Plans to spend hundreds of millions of pounds to reduce bills by making homes more energy efficient have been blocked by the Treasury.
The Telegraph can reveal that Number 10 and the Business Secretary’s team were pushing for an expansion of the Energy Company Obligation (Eco) scheme to be included in Thursday’s energy security strategy.
The Eco scheme uses money raised from a levy on energy bills to pay for home energy efficiency improvements for the poorest households.
The proposal was for the Treasury to put in about £200 million a year extra of taxpayer money, so that the £1 billion scheme could be expanded beyond people receiving benefits.
Tens of thousands of households would have benefited and the move would have been championed by the Government as a boost to ease the cost of living crunch.
However, Rishi Sunak is understood to have rejected the calls, as the Treasury stands firm on the spending agreements set out last autumn for the next three years.
‘Treasury doesn’t believe in the plan’
The refusal has left some in Whitehall who are supportive of the scheme livid.
A senior government figure said: “It would have been something that we could say to households: ‘We’re on your side, we want you to reduce your bills.’ But the Treasury doesn’t believe in it.”
The source added that the Treasury had kept removing lines from the energy strategy that had spending implications, despite support from Number 10 and the Department for Business, Energy and Industrial Strategy – calling the situation “ridiculous”.
However, an ally of Mr Sunak countered on Tuesday night, saying: “We have to be scrutinising every extra penny of taxpayer money that is proposed for spending because ultimately, we want to do the Conservative thing and cut taxes for people.”
The energy security strategy, which promises to map out how the UK reaches energy independence, has been delayed for weeks amid wrangling between Number 10 and Number 11 about how ambitious to make new pledges on nuclear power.
Mr Sunak has made clear for months his concern about the scale of UK borrowing and ballooning debt repayments as interest rates rise, creating tensions with a Prime Minister more eager to agree to new spending.
Sections of the document were still being rewritten on Tuesday night, less than 48 hours before it is due to be published.
