Green households to get £600 tax breaks

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Homeowners will get tax cuts of up to £600 for making their houses "green" and energy efficient, under official plans to combat global warming.

Homeowners will get tax cuts of up to £600 for making their houses "green" and energy efficient, under official plans to combat global warming.

People who sell their homes can offer potential buyers a discount of up to 40 per cent off their stamp duty as a reward for making their properties much more energy efficient - so making them easier to sell. If they have no plans to move, homeowners could get a one-off discount on their council tax.

The proposals will be unveiled this week by Tony Blair's senior adviser on energy efficiency, Eddie Hyams, the new chairman of the government-funded Energy Saving Trust. He will claim the measure should be at the centre of climate change strategy after the next election.

At the same time, ministers are drafting plans to give every house a colour-coded "energy label" when it is put on the market, based closely on the A to G labels now used for new fridges, freezers and washing machines.

Environmentalists and MPs believe these measures are essential because most home-owners have ignored pleas to properly insulate their homes, or use energy-efficient appliances, despite the threat posed by climate change.

As a result, Britain's 25 million homes are to blame for a third of the country's global-warming gas emissions - a higher figure than the emissions from the country's 26 million cars. The trust claims £5bn a year is wasted on gas and electricity because of badly insulated houses.

But the Government is widely blamed for failing to introduce effective measures to promote energy efficiency despite the Prime Minister's claims that he wants Britain to take a global lead on climate change. Experts now predict the Government will miss its "green" homes target for 2010, unless radical steps are taken.

The trust now plans to put the Treasury under pressure to agree to tax breaks for homeowners. Mr Hyams said: "The newly elected Government must introduce tougher targets and measures if we are to meet the very challenging, but essential, carbon-emissions reduction targets set out in the energy White Paper."

The trust claims the tax cut should be based on the homebuyers' information packs, which everyone selling a house will be legally required to have from 2007. These packs, which will contain basic information about a house for prospective buyers, will include an energy rating.

Environment ministers also want this rating to be used to give homes an "energy label" when they go on the market.

If homeowners or people renting their homes aren't about to sell, the trust has pointed to a scheme launched last November by Braintree council in Essex with British Gas. It gives a £100 council tax rebate to people who buy a £175 insulation package.

Experts think many householders would see an immediate tax cut as a much more attractive offer than the promise of lower electricity and gas bills in the future.

Paul King, a housing expert with the conservation group WWF UK, added: "If people can get 30 per cent savings on their bills and a tax break, then [energy efficiency] becomes a bit of a no-brainer."