The Home Energy Saving Programme includes extra funding for the Carbon Emissions Reduction Scheme (CERT), which subsidises improvements such as home insulation, and increased Cold Weather Payments for poorer households.

But it is the energy companies and energy-generating firms that would be expected to contribute nearly £1bn to fund the scheme, if the proposals go ahead.

Ministers hope it will help those most at risk of fuel poverty, such as pensioners and low-income households.

Launching the scheme, Environment Secretary Hilary Benn said: “This plan is about giving help – not only over weeks and months, but over the coming years – by enabling householders to make their homes more energy efficient.”

Reacting to the announcement, Liberal Democrat leader Nick Clegg said the measures will not provide enough help for those facing fuel poverty.

He added: “Government should have compelled the energy companies to go much further.

“The energy giants have profited to the tune of more than £9bn from the EU Emissions Trading Scheme.

“They should be forced to use most of this money to properly insulate the homes of their most vulnerable customers and introduce social tariffs to cut energy bills.”

But the Association of Electricity Producers (AEP) has sounded a warning about the proposals, arguing that companies have tied up billions of pounds investing in new power stations to secure electricity supplies.

Chief executive David Porter added: “It is worrying that some companies with no domestic customer base of their own have been asked to contribute to these measures.

“Electricity producers operate in a competitive wholesale market and companies may have to absorb the extra costs of the Government’s scheme. The whole proposal needs careful examination.”

National Energy Action (NEA), which campaigns for and promotes energy efficiency services for low-income households, welcomed the news.

Jenny Saunders, chief executive of NEA, said, “This should ensure year on year benefit from energy saving measures which will help cut everyone’s fuel bills, most importantly the fuel poor.”

Kate Martin

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