One senior Government source said: “Public health teams working in local lockdown areas have been reporting a lot of cases of people refusing to self-isolate, and the reason tends to be about loss of income.

“The Prime Minister said earlier this year that nobody should face hardship for doing the right thing and this is the latest part of that process.

“We need to drive up the numbers of people who are getting tested, who are giving us their contacts if they test positive, as well as the numbers of contacts who self-isolate. People worrying about money is the biggest barrier to that.”

The scheme will be piloted in Blackburn with Darwen, Pendle and Oldham, all of which are subject to local restrictions, before being extended to other high infection areas if it proves a success.

To qualify for the money, people must be in work and in receipt of either Universal Credit or Working Tax Credit. They will be required to provide bank statements and a notification from NHS Test and Trace before getting the payments.

There will be no limit on how many people from the same family can claim the payments at the same time, as long as all are in work and eligible for the scheme.

It means a couple who both work will receive £314 over the course of a fortnight if one of them tests positive and the other has to self-isolate as a result. The money will be on top of their usual in-work benefit payments.

Local authorities will police the system through welfare checks, phone calls and checks with employers.

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