Page last updated at 07:32 GMT, Friday, 12 September 2008 08:32 UK

Fuel help 'may end up on bills'

Gordon Brown announces energy-saving measures

The government has admitted that it is powerless to stop energy firms passing on the cost on its fuel assistance package onto customers.

Business Secretary John Hutton said he could not stop firms increasing bills in response but said there would be "no justification" for them doing so.

The plan includes half-price insulation for all households and a freeze on this year's bills for the poorest families.

The measures have been criticised as "flimsy" and "disappointing".

Gordon Brown said he hoped for a "sea change in energy efficiency" and help for the poorest households this winter.

But anti-poverty campaigners say while the 910m package is a step in the right direction, it does not go far enough.

Mr Brown announced the package of measures, drawn up after weeks of negotiations with energy companies, to help people cope with rising energy bills.

The package is being financed by the companies themselves.

But Mr Hutton said the government could not fix prices to ensure customers did not end up footing part of the bill themselves.

Windfall tax

They included free cavity wall and loft insulation for pensioners and poor households, 50% off the cost of insulation for all households, a freeze on this year's bills for 500,000 of the poorest households and an extra 16.50 a week for pensioners, disabled and unemployed people with young children if there is a severe winter.

Announcing the plans earlier Mr Brown said the deal was a "better way of moving forward" than the windfall tax - which had been demanded by trades unions and supported by many Labour MPs.

This should ensure year-on-year benefit from energy saving measures which will help cut everyone's fuel bills
Jenny Saunders
National Energy Action

He said: "Our objective is nothing less than a sea-change in energy efficiency and consumption, at the same time as helping the most vulnerable households this winter."

He added: "We want to keep energy bills as low as possible and I do not expect the 910m that we raise to be passed on to the consumer by the energy companies."

But David Porter, chief executive of the Association of Electricity Producers, told the BBC earlier "It remains to be seen just how much of it ends up on the customers' bill in the longer run.

"Whenever people impose costs on an industry like ours the bill, to some extent, always ends up with the customer."

Labour MP Frank Field, who led a successful backbench revolt over the abolition of the 10p tax band, said after a summer spent "roaring about the package" the government had actually produced "a mouse of a proposal".

Another Labour MP, Alan Simpson, chairman of the Parliamentary Warm Homes group, told the BBC that an extra 74m pledged towards the Warm Front insulation scheme simply reversed existing cuts to its budget.

These measures will not do nearly enough to help the millions of people who will struggle to heat their homes this winter
Nick Clegg
Lib Dems

He said Britain should look to other European countries for a more radical approach - such as allowing price increases to be set by an independent regular.

"We have ducked this notion of intervening, and have gone to the industry sort of cap in hand," he said.

Gas and electricity watchdog Energywatch said the response to growing fuel poverty was "too little, too late".

Chief executive Allan Asher added: "The lack of political will to tackle fuel poverty is not just disappointing, it approaches negligence."

Help the Aged described the package as "flimsy and failing" which would do little to help the elderly while Tony Woodley, joint leader of the Unite union, said bigger steps were needed and promised a windfall tax a central theme of this month's Labour conference.

But Jenny Saunders, of National Energy Action, welcomed the focus on long-term energy efficiency, saying: "This should ensure year-on-year benefit from energy saving measures which will help cut everyone's fuel bills, most importantly the fuel poor."

Lib Dem leader Nick Clegg said the government should have been tougher with the energy companies, adding: "These measures will not do nearly enough to help the millions of people who will struggle to heat their homes this winter".

And for the Conservatives, shadow business secretary Alan Duncan, added: "Despite all their grand promises of cash payouts, all Gordon Brown has been able to offer is to restore a budget which they cut last winter and a package of measures that should have been implemented years ago."

House showing energy-saving measures
1. Loft insulation: Prevents 15% of heat lost through the roof.
2. Tank and pipe insulation: A hot water cylinder jacket of at least 75mm cuts heat loss by 75%.
3. Cavity/solid wall insulation: About 30% of heat lost through walls. Homes built after 1920 - with cavity walls - can be injected with insulating material. Older houses with solid walls can be fitted with an extra layer.
4. Double-glazing: Can cut heat loss by about 50%. The two panes of glass create an insulating barrier.
5. Draught-proofing: About 20% of heat lost through poor ventilation and draughts. Measures include fitting brushes to letterboxes.
Source: Energy Saving Trust

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