European ruling sours VAT sweetener

ONE of the Chancellor's Budget sweeteners to soften the impact of VAT on fuel will turn sour today when ministers disclose that funds for heating insulation will be stretched to cover a further 1 million pensioners.

The Government has been forced by the European Commission to extend the scheme from pensioners of 65 and over to all those over the age of 60 as part of the European Union's policy of equalisation of pension ages. Lobby groups said last night that today's announcement by the Department of Environment will embrace an extra 1 million pensioners. But the sums allocated by the Government have not been increased to meet that extra demand.

The Chancellor revealed in the Budget that the home energy efficiency scheme would be boosted by pounds 35m a year over the next three years, as part of the package of measures to ease the burden of VAT on fuel for pensioners.

Andrea Cook, director of Neighbourhood Energy Action, an organisation which successfully lobbied for the help in the Budget said: 'My understanding is they have extended the scheme to everyone over 60 whether pensioner or not. That means that pensioner low income households will be more squeezed so that affluent households will be eligible.

'The chairman of British Gas will be eligible from next year for the extra help with insulation costs, if he reaches 60,' said Ms Cook, who is also an adviser to the Government.

She is demanding more resources for the scheme, which is due to be introduced from 1 April.