Kenneth Clarke, who was involved in detailed negotiations on the package with Peter Lilley, the Secretary of State for Social Security, is expected to add pounds 50m to the existing insulation budget of pounds 37.5m, according to Andrea Cook, director of Neighbourhood Energy Action, one of the key charities in the project. The money could provide insulation for 500,000 homes and provide 4,000 jobs. Ms Cook has persuaded ministers it could also cut the fuel bills of claimants by 20 per cent, more than the cost of the VAT, even if, as expected, the Chancellor decided to impose it in one go at 17.5 per cent, instead of holding it at 8 per cent for a year.
An increase in the cold weather allowance, and any increase in the pension, caused by a rise in the retail price index, will also be presented as part of the package. Mr Lilley is fighting for an increase in benefits to go beyond pounds 5.5m on income support to the 'nearly poor' including pensioners whose savings disqualify them for the benefit.
Higher energy insulation fits in with the Government's presentation of VAT on fuel as a conservation measure. Ms Cook said: 'We have been arguing for funding for energy efficiency improvements as part of the compensation package so it isn't just a question of providing increases in benefit levels . . .
'We have been asking for an extra pounds 100m. I am hopeful we will be seeing about pounds 50m.'
About 8 million households are eligible for the grants because they are in receipt of income support, housing benefit, family credit, disability working allowance or the former community charge rebate. About 1.5 million poorer households have had heating insulation over the past 12 years, leaving about 6.5 million to be tackled.
The Department of the Environment, which runs the budget, announced it was abandoning the requirement that claimants must make a contribution of about pounds 16 before the work can be done.Reuse content