Chancellor Rishi Sunak is set to announce a multibillion-pound package of economic support including wage subsidies for part for part-time workers, VAT cuts and more loans for struggling businesses.

Sunak is expected to set out his “winter economy plan” in the Commons to avoid widescale redundancies over winter.

The Times reports it will feature a German-style subsidy scheme in the government would help to pay the wages of people returning to work on a part-time basis.

The system is designed to encourage companies to keep on workers in viable jobs while ensuring that others are not retained in “zombie posts” that exist only because of the government’s furlough scheme, which ends on October 31.

The chancellor will extend four loan schemes for businesses until the end of November and increase the terms of loans from six years to ten in a move that will sharply reduce monthly repayments. The schemes have already provided £53bn worth of loans to companies.

A VAT for the hospitality and tourism industry to 5% will be extended from January to the end of March.

Under the German kurzarbeit [short-working] scheme, employers pay the wages of staff while they are at work and the state covers 80% of their wages when they are not.

Ministers have been considering plans to subsidise the wages of employees who can work at least half of their normal hours.

Companies would pick up the wages for hours covered by employees and the government would pay a third of their wages while they were not working.

Employers would pay another third and employees would forgo a third.

The scheme would cost about £500m a month against the £4bn cost of the furlough scheme.

Sunak has rejected calls to extend furlough payments amid concerns that doing so would hold people in jobs that were no longer viable.

Responding to the package, Kate Nicholls, CEO of UK Hospitality, tweeted: ”With significant additional restrictions on hospitality and many businesses fully closed by law, it is vital this is not a one size fits all subsidy and proportion of wages covered flexes to take account of restrictions. Hospitality workers substantially worse off.”