'Council tax cuts should be tied to energy use'

Significant discounts on council tax and stamp duty are needed to persuade householders to reduce energy use and ensure Britain meets targets for cutting greenhouse gas emissions, according to a government-funded watchdog.

The Energy Saving Trust, which aims to cut domestic and business power consumption, called for council tax bills to be cut by up to £90 a year.

The organisation also called for stamp duty discounts of £1,000 to stimulate demand for energy efficiency in new homes. The measures could cost the Treasury up to £100m.

Officials say that 11 million householders still do not have cavity-wall insulation, although it costs only a few hundred pounds and can pay for itself many times over in smaller fuel bills.

Estimates suggest a third of heat in homes is lost through walls. Insulating walls can cut a home's annual carbon emissions by a third.

Trust figures show that if all the 11 million homes were fully insulated, Britain could stop 300,000 tons of carbon from being pumped into the atmosphere each year; 10 per cent of the savings needed to meet the nation's domestic energy efficiency targets.

Philip Sellwood, chief executive of the trust, said: "It is unlikely that the overall targets will be met unless the domestic energy efficiency targets are met. Unless some more radical measures are taken to incentivise customers I don't think they can."

Millions of homeowners had not carried out home-efficiency measures despite huge subsidies.

"Current policies are not generating sufficient consumer demand for energy-efficiency measures to reach levels envisaged in government targets."

Pilot discount schemes run by local authorities had shown the potential of tax discounts by encouraging hundreds of people to install additional insulation.

Mr Sellwood said people needed a tax cut to persuade them to consider fuel-saving measures. "There is no real incentive for householders to take advantage of energy efficiency measures. We need to make people aware of this and make it easy and convenient for them to take action."