Millions of British families facing fuel poverty this winter will not qualify for free insulation under a £1 billion energy efficiency scheme announced by the Government last week.

Rising fuel prices mean that 5.4 million households are having to spend more than 10 per cent of their income on energy — putting them in so-called fuel poverty. The Government said last week that up to 11 million low-income households would qualify for free insulation under the scheme, but industry insiders have told The Times that this figure is highly misleading.

For example, any home with more than 60mm of loft insulation will not qualify for the scheme. The recommended standard is 270mm. Nor will most homes built before the 1930s, which are unsuitable for cavity-wall insulation. Recently built homes that have loft and cavity wall insulation are also unlikely to qualify.

Alan Atherton, of A&M Insulations, based in St Helens, Merseyside, emphasises another point likely severely to restrict eligibility. The majority of fuel-poor families in Britain reside in either council-owned or housing association properties, most of which have already been insulated after a series of government initiatives over the past 15 years.

“There are actually very few houses left in the UK that have absolutely no insulation at all,” said Mr Atherton, who estimates the number of qualifying homes as far lower than 11 million. “It’s nothing like that . . . It’s a fraction of that figure.” The reality is that neither the Government nor the energy industry has a firm grasp of how many homes will qualify because no record exists about how many homes are insulated.

The news has emerged as Gordon Brown is set to face fresh calls for a windfall tax from trade unions at this week’s Labour Party conference in Manchester.

“It’s a classic piece of government spin — it sounds great, but it is actually a completely unworkable plan,” one energy industry source said. “Nobody has any idea how many people will apply.”

A spokeswoman for the Department for Business, Enterprise and Regulatory Reform acknowledged that there were significant uncertainties over eligibility for the scheme. “One of the main problems with fuel poverty is that it it is very hard to pinpoint these people,” she said.

The scheme is to be funded with an extra £910 million from the energy industry. About £560 million of this will be added to the existing carbon emissions reduction target (Cert) programme, which subsidises improvements such as loft and cavity-wall insulation. The remaining £350 million will go towards the new community energy saving programme, for up to 100 schemes in deprived areas.

The insulation industry has also raised questions about another government claim — that as many as two million homes could benefit from the scheme this winter.

Mr Atherton said that during the whole of last year the industry was able to insulate only about 500,000 homes. He doubted that there was capacity to do much more than this during an entire year, let alone in time to assist homeowners for the coming winter.

Tony Woodley, joint leader of Unite, Britain’s biggest trade union, will repeat the union’s call for “fuel justice”, including a windfall tax and a cap on prices, at the Labour conference today and expects overwhelming support from delegates. Unite said that even a “modest” energy windfall tax would raise £3.6 billion.

Feeling the cold

— 23 million households in UK

— 5.4 million households now in fuel poverty

— Recommended loft insulation standard is 270mm

— Homes already having 60mm or more of insulation do not qualify for free insulation under new energy efficiency scheme

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