Labour plans green revolution to slash energy prices and win back lost voters

Gordon Brown is planning to use a massive expansion of green energy to win back voters angry at spiralling fuel prices.

They will be offered guaranteed prices for generating their own power that could fund loan schemes to pay for energy-saving technology under plans being finalised by ministers.

The plans are expected to be contained in a major offensive to promote domestic solar and wind power, as well as promoting energy conservation, that will be launched by the Prime Minister next month.

Senior ministers believe the programme will help win over hard-pressed families by offering energy-saving and renewable power packages to cut their fuel bills for good. Under the plans, ministers will agree to a key demand of environmentalists to back so-called "fee-in-tariffs", which offer householders guaranteed premium prices if they sell surplus renewable power back to the national grid.

The idea has been used in Germany to kick-start a dramatic expansion of renewable power in the home, such as domestic wind turbines or electricity-generating solar power, where householders can sell power back to the grid for four times the standard rate for 20 years. The scheme can dramatically reduce payback times for renewable energy, which have proved the major obstacle to their acceptance here.

Ministers are exploring using guaranteed payments to secure "green homes loans" to pay for energy generating equipment. Other proposals include a scheme to force water companies to help install energy-saving showers and appliances that could cut hot water bills by 60 per cent by reducing waste.

Mr Brown has been buffeted by calls for the Government to row back on green tax measures, such as increases in fuel duties and car tax, in order to throw a lifeline to families suffering the effects of the economic downturn and rising food and fuel prices.

But senior figures in the Government believe they can promote affordable energy-efficiency measures as a way of fighting spiralling prices. One said: "People might think it's too expensive to go green and we can't afford it. We are saying you can go green and cut your fuel bills."

Low income households are already benefiting from energy-efficiency improvements to cut fuel bills under a £1.5bn programme funded by energy companies.

Yesterday environmentalists urged ministers not to abandon green measures as they attempt to deal with the economic downturn.

Friends of the Earth's head of campaigns, Mike Childs, said: "The Government must make it cheaper and easier for people to go green. It must urgently introduce a range of measures to help people save energy, switch to greener energy sources and cut bills. If the UK became a genuine leader in developing a low carbon economy, the economic and employment benefits would be huge."