The Local Government Association (LGA) said the Government's announcement on fuel poverty was a move in the right direction but is calling for energy companies to make the same contribution as householders to pay for a national programme, to ensure that every home in the country is insulated. This would take £2bn off the nation's energy bills and lift half a million people out of fuel poverty.

Cllr Paul Bettison, Chairman of the LGA's Environment Board, said: "What we need is a comprehensive drive to insulate every home in the country, cutting carbon emissions and lifting people out of fuel poverty long term but this should not be financed by a new tax. Energy companies should match pound for pound what consumers already pay towards combating climate change.

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"Utility companies are making eye-watering profits at the expense of hard working families. If these firms made the same contribution as householders we could insulate 10 million homes, take £2 billion off energy bills and lift 500,000 people out of fuel poverty. The cut in bills would be the equivalent of a penny off the standard rate of income tax and would help people manage rising costs."

Council leaders are also seeking urgent clarification from the Government and energy companies about how the £225m to help people with rising fuel bills will be paid for.

(CD/JM)