Brown promises energy help for 10m homes

An estimated 6.5 million households have already been left in fuel poverty this winter because of near-8 per cent hikes increasing the average annual bill to £1,343 (Getty)

Gordon Brown today unveiled a £1bn package to help struggling households cope with soaring energy prices, promising it would be funded by suppliers and producers.

The Prime Minister announced that all low income and pensioner households would get free loft and cavity insulation, while everybody else would be entitled to half-price energy-saving measures.

He said there would be "immediate help for those who need it most" but stressed that the moves were focused on reducing energy consumption.

"Our objective is nothing less than a sea-change in energy efficiency and consumption, at the same time as helping the most vulnerable households this winter," he told a Downing Street press conference.

Mr Brown said the Government would be legislating to ensure that energy suppliers and electricity producers would provide £910m in funding for the measures.

The premier said provision had been made to give six million homes insulation and provide help for five million more between now and 2011.

There would also be action to ensure that households on pre-payment meters do not face higher tariffs.

He said 600,000 low income households will also have lower social tariffs by the end of the year.

In the event of "severe" weather this winter, cold weather payments will increase from £8.50 to £25 a week.

Ministers were also meeting banks to increase the take-up of direct debits to pay energy bills and make savings of between £100 to £150 a year.

A national information campaign will be launched tomorrow to publicise the support on offer.

Mr Brown said the Government had considered introducing a windfall tax but had decided that this package was "the better way of moving forward".

And he said he did not expect the £910 million cost to be passed from the energy companies to customers.

"We looked at all possible options of both raising money and the action that we could take and that has been an inquiry that we had over the summer months," the Prime Minister said.

"Instead of a windfall tax, this is the better way of moving forward.

"The special payments will be made, as a result of laws that we will pass in the House of Commons, by the energy suppliers. For the first time the energy generators will be paying as well as the distributors. The total amount of money raised will be £910 million."

He added: "We want to keep energy bills as low as possible and I do not expect the £910 million that we raise to be passed on to the consumer by the energy companies. I think that's a very important point to make."

Energy Secretary Hilary Benn said there would be a £74 million increase in funding for the Warm Front scheme, as well as a "community energy saving programme" with officials visiting poor households across the country to help them identify ways to save energy.

But he said the number of people who would be helped by the overall package would depend on the number of people who came forward for assistance.

Business Secretary John Hutton added that the Government was monitoring competitiveness in the energy sector and would "come down like a ton of bricks" if firms were found to be abusing customers.

Paul Kenny, general secretary of the GMB union, said: "It is clear there will be no windfall tax, but there is a glimmer that the Government might take action on prices."

Mr Kenny called on the Government to give powers to energy regulator Ofgem to set prices, describing the organisation as a "toothless tiger".

He said: "It is a shame that it was a Labour Government that took the teeth out in the first place."

The GMB has submitted a motion to Labour's annual conference in Manchester later this month calling on the Government to restore the power of Ofgem to fix gas and electricity prices.