A Government scheme to combat fuel poverty has been called a failure after it emerged that more than 10,000 eligible low-income households will be unable to benefit this winter - because they are too poor.

Government statistics seen by The Times show that 11,020 qualifying households that applied for its Warm Front scheme this year have pulled out because they cannot afford their share of the costs involved in home heating and insulation upgrades.

Warm Front was established in 2001 as part of the Government's drive to eradicate fuel poverty in England by 2010. The scheme offers households that are receiving benefits home energy improvements worth up to £2,700, or £4,000 for those with oil-fired central heating.

While the costs of labour and materials have all increased sharply, the grants have remained capped for four years. Applicants are expected to pay any extra to complete the work. So many people are withdrawing to avoid paying these top-ups that more than 10 per cent of the nearly 110,000 eligible households that have applied this year will receive nothing.

The figures also point to a 13-fold escalation in the number of poor families and pensioners pulling out of the scheme. In 2005-06, fewer than 1 per cent of applicants withdrew on the same grounds - 818 households out of a total of 112,976.

Age Concern called the scheme a failure yesterday, pointing out that it was the poorest applicants who were most likely to struggle to pay the extra, while their homes often required most work.

Gordon Lishman, the director-general of Age Concern, said it was “outrageous” that a scheme established to help those most at risk expected the poorest pensioners and families to pay hundreds or thousands of pounds extra. “This is leaving thousands of the most vulnerable households with no option other than to live in cold and energy-inefficient homes,” he said.

“If the Government is serious about helping the poorest households out of fuel poverty, it must urgently raise the Warm Front grant and review the problems with the scheme.”

Rising fuel prices this year mean that about 5.4 million households are facing fuel poverty, which is defined as spending more than 10per cent of their income on energy. With wholesale energy prices now tumbling, power companies are under mounting pressure to trim bills.

Joan Ruddock, Energy Minister, said she was “very concerned” that so many people were having to pay a contribution. Total funding for Warm Front will be £959million for the three years to March 2011.

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