Homeowners to be offered 'bribes' of up to £1,000 to take up Government energy initiative

Homeowners are to be offered 'bribes' of up to £1,000 in cash to sign up to a Government initiative to make their properties more energy efficient.

Ministers have earmarked £140 million on a first come first served basis for people who take up the "green deal" scheme which launches at the start of next year.

Under the green deal homeowners borrow money to pay for energy efficiency improvements to their homes such as insulation, double glazing and energy-efficient boilers.

The cost for improvements is provided upfront by the private sector and then paid back in energy savings by homes over a 20-year period.  

But to increase take-up of the scheme the Government is now planning to offer cash-back to consumers for every improvement made.

Households will initially be eligible to get £270 for upgrading their gas boiler, £100 for loft insulation and £320 for double glazing.

Ministers believe that over quarter of a million homes could benefit - which will spur interest in the scheme overall.

The announcement came as the regulator Ofgem announced details today of its new plans to crackdown on energy companies who rip off consumers with complex pricing systems.

Companies will be banned from offering a "baffling" array of gas and electricity tariffs and will have to inform customers of the cheapest deals on offer. Ofgem said it wanted to create a "simpler, clearer, fairer and more competitive" energy market which would have just four "core" tariffs.

At the same time Ofgem has proposed a scheme where suppliers would be made to give vulnerable customers and others who have not switched tariffs for some time an estimate on the cheapest prices across the whole energy market.

The plans come just two days after Prime Minister David Cameron announced plans to legislate to force energy companies to offer consumers the cheapest deal available.

This morning the Prime Minister's official spokeswoman welcomed Ofgem's plan and said the two sets of proposals were "complimentary".

However she was unable to explain why - if Ofgem's legally binding proposals are implemented - there was also a need to legislate in the forthcoming Energy Bill.

She refused to say whether the Prime Minister was aware of Ofgem's plans when he made his announcement on Wednesday.

The package of proposals will be published before the end of October alongside its non-domestic proposals.

Ofgem is legally required to go through an extensive consultation process but wants to start to introduce its reforms by summer 2013.

Next week Labour will try and increase the pressure on the Government by tabling its proposals which would force energy companies to put pensioners automatically on the available tariff.

Caroline Flint, shadow energy and climate change secretary, said Ofgem's current proposals were "only tinkering at the margins".

"It is deeply disappointing that after spending nearly two years putting these proposals together Ofgem has once again ducked the opportunity to get tough with the energy giants," she said.

"We need to open up the books of the energy companies, but these reforms do nothing to improve the transparency of the prices these firms charge their customers."

But Angela Knight, the chief executive of Energy UK, which represents suppliers, said the Ofgem plans were "a pretty challenging set of requirements on the companies". 

"What Ofgem they are saying to us is (you should have) a very small handful of tariffs, you have got to be very clear on them and tell your customers about them and give the customer the choice.

"We need to have a set of proposals that are in the best interests of our customers and I think the customers do want choice. I do believe that choice is the right thing. I don't think we should say to the customer 'You must have this or that'."