A new 'Help to Heat' scheme modelled on the government's 'Help to Buy' scheme is today recommended in a report funded by the Energy & Utilities Alliance and undertaken by think tank IPPR.

New analysis shows that the cost of a current Green Deal loan with a typical 8% interest rate eliminates any efficiency savings made on household bills, whereas a ‘Help to heat’ scheme with a 0% interest loan for the first 200,000 homes would generate savings of £136 on the average households energy bill.

The report also urges the Chancellor not to scrap the Energy Company Obligation (ECO) energy efficiency policy at next week’s Autumn Statement. The ECO is not a green levy but a social levy and can be used to help the fuel poor if targeted properly. Scrapping ECO would save £47 off the average annual bill but would leave 2.4 million fuel poor households in England without support. As well as making greater bill savings available, ‘Help to Heat’ would improve how ECO is targeted so that 117,000 extra fuel poor homes receive support every year (197,000 in total).

Mike Foster chief executive of EUA said: “‘Help to Heat’ is cost neutral to the Exchequer by using existing funds more efficiently. We need to improve upon what the government is doing with more energy efficiency measures not less. By reducing the Green Deal interest rate from 8% to 0% and underwriting the loans, would make savings for households and help stimulate the economy in the same way that ‘Help to Buy’ has worked on the housing market.”