MINISTERS were yesterday accused of surrendering to "blackmail" by the big power companies amid reports that plans for a cash handout to help needy families pay energy bills are foundering.
Unconfirmed reports suggested the energy industry was holding out against a proposal for it to fund an assistance package worth £100 to households struggling with rising bills.
A less ambitious deal involving support for energy efficiency measure
s is thought to be under consideration.
A spokesman for Gordon Brown, the Prime Minister, yesterday declined to discuss the details of negotiations between the government and the industry, which he described as "constructive".
An announcement on assistance for people affected by soaring fuel bills, originally expected this week, is now thought likely to be made next week, following Tuesday's £1 billion package of support for the housing market. Mr Brown's spokesman said that all options remained on the table – including a windfall tax on power companies' "excessive" profits, which is supported by many Labour back-benchers.
"There is a discussion taking place at the moment between government and the energy companies," he added. "We want to work co-operatively with the energy companies in order to find ways of helping people cope with rising fuel bills."
Nick Clegg, the Liberal Democrat leader, said: "It looks as if the government has surrendered to blackmail by the big, foreign-owned energy firms.
"The behaviour of these companies is unacceptable: first they receive a massive £9 billion subsidy through the European Union emissions trading scheme; then they line up to clobber customers with crippling price hikes; then they do all they can to scupper a deal aimed at helping the most vulnerable.
"The energy companies must now be forced to use the bulk of the £9 billion subsidy to finance a programme of mass home insulation, proper social tariffs for the most vulnerable, and the installation of smart meters."
