Rishi Sunak is urging workers to return to the office – at the same time as ministers are planning emergency measures to cut quarantine numbers.
The chancellor says he wants as many people as possible, especially younger staff, to go back to normal working as soon as work-from-home guidance is lifted on 19 July.
But his call risks being undermined by the threat of hundreds of thousands of workers being forced to quarantine in the weeks leading up to self-isolation being axed on 16 August.
One government source told Sky News mass isolation would be “another lockdown by the back door” and confirmed that ministers are planning changes to the NHS COVID-19 app.
Plans to change the app emerged after Mr Sunak told Sky News he had spoken to Health Secretary Sajid Javid about the public’s frustration with the Test and Trace system.
And the chancellor has now told The Daily Telegraph that working remotely during the pandemic had disadvantaged young workers, as face-to-face interaction is valuable.
“I think for young people, especially that ability to be in your office, be in your workplace and learn from others more directly, is something that’s really important and I look forward to us slowly getting back to that,” Mr Sunak said.
But coinciding with the chancellor’s return-to-work call, Sky News understands there is concern in Whitehall over what to do about the sheer number of people expected to be told to isolate in the five weeks leading up to 16 August.
The Department of Health has confirmed to other parts of Whitehall that it is looking at a scheme to make the COVID app Bluetooth function less sensitive, Sky News has learned.
The Daily Mail is also reporting that the self-isolation system will be watered down within days, amid fears it will cripple the economy and public services this summer.
Ministers have ordered an urgent review of the app following concerns it is bringing the system into disrepute by ordering too many people to self-isolate.
They say the app’s “sensitivity” will be reduced to cut the numbers being asked to quarantine unnecessarily, the paper reports.
The latest figures on self-isolation reveal there were 356,036 app alerts in England for the week ending 30 June, up 62% on the previous week.
But some in Whitehall want Mr Javid to go further, Sky News understands.
The statistics show in that week 135,685 people tested positive and 281,500 people were told they had come into contact with someone with COVID and told to self-isolate.
In his Commons statement on Tuesday announcing the end of self-isolation for people in England with two jabs and under-18s, Mr Javid predicted 100,000 cases a day.
That suggests 700,000 cases every week, with 1.4 million quarantining.
Whitehall insiders have told Sky News that curbing the app would not cut those numbers.
One source said that government modelling carried out when Matt Hancock was health secretary suggested the scale could be devastating for public transport and healthcare staffing levels.
Some in Whitehall are said to believe test-to-release is the answer, pointing to cabinet office minister Michael Gove benefiting after being pinged on his return from the Chelsea-Manchester City Champions League final in Porto in May.
A pilot scheme in Liverpool also found 3,200 key worker staff days were protected from quarantine in the same way.
But senior government sources have downplayed that option, telling Sky News that test-to-release is not the focus of discussions and ministers are primarily looking at changing the app.