An annual charge should be levied on energy suppliers to fund a national home insulation programme to fight fuel poverty and combat climate change, council leaders have argued in a joint letter to six cabinet ministers.

In their letter, the leaders of the Conservative, Labour, Liberal Democrat and Independent groups at the Local Government Association (LGA) have argued the move would lift 500,000 people out of fuel poverty, cut £200 off the energy bills of 10 million households and reduce domestic carbon emissions by 20%.

The leaders have written to Chancellor Alistair Darling, Communities and Local Government Secretary Hazel Blears, Environment Secretary Hilary Benn, Business Secretary John Hutton, Work and Pensions Secretary James Purnell and Housing Minister Caroline Flint.

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As pressure increases on the government to consider a one-off windfall tax on energy suppliers, the LGA is arguing for a long-term solution to fuel poverty and climate change.

Cllr Paul Bettison, Chairman of the LGA Environment Board, said: "One-off payments to deal with rising energy bills will be of help to many households but will do little to tackle the root causes of fuel poverty. A national home insulation programme would be the best long-term solution to this challenge and that of cutting carbon emissions.

"There are 10 million homes in this country that still lack basic insulation. Making these properties more energy efficient would take around £2 billion off fuel bills each and every year and also reduce domestic carbon emissions by a fifth.

"Energy suppliers are making eye-watering profits at the expense of hard working families. The government should seize the opportunity to take a long-term solution to current problems by using these disproportionate excesses to pay for a massive drive to insulate people's homes."

(CD/JM)