Govt backs £1bn deal to cut bills

Energy companies are to fund the bulk of an additional £1 billion for energy efficiency measures over the next three years - the biggest government-backed programme to modernise household energy use for more than four decades.

Gordon Brown is likely to announce tomorrow that 11 million homes will be given help to reduce their power bills, while four million of Britain's poorest households, those on benefit and the elderly will be eligible for free loft and cavity insulation. There will also be discounts available for more affluent households to make home improvements that cut energy consumption.

The Prime Minister is also expected to announce improvements to cold-weather payment scheme and the restoration of up to £100m of cuts in the government's own warm-front programmes.

However the plans are unlikely to satisfy union leaders who have demanded a windfall tax to provide immediate help to those who could struggle to pay rising fuel bills - which are now at an average of £1,300.

The Chancellor Alistair Darling came under pressure at the TUC conference yesterday to do more to help poorer families. Darling was greeted by jeers as he refused to back the idea of a one-off tax. "If we could cut people's fuel bills, not just for this winter [but] next winter and into the future, then that actually is a good thing, so don’t let anyone knock it."