is thought the scheme could benefit hundreds of thousands of businesses, including restaurants, pubs, nightclubs, bowling alleys and many more.
But it could cost "hundreds of millions a month", a treasury source said.
ITV News correspondent Carl Dinnen breaks down Sunak's announcement
Chancellor Sunak said: “The expansion of the Job Support Scheme will provide a safety net for businesses across the UK who are required to temporarily close their doors, giving them the right support at the right time.”
In an interview with broadcasters, he added: "I hope this provides reassurance and safety net for people and businesses in advance of what may be a difficult winter."
Businesses will only be eligible to claim the grant while they are subject to restrictions and employees must be off work for a minimum of seven consecutive days.
The scheme will begin on November 1 - just as the furlough scheme finishes at the end of October and will be available for six months - it will be reviewed in January.
These measures will sit alongside the original Job Support Scheme, which allows businesses to bring staff back on a part time basis and share the wage burden with the government.
Businesses must continue paying National Insurance and pension contributions for their staff, but the Treasury estimates at least half the people who will be eligible for the scheme do not pay these anyway.
Of those who are paying, it will be 5% or less of their salary.
Director General of the Confederation of British Industry (CBI), Dame Carolyn Fairbairn, said: “The steep rise in infections in some areas means new restrictions to curb numbers feel unavoidable.
“The Chancellor’s more generous job support for those under strict restrictions should cushion the blow for the most affected and keep more people in work."
Rishi Sunak on how much the new support package will cost
The scheme has been announced ahead of an expected tightening of restrictions in northern England, which could see all hospitality businesses forced to close in particular areas.
The government says hospitality accounts for 30% of all settings in which people are exposed to Covid-19.
Ministers are expected to outline a three-tier local lockdown system on Monday, which may see high-risk individuals told to stay at home for months and fresh measures for businesses.
There are particular concerns for the hospitality sector, as it faces new restrictions with data indicating it is linked to a significant number of transmissions.
Chief medical officer for England Chris Whitty on Thursday briefed MPs representing constituencies in northern England and the Midlands, where infection rates are at their highest.