Now Government plans £600m of vouchers to help poor buy fuel

Britain's poorest families are in line for Government vouchers worth between £50 and £100 to help meet soaring fuel bills under plans being drawn up by ministers.

Whitehall sources confirmed that a scheme is under consideration as part of Gordon Brown's autumn relaunch.

The vouchers could be sent to up to six million who claim child tax credit and would be redeemed directly against fuel bills.

But they would cover only a fraction of the annual rises in bills.

Higher costs in petrol, heat and light mean the average household is paying almost £630 a year more than 12 months ago. 

Tonight, there were questions about how Chancellor Alistair Darling could afford the proposed giveaway - revealed by Channel 4 News  -  which could cost £600million.

Opposition MPs also asked why the taxpayer should effectively be subsidising inflated bills being issued by the big energy firms.

Foreign-owned companies have been accused of 'picking the pockets' of British customers, while being forced to cap price rises at home.

LibDem Treasury spokesman Vince Cable said: 'This is a seriously bad idea. It only covers a proportion of the problems of the poorest families. And why should taxpayers be paying it rather than the energy companies?'

Jenny Saunders, of the charity National Energy Action, cast doubt on the proposed voucher scheme.

'People won't really have faith in this working for them,' she said.

'I think we need something that's far more straightforward. Payments with benefit through the tax credit system might be more sensible.'

Carl Emmerson, of the Institute for Fiscal Studies, said: 'This is going to cost the Government £600million.

'You could choose to target the poorest half getting child tax credit and that would halve the cost. It would have a smaller impact overall, but it would still ensure that the poorest got the money.'

Energy firms are said to have been pushing for any help to be targeted on the most needy.

But data protection laws means they are not allowed to use Government information to identify those most in need. A voucher scheme would remove that obstacle.

At the weekend, it was reported that all households in receipt of child benefit were in line for a £150 payment to help meet fuel bills.

In a major embarrassment for the Government, the plan leaked after a senior civil servant was overheard discussing it on a train.

But Left-wing Labour MPs would be deeply unhappy with any handout that is not concentrated exclusively on the most disadvantaged.

And there is growing speculation that the Government will fund its new economic recovery plan through a levy on the profits of energy firms.

Around £500million is expected to be raised through a 'green tax'.

Ministers are also said to be examining whether it is possible to change the £2billion winter fuel poverty payment so that it is not targeted solely at pensioners, but also at the poor.

The annual tax-free payment of between £100 and £300 only goes to those over 60, roughly 11.7million people.

A Treasury spokesman said: 'We do not comment on speculation. The Government has said it is looking at measures to support families and business through these tougher times. No decisions have been taken.'

Ten million householders cannot afford to stay warm this winter, it was claimed yesterday.

A study by price comparison website uSwitch.com found that 39 per cent of households simply cannot afford the rises.

Some 54 per cent say they are taking steps to make their homes more fuel efficient with insulation and double glazing.

And 15 per cent  -  around four million homes  -  plan to sacrifice hot meals to save money.

uSwitch director of consumer policy, Ann Robinson, said: 'The second wave of price rises has put the final nail in the coffin for affordable energy.'

British families fare much worse in price comparisons across Europe

British families are facing punishing increases in food and energy bills that dwarf those across Europe.

Food prices here are rising at 13.7 per cent a year - almost twice as fast as the rest of Western Europe.

And Britain's official inflation rate of 4.4 per cent is some ten per cent above the EU average, according to figures published yesterday.

In France, food prices have risen by 6.9 per cent. In Germany, they are up seven per cent and in Ireland 7.1 per cent.

Gas and electricity bills have risen by more than 12 per cent in the UK. But French electricity prices are up by just 1.1 per cent, and bills have fallen in Ireland.

The increases will raise suspicions that some businesses may be profiteering from the credit crisis.

Earlier this week Mervyn King, the Governor of the Bank of England, warned that some might adopt this sort of 'camouflage' tactic.

He said: 'The concern is that we end up in an environment in which firms feel it is easier to pass on higher costs in the form of higher prices.

'That's probably inevitable given the increase in commodity and energy prices.'