Next week's budget could see moves towards ending 'fuel poverty' in Britain

Speculation was growing last night that Chancellor Alistair Darling will use his first Budget next week to reveal moves to cut energy bills.

About four million live in "fuel poverty" in Britain, which means they spend more than 10 per cent of their weekly income on power.

The problem is getting worse after firms announced further rises of up to 27 per cent in energy bills.

For an average family, the "dual-fuel" bill, for customers who get their gas and electricity from the same company, is now more than £1,000. It has almost doubled in five years.

All the "big six" power firms operate social tariffs, which should ensure the elderly and poor can afford to stay warm.

At present, the discounts work in a variety of ways. They are only offered as an option, which many vulnerable customers do not know about or are too proud to request.

A tiny percentage of most energy firms' customers are on a social tariff. In one case, it is as low as 0.3 per cent of the company's customers.

However, inflation-busting rises in bills - and a surge in energy firms' profits - have renewed calls for the poorest customers to be switched automatically to the cheapest prices.

Energy giants have been meeting Government officials in the run-up to the Budget, on Wednesday of next week, to discuss various options.

A new "social tariff" is likely to be a flat rate across the industry, which everybody in fuel poverty or on some benefits would get.

It could involve such customers paying heavily discounted rates for their energy or having prices fixed at current levels.

Speculation about another windfall tax, if the energy giants refuse to cooperate, was dismissed yesterday by Treasury sources.

Labour is under pressure to deal with fuel poverty after pledging to eradicate the problem by 2016.

Allan Asher, chief executive of the consumer group Energywatch, said: "They have left it far too late.

"Companies have been abusing consumers for too long while the Government has its head stuck in the sand.

"Companies are profiteering from the poor and it is outrageous and immoral."