Home-buyers will be offered grants of up to £1,000 to pay for new boilers and
loft insulation, under plans to reduce household gas and electricity bills.
Private landlords, schools and hospitals will also be given more “incentives”
and help to improve the energy efficiency of their buildings.
After weeks of bad tempered disagreements and “painful” negotiations inside
the Coalition, David Cameron and Nick Clegg have struck a deal which they
claim will cut the typical family’s energy bill by £50 a year.
The saving will come from reductions to the “levies” which are added to
customers’ household bills by energy firms to pay for the government’s
environmental initiatives, such as wind farms and support for the poor. Some
schemes will be paid for through general taxation while targets for others
will be relaxed.
However, the energy companies said last night that they had not been given
figures on the government’s plans and would wait to see details before
deciding how far any savings could be passed on to customers.
The cost of the proposed energy giveaways, to be detailed in the Chancellor’s
Autumn Statement on Thursday, will be met by a Treasury crackdown on tax
The Prime Minister will claim that he has fulfilled his promise to “roll back”
these “green taxes” which energy firms blame for pushing up customers’ bills
to levels which have become politically toxic for the government in recent
However, Mr Clegg and his Lib
Dem colleagues have been fighting fiercely inside the Coalition to
retain key subsidies for wind farms and other renewable power plants. There
is no sign that these renewable subsidies will be removed from customers’
In fact, the package of reforms will create even more environmentally friendly
energy initiatives, with three new schemes to be detailed this week.
A key part of Mr Cameron’s agreement with Mr Clegg, the Deputy Prime Minister,
is for the changes in the Coalition’s energy policy to be “carbon neutral”.
In a joint statement today, Mr Cameron and Mr Clegg said they had already
helped families with the rising cost of living by cutting income tax and
reducing fuel duty.
“Later this week, we’ll announce further help: proposals that will be worth
around £50 on average to energy bill-payers,” they said. “We’re doing it
without taking any help away from poor families or sacrificing our green
commitments; and in a way that will keep Britain’s lights on in the
The reforms to energy bills follow the populist announcement by Ed Miliband in
September that a future Labour government would force power firms to freeze
gas and electricity prices for 20 months after the next election.
Conservative MPs believe the Labour leader’s pledge put the Prime Minister on
the back foot for weeks as the coalition struggled to come up with a
A succession of above-inflation price rises from the giant energy companies
reinforced the potency of Mr Miliband’s offer and intensified the pressure
on Mr Cameron to act.
Last month, he ambushed Mr Clegg with an announcement at Prime Minister’s
Questions that the government would “roll back” the green taxes which add up
to £112 to a typical energy bill.
The Liberal Democrats, who have championed green energy policies, reacted
furiously and refused to sanction any cuts to wind farm or solar power
subsidies, to the irritation of senior Tories.
Eventually, the outline of an agreement between Mr Cameron and Mr Clegg began
to emerge, although officials were still unable last night to provide
detailed information on how the proposals will work.
Under the plans made public so far, all home-buyers will be able to apply for
a new government grant to pay for up to £1,000 worth of energy efficiency
improvements to the property which they are buying. Number 10 pointed out
that this was equivalent to about half the stamp duty cost on a typical
The grants will be awarded after an assessment of the property and older
homes, such as Victorian suburban housing, are likely to require more work
to make them energy efficient, in the form of wall and loft insulation, as
well as double glazing.
People buying newer housing, which has been designed to be more efficient and
better insulated, are expected to receive lower grants.
In some rare circumstances, home-buyers will be able to claim even more than
£1,000 for efficiency measures, Downing Street suggested, without giving
A separate incentive scheme will encourage private landlords to improve the
energy efficiency of their properties. A third new initiative will offer
more “help” to schools and hospitals to ensure their buildings run on as
little power as possible.
A Lib Dem source said that the party had always been willing to examine what
could be done to cut the cost to customers but would not contemplate
reducing help for the poorest households or compromising the coalition’s
One senior Tory said reaching a deal which would help customers had been “very
hard work” due to the “Lib Demery”.
The talks leading up to the deal have focused on how to reduce the cost of the
green levies which are added to customers’ bills to pay for renewable energy
subsidies and efficiency schemes.
The cost of subsidising a rebate of up to £140 a year for poor households
through the “Warm Home Discount” is to be removed entirely from customers’
accounts, saving on average £12 per bill. Instead it will be paid for
through general taxation, despite Tory fears that this could push taxes up.
In addition, the targets requiring energy companies to provide home insulation
and pay for boiler repairs for poor pensioners and other vulnerable
customers, through the Energy Company Obligation or “Eco” scheme,
will be eased.
This will give energy firms more time to meet the targets, and spread the
costs of the programme over a longer period, reducing the amount that is
added to customers’ bills to pay for the Eco scheme in the short term.
The combined savings are expected to reduce the typical household dual fuel
bill by £50.
Downing Street stressed that any extra costs resulting from the package of
reforms would covered by “measures to tackle tax avoidance”, with further
details expected in the Autumn Statement.
Peter Bone, the Conservative MP for Wellingborough, said the biggest problem
the Tories faced in cutting the cost of green initiatives was the Liberal
“If this was a Conservative government we wouldn’t have this rubbish,”
“Obviously the government wants, quite rightly to get the price of
utilities down,” he said. “The danger is that all they do is
switch it to national taxation, which isn’t a solution at all.
“We are still paying for what the Prime Minister quite rightly called
‘the green crap’ but just in a different way.”
:: The Free Enterprise Group of Tory MPs will publish a report on Monday
urging the Chancellor to ease the burden for small businesses. They will add
their voices to calls from business groups to cut business rates, a demand
which the Treasury is believed to be considering.
Kwasi Kwarteng, convenor of the group, said: “In preparing his Autumn
Statement, George Osborne, should consider how tough life is for many
businesses up and down the country.
“The combination of business rates and red tape is stifling people’s
ability to innovate and drive the economy forward. “It’s great how many
people in Britain take a risk and set up their own business, but it’s
crucial we make it easier for them to do so.”