Retirees could be set to benefit from cheaper utility bills after a new campaign to cut VAT from energy bills was launched.

Independent price comparison website uSwitch.com is calling on the government to axe the five per cent VAT rate on household energy bills in a bid to help keep more people warm this winter and snatch 250,000 households from the grip of fuel poverty.

With the average household energy bill now £1,259 a year, axing the VAT would save households £60 a year on average and, coupled with the recent price cuts announced by the major energy suppliers, would provide a lifeline to those who are struggling to pay their bills.

Ann Robinson, director of consumer policy at uSwitch.com, said: "Energy bills and the cost of keeping warm in winter are a major concern for consumers.

"Cutting bills by five per cent by removing VAT would provide immediate relief and would send a clear message to the ‘squeezed middle', the 'working poor' and the fuel poor that their concerns are not going unheard."

A recent survey by uSwitch revealed that the cost of energy is the top household worry for consumers (90 per cent), ahead of the rising cost of food (77 per cent) and mortgage payments (42 per cent).