Boris Johnson is understood to be reconsidering a VAT cut on gas and electricity - cutting every household energy bill by 5% as prices surge to record levels.
Though no final decisions have been made on how to help millions of people facing huge hikes in their energy costs, the PM is said to be warming to the idea of a cut to VAT.
Boris Johnson and Chancellor Rishi Sunak are due to meet to discuss the issue and finalise a shortlist of options this week – one of which may also involve an extension of the Warm Homes Discount.
An announcement on a support plan is expected next week, ahead of Ofgem’s announcement on how much the energy price cap will rise in April. The rate is due to be confirmed on February 7.
The PM previously talked down the idea, insisting that it would be better to introduce targeted support for those facing severe hardship instead.
Now it has emerged a VAT cut could come with another measure targeted at poorer households too.
A source close to the PM told The Sun : “There are a lot of options on the table, including the cut to VAT … There is a school of thought that you might do something for everyone, such as a cut to VAT, and something more targeted for the least well off but it’s still to be decided.”
Business groups have also urged the Government to take urgent action to deal with the energy crisis.
They wrote to the Chancellor asking him to act "decisively" to support consumers with spiralling bills and help business manage inflated costs.
They said: "In doing so the Government can set the conditions for a more resilient and competitive energy system that can underpin the UK's transition to net zero in the years ahead.
"By acting now, Government and business can mitigate against the economic impacts that high wholesale energy prices for a sustained period will have.
"Failure to do so could see years of higher bills, rising inflation and further increases to business costs.
"Businesses too have been hit by steep rises in their energy bills, with further increases likely as existing fixed tariff contracts come to an end.
"The scale of the crisis has left companies with little protection while they face dealing with soaring wage, shipping and tax costs.
"Small and medium sized businesses are the most at risk.
"Many companies will be left with little other choice than to pass costs onto their customers, adding further inflationary pressure."
Worried about how you will cope with rising energy bills? See our guide on the support you could get here.
They said small businesses faced the same barriers as consumers when it comes to energy but do not enjoy the same protections.
The five groups, the British Chambers of Commerce, the Confederation of British Industry, the Federation of Small Business, the Institute of Directors and Make UK, said businesses were likely to be faced with further costs as existing fixed tariff contracts come to an end.
