The owner of British Gas plans to challenge its cut-price competitors by setting up a new digital energy brand to offer discounted deals on electricity and gas. The online-only spin-off will compete directly with the rising number of low-cost startups which have lured millions of customers away from British Gas in the last decade. By keeping its costs low, the company hopes the new business can keep households from choosing a different energy supplier, and even win back former customers who have switched to rivals with cheaper rates. British Gas, the UK’s largest energy supplier, will continue to offer a “premium” service which includes access to existing British Gas home energy services such as boiler repairs and insurance cover. A British Gas source said the two sibling energy supply brands would not compete with each other for the same customers. Peter Simon, the head of Centrica’s home services division, will run the new low-cost digital energy service – currently known as “British Gas X” – and Matthew Bateman, who runs Centrica’s field operations, will manage the existing British Gas supply business. Both will report directly to Centrica’s new chief executive, Chris O’Shea, who replaced Iain Conn earlier this year amid deepening financial woes for the British Gas parent company. The decision to launch a new challenger energy brand is part of a wider shake-up of the energy company, which lost its place in the FTSE 100 index this year amid falling customer numbers and the collapse of global oil and gas prices. Centrica said this month that it would axe 5,000 roles from its workforce as part of a plan to dismantle the corporate bureaucracy, which has built up in the company over more than three decades. The company is expected to sweep away three layers of management in the second half of this year, and simplify its 80 different employment contract types, some of which date back more than 35 years.