Fuel-efficiency scheme may hit homeowners

A £200m government energy-efficiency scheme which aims to refurbish the UK's 14 million draughty homes has been attacked for putting millions of homeowners in a worse position.

The so-called Green Deal announced this week will allow homeowners to take a loan to install insulation or other energy-saving measures from October 2012. The theory is that the bill savings from the measures will be larger than the loan repayments.

"But millions of hard-working households will lose existing subsidies for insulating their home and will have to borrow the costs of insulation at commercial rates instead," claimed Steven Heath, of Knauf Insulation.

Although subsidies remain for the fuel poor, Mr Heath said households struggling to pay rising fuel costs would be adversely affected. "The Green Deal initiative needs to be revised to ensure a sensible, effective transition over the next five years from current green energy subsidies," he said.

The Green Deal proposals allow for up to £150 to be given as a cashback offer to homeowners, but that is added to the loan. Richard Lloyd of Which? said: "It's crucial that the Government gets the Green Deal right. If it's not good value for consumers overall, short-term incentives will not be enough."