People who earn around £45,000 per year could still struggle with the ever-increasing costs of living, the Chancellor has suggested.

Nadhim Zahawi has said that middle earners will also have things "really hard" as the year goes on, with the energy price cap set to rise by another 80% in October.

This would push the average household’s yearly bill up from £1,971 to £3,549.

Industry regulator Ofgem warned the Government it must act urgently to “match the scale of the crisis we have before us” as Britain faced the bleak news on Friday (August 26).

How to reduce your energy bills

Mr Zahawi has said he is drawing up a plan of action for the next Prime Minister so they can “hit the ground running” in September.

In an interview with The Daily Telegraph, he said he is exploring ways to ensure “we help those who really need the help”.

He added: “My concern is there are those who aren’t on benefits.

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“If you are a senior nurse or a senior teacher on £45,000 a year, you’re having your energy bills go up by 80% and will probably rise even higher in the new year – it’s really hard.

“If you’re a pensioner, it’s really hard. So Universal Credit is a really effective way of targeting, but I’m looking at what else we can do to make sure we help those who really need the help. We’re looking at all the options.”

One option on the table to help people out is granting large loans to energy suppliers to help cut bills by up to £500 a year, the newspaper said.

Additionally, Mr Zahawi didn't rule out freezing the energy cap as suggested by Labour, insisting “nothing is off the table”.

Your Money Matters

Your Money Matters is a campaign launched by us and our sister titles across Newsquest to help you overcome the surge in the cost of living. This year has seen a whole host of household price increases — from the energy price cap rise to surging inflation and food prices — costing your family hundreds or even thousands of pounds extra per year. We’re making it our mission to look out for your cash, offering money-saving deals, competitions, giveaways and insightful stories from your community on the impact this cost-of-living crisis is having on our readers. The worldwide energy crisis exacerbated by the Ukraine invasion, the financial impact of the Covid pandemic, record inflation figures and a surge in the cost of goods, fuel and travel means we will all feel the pinch. Through our newspaper, we want to do what we can to help make your cash go further because we know your money matters.