Eleven million homes are to be given help to reduce bills in the biggest state-backed programme to modernise household energy use for more than 40 years.

Utility companies will fund most of an additional £1 billion for energyefficiency measures over the next three years, Gordon Brown is likely to announce tomorrow.

About four million of Britain’s poorest households, people on benefit and people over 70, will be eligible for free loft and cavity insulation. More affluent households, yet to be defined, will be able to claim discounts on household improvements designed to reduce energy consumption.

But the package will fail to satisfy Labour MPs and union leaders demanding a windfall tax to pay for immediate help for families to meet rising bills this winter.

Alistair Darling, the Chancellor, faced a hostile reception yesterday from trade unionists in Brighton, where the TUC conference was dominated by soaring energy bills and energy companies’ profits.

Tony Woodley, joint general secretary of Unite, made a pre-emptive attack on the expected energy-efficiency package, saying that the issue “can’t be addressed by ‘lagging the loft’, as some crackpot has suggested”.

He added: “Without help with fuel bills now, we’ll be lagging the coffins of the elderly if we have a cold winter.”

Mr Darling was greeted by jeers as he refused to make a commitment to a windfall tax during a question-andanswer session after his speech, and defended planned energy-efficiency measures. “If we could cut people’s fuel bills, not just for this winter [but] next winter and into the future, then that actually is a good thing, so don’t let anyone knock it.”

A plan to provide six million poorer families with fuel vouchers worth between £50 and £100 was scrapped after ministers failed to agree how it should be funded. The option of increasing the price of pollution permits sold under the European Union carbon-trading scheme was ditched after opposition from Brussels.

Nevertheless, ministers will claim that persuading energy companies to volunteer almost £800 million of extra funding vindicates their decision to pursue a negotiated settlement with Britain’s biggest utility providers.

The money will be raised by increasing by up to 30 per cent contributions that the big six power companies are already required to invest in the carbon emissions reduction target programme. The existing three-year, £3 billion scheme obliges them to pay for measures such as loft and cavity wall insulation as well as low-energy lightbulbs.

Price increases from Britain’s big power companies this year mean that 5.4 million households face fuel poverty — defined as having to spend more than 10 per cent of income on energy. The biggest beneficiaries of the energy measures are likely to be loft laggers, double-glazing installers and other home-insulation specialists.

Loft insulation is a good starting point. It prevents 15 per cent of heat loss through the roof. A 270mm layer of insulation costs £500 to install but average savings are £155 a year. DIY insulation costs about £250, with payback after two years.

Insulating cavity walls can save one third of heat loss from a home and reduce bills by 15 per cent, or £120 a year. Only homes built after about 1920, however, were constructed with two layers and a cavity.

Converting the masses

— The plan to help about 11 million households to instal home insulation almost matches in scale the programme to convert from manufactured to natural gas 40 years ago

— In a ten-year programme beginning in 1967, gas engineers visited 13 million homes and factories to convert 34 million boilers and other household appliances

— Whole areas were isolated from the gas network on set days as an army of engineers went from house to house changing the appliances, sometimes taking a week before the new natural gas supply was connected

— Ministers sanctioned the conversion after the discovery of natural gas reserves in the North Sea in 1965. Previously, gas was manufactured through the costly processing of coal. The conversion cost British Gas, then state-owned, £563 million

Source: Times archive

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive