UK finance minister Nadhim Zahawi has asked officials in the exchequer to work on a multibillion pound package that could lead to an extra 400 pound ($485.20) cut in energy bills, the Times reported on Saturday.
According to the newspaper, the chancellor is working for a proposal for government-backed lending schemes for suppliers which would result in a reduced energy price cap from January.
The new proposal will change how the country's energy regulator Ofgem determines the level at which the price cap should be set by removing an allowance that suppliers charge consumers, the newspaper said.
The cost would instead be paid for by financing facilitated by the Treasury and the Bank of England, the Times added.
The Treasury has previously said it is working on energy support options for the country's new leader to consider. Current Prime Minister Boris Johnson, whose successor will be named on Sept. 5, has said he will make no new fiscal commitments before he leaves office.
The new measures are being worked on to be ready for when either Liz Truss or Rishi Sunak is announced as the new prime minister, the Times said citing a senior government source. Both candidates have announced their own plans to help struggling households pay fuel bills.
Sunak has promised to increase an existing 15 billion pound ($18.20 billion) support package aimed at helping Britons cope with energy costs that are forecast to rise 150% from current levels by April 2023. While Truss has not committed to increasing direct payments to consumers said has said she would do everything possible to ensure people can pay their bills, including lifting some environmental surcharges.
Sunak on Saturday fleshed out his plans on energy saying he would deregulate North Sea fossil fuel production, cut energy waste by insulating more homes, and reform licensing around offshore wind, solar and nuclear energy generation. Truss has argued that lowering taxes as soon as possible is the best way out of the current squeeze.
(Reporting by Akanksha Khushi in Bengaluru; Editing by Daniel Wallis)