BORIS Johnson and Rishi Sunak launched the UK Government’s economic fightback against the coronavirus pandemic with the biggest state intervention into the workplace in Britain’s history.

At the daily Downing St press conferences, the Chancellor made clear the country was facing a “generation-defining moment” and that a massive response was needed to save the economy from falling off a cliff.

The headline measure is the UK Government’s decision to step in and pay 80 per cent of employees’ wages, up to £2,500 a month, for those not working because of coronavirus.

It will kick in within weeks and the Coronavirus Job Retention Scheme will be fully operational by the end of April.

The other key measures are:

*no business will pay VAT until June;

*firms will be able to get interest-free loans for 12 months;

*the standard rate in Universal Credit and Tax Credits will be increased by £20 a week for one year from April 6, meaning claimants will be up to £1,040 better off and

*nearly £1 billion of additional support for renters through increases in the generosity of Housing Benefit and Universal Credit; from April, Local Housing Allowance rates will pay for at least 30 per cent of market rents.

In the next few days, the Government will launch a major national advertising campaign to set out the details of the available support so that businesses and workers can fully understand them.

Last night, the Institute for Fiscal Studies calculated the cost of the Government’s wage subsidy package was “unknowable” but would run into several billions of pounds a month.

“Suppose 10 per cent of employees are affected. That could cost the Government in the order of £10 billion over three months. If more take advantage of the support, then the cost will be proportionally higher,” said Paul Johnson, the think-tank’s director.

“It is clearly a policy designed in haste and will require considerable speed and flexibility from HM Revenue and Customs to deliver,” he added.

The “people’s bail-out” comes just days after Mr Sunak unveiled in a £350bn package of loans and government grants to help businesses get through the crisis.

He explained the job retention scheme would be available to any employer, large and small, as well as charities or non-profit organisations and “means workers in any part of the UK can retain their job, even if their employer cannot afford to pay them, and be paid at least 80 per cent of their salary".

The scheme will cover the cost of wages backdated to March 1 and will be open initially for at least three months; the Chancellor pledged to extend it for longer if necessary.

In an appeal to businesses, the Chancellor urged them to look very carefully at the support before making decisions to lay people off. He said: "The Government is doing its best to stand behind you and I'm asking you to do your best to stand behind our workers."

The Prime Minister said the Government was taking “exceptional measures” to help those who were adversely affected economically by what the Government had to do.

“Everybody understands that people in employment, businesses and workers, are making a huge sacrifice right now to protect the lives of people who are vulnerable to coronavirus and it’s absolutely vital and right that the Government should stand behind those businesses and those workers,” he added.

Unions and businesses welcomed the Government’s historic intervention as did opposition parties but Labour made clear it did not go far enough in several areas.

Len McCluskey, General Secretary of the Unite Union, described the measures as "historic, bold and very much necessary" while Tim Roache of the GMB said the Government underwriting of wages was “hugely welcome” but stressed his union would be “pushing hard” for employers, that could afford it, to pay an extra 20 per cent to secure the incomes of their employees.

The British Retail Consortium said the Chancellor’s measures “packs a punch” and offered a “vital lifeline” to the High St but stressed further action might be needed in the coming months to help the survival of jobs and businesses.

The Institute of Directors described the Government aid package as a “hugely significant step forward for employers” but insisted the acid test was how quickly the help could get to struggling businesses.

Stuart Patrick, Chief Executive of Glasgow Chamber of Commerce, described the Government’s measures as a “significant step forward” but noted: “Time is of the essence and it is imperative the Government provides details of the job retention scheme speedily and that loan guarantees reach companies as soon as possible.”

At Westminster, there was a mixed response.

John McDonnell, the Shadow Chancellor, said Mr Sunak had “shifted direction but, unfortunately, not far enough or fast enough”.

He called for the raising of Statutory Sick Pay and insisted the cap on incomes meant many people would take a “significant pay cut”.

Noting how the financial help would take “some weeks to roll out at a time when wages need to be guaranteed more urgently,” Mr McDonnell added: "The Chancellor said he would do whatever it takes, but he can and should go further and we will keep working constructively with Government to ensure the best possible response to the coronavirus crisis."

Ian Blackford for the SNP welcomed the Chancellor’s proposals, saying: “While they do not go as far as we would have liked, they will provide significant support to protect people's jobs and incomes.”

Ed Davey, the acting Liberal Democrat leader, also welcomed the package for employees but insisted his party was “worried far too little is being done for the self-employed, for those on zero hours’ contracts or for those on statutory sick pay and benefits”.

Earlier, Nicola Sturgeon called on businesses to support their staff during the outbreak of coronavirus as she condemned the actions of Britannia Hotels after it sacked staff at the Coylumbridge Hotel in Aviemore, leaving some without accommodation.

At a briefing on the virus, the First Minister said: "I would unreservedly condemn the approach that was taken in the Aviemore case; that is not how we want employers to operate.”