Energy companies will spend a combined £500 million to help customers struggling with energy bills this winter after talks with the Government.

Companies will lend money to people to help cover costs, reduce standing charges, which make up a segment of all energy bills, and help fund a national debt advice campaign.

Ministers have been looking for ways to reduce the impact of cutting winter fuel payments for about 10 million elderly people, which officials estimate will push 100,000 pensioners into relative poverty this decade.

Consultancy Cornwall Insight forecast that energy bills will rise by 1% this winter, after wholesale prices rose by 10% in October.

Minister for Energy Consumers Miatta Fahnbulleh said: “The impact of the energy crisis is still being felt by people across the country, and the Government and energy suppliers are working in lockstep to help vulnerable households this winter.”

She said the support from companies combined with the Government’s warm homes plan, which helps fund home upgrades to make properties more energy efficient, will come to about £1 billion of support.

Ovo Energy, Octopus and British Gas had already pledged to continue financial support schemes from previous years, in commitments worth a combined £120 million for this winter.

Some of the money announced on Wednesday will also go to charities which help hard-to-reach consumers.

While the latest support measures will help people this winter, Ms Fahnbulleh will lead a working group with industry representatives as part of a push to make energy more affordable on a long-term basis.

Several suppliers have called for a social tariff, something which is already used in the telecoms industry to help people who receive benefits like Universal Credit pay their broadband bills.

The measure, which campaign groups have proposed for several years, would likely take the form of a targeted discount energy deal for poorer customers, and could be below the price of the cheapest available standard energy tariff.

Dhara Vyas, boss of the trade body Energy UK, pointed to record high levels of consumer debt of £3.7 billion in June.

She said that many people are “yet to recover from a sustained period of high energy bills and an accompanying increase in the cost-of-living”.

“As in previous winters, energy suppliers have already been stepping up the amount and range of support they offer to customers.

“There is, however, only so much they can do when a large number of households are struggling to afford energy at the price it costs to supply it.

“We’ve very much welcomed the Government’s constructive approach in our discussions so far and the recognition this is not a temporary problem.

“The establishment of a working group and the commitment to look at how data sharing can help target support are important steps towards putting in place an enduring plan for future winters.”