Jeremy Hunt confirms plan to permanently slash energy bills for millions of households

The chancellor has confirmed the government is considering a "social discount" for energy bills, which experts have said could knock at least £1,000 per year off bills for some households.

Appearing before the Treasury select committee in parliament on Wednesday, Jeremy Hunt said the government wanted to "work towards" a social tariff system by 2024.

A social tariff would fix energy bills at a certain level for those on low incomes, protecting them from volatile energy markets.

This would be paid for via taxation or higher bills for other customers. Water providers currently use this arrangement.

Hunt told MPs that while the benefits system has enabled the government to target people on the lowest incomes swiftly with financial support during the cost-of-living crisis, it wanted a more long-term solution.

Read more: Martin Lewis urges bill payers not to worry about today's energy price cap increase

"I think the challenge we had, or have, is that if we want to help people quickly the benefit system is a way that we can do that.

"We know who everyone is, we have a good idea of their circumstances, so it is an efficient way to get people help quickly," he said.

"But what I said in my comments in the autumn statement is that, whilst we'll be using that system this year or next year, from April '24 we want to work towards a social tariff or social discount approach – whereby we reach all people equally on low incomes.

"That means a lot of complicated work to marry the information held by HMRC with the information held by DWP on benefits, and that's a very big operational challenge, but that's the direction of travel we want to go in."

In his autumn statement last week, Hunt announced new cost of living payments for those on the lowest incomes next year, consisting of:

• £900 for households on means-tested benefits

• £300 for pensioners

• £150 for people on disability benefits

However, experts have said that the support will still not go far enough for many low-income households, with some warning the government it "can't keep stumbling forward with short-term, ad hoc responses".

Adam Scorer, chief executive at National Energy Action (NEA), said: “Boosting welfare payments and the targeted support that has been announced for energy bills will help some of the poorest households and at-risk groups, that's important.

"But there are big gaps in these measures especially for low-income households not on means-tested benefits."

Read more: UK single parents skipping meals due to food price inflation, Which? finds

Hunt's remarks in front of the Treasury committee come months after MPs on the cross-party business, energy and industrial strategy (BEIS) committee also urged the government to look at a social tariff.

"We call on the government to consider the introduction of a social tariff for the most vulnerable customers and a relative tariff for the rest of the market, to be introduced once wholesale energy prices have stabilised," the committee said.

"We ask the government and Ofgem to report its findings on the above issues within nine months of the date of this report."

Their recommendations came after experts called for the measures – including Martin Lewis, Citizen's Advice, and bosses at E.ON and Scottish Power.

Watch: Money-saving expert Martin Lewis has warned that the 'squeezed middle' will feel the pinch from Jeremy Hunt's autumn statement the most