Chancellor Nadhim Zahawi (PA)
(Picture: PA Wire)Plans to cut household energy bills by an extra £400 this winter are being drawn up at the Treasury, reports claim.
Chancellor Nadhim Zahawi, has asked officials to draw up a multibillion-pound package to reduce the price cap from January with Cornwall Insight predicting it will reach £4,266 by the beginning of next year.
If implemented, the new plan would change how Ofgem determines the cap by removing an allowance suppliers can charge consumers and is being worked at a speed, a senior Government source told The Sunday Times.
The removal of the allowance, created to protect supplies from higher winter prices from October, would then be met by financing facilitated by the Treasury and the Bank of England.
Although the scheme would not be ready by October, it is estimated that it may reduce the price cap by £400.
It is not guaranteed, however, if the possible proposal would be adopted by Rishi Sunak or Liz Truss, as they have different plans to tackle surging energy prices.
It comes as Mr Sunak revealed his plan to make Britain more “energy secure” if he becomes Prime Minister.
The former chancellor said he would legislate to make the UK “energy independent” by 2045 as he vowed to ensure there is no repeat of the looming winter crisis.
“The first rule of any crisis is to acknowledge that you are facing one. We are facing an energy crisis and I have a plan to both get us through it and make sure this is a one winter crunch,” Mr Sunak said.
“I will lead a national effort to increase our domestic energy supply and cut our energy waste. I will also make sure our country is never put into this position again.”
Simon Clarke, one of Ms Truss’s key backers, has said richer households should not receive the £400 energy pay out which is due in the autumn.
Speaking to The Daily Telegraph, Mr Clarke said: “I do find it pretty odd that high earners are receiving £400 off their bills.
“As Conservatives, we ought to surely believe in targeting taxpayer money as best we can so that we actually achieve the best value and keep the burden on the exchequer as low as we can.”
Meanwhile, Labour will on Monday call for the energy price cap to be frozen at its current level of £1,971 as UK households struggle to pay their bills.
A think-tank has warned households on low incomes will have to reduce their spending power by three times as much as high income households in order to afford their energy bills this winter.
Labour leader Sir Keir Starmer will call for the price-cap freeze when he sets out details of his party’s plans, including how they will pay for the measure, according to The Observer.
Specifics of the measure were not available, though Sir Keir wrote elsewhere that the party aimed to end energy “injustice”.
