The £1bn clawback: Customers could be forced to pick up bill for Brown's fuel package

Gordon Brown's £1billion fuel package, which will allow everyone in Britain to insulate their home for half the price, could be derailed by power suppliers passing on the costs to consumers.

Despite the Prime Minister's assurances that no one would have to pay more to fund the plans, his stance was undermined within hours by an energy industry representative claiming 'the bill always ends up with the customer'.

David Porter, chief executive of the Association of Electricity Producers, told BBC Radio 4's World At One: 'They (the companies) will try to contain this because they have to, but it remains to be seen just how much of it ends up on the customers' bill in the longer run.

'In the end somebody has got to pay for this.'

Mr Porter later told the Daily Mail that he was referring to firms which produce power rather than supply it.

However, five of the 'big six' energy giants are members of his organisation.

Announcing the measures yesterday, Mr Brown said four million of the poorest parents, pensioners and the disabled would be in line for emergency cash payments if there is a severe winter.

He also revealed that power suppliers have agreed to freeze the tariffs of 500,000 of the worst-off households.

Other key features include:

Free cavity wall and loft insulation for pensioners and poor households, with 50 per cent off for everyone else;

Action to ensure households on pre-payment meters are not being ripped off and moving 600,000 low income families to cheaper tariffs by the end of the year;

Cold weather payments to go up from £8.50 to £25 a week to those eligible if temperatures drop below zero for seven consecutive days.

Of the £910million from energy firms, £560million will be invested in the existing carbon emissions reduction target scheme, which funds subsidised energy-saving improvements for all homes.

The remaining £350million will be spent on a community energy-saving scheme.

The cost of increasing cold weather payments is estimated at £16million.

Energy cost-cutting: How savings can be made

Last year, 472,000 people received at least one emergency payment when temperatures fell below freezing.

Mr Brown insisted yesterday that the costs would not be passed on to the consumer, and claimed helping households insulate their homes was a 'better way' to tackle the problem than one-off handouts.

However, ministers were forced to admit last night that they would be unable to stop energy firms increasing their tariffs if they wanted to.

Business Secretary John Hutton said: 'Of course they are able to, the question is whether they are going to. We don't have powers to fix energy prices.'

'The suit is £200, sir – but
I’m afraid the cavity
insulation brings it to
double that'

Critics also warned the package will offer no immediate help to the 5.4million living in fuel poverty.

They claimed millions will face a nightmare choice this winter between heating and eating.

Mervyn Kohler, of Help The Aged, said: 'This is a flimsy and failing package which does little to help older people struggling to cope with soaring fuel bills. Older people need help as the winter months approach.'

The Prime Minister is also facing pressure from the unions, who have insisted they will continue to press for a windfall tax on energy firms.

Unite general secretary Derek Simpson said: 'The energy companies are laughing all the way to the bank while hard-working families are going to struggle this winter.'

Rebel MP Frank Field, who led the 10p tax revolt, said: 'The Government has spent all summer roaring about the package it will produce and now out pops a mouse of a proposal that will probably do very little for many of the poorest pensioners.'

But the Royal Institution of Chartered Surveyors said: 'This is a significant step in the right direction.

'Unlike one-off handouts, the energy efficiency measures could cut energy bills by as much as 20 per cent year after year.' 

Helping hand: Six million homes will be insulated by 2011 under the programme which hopes to achieve long-lasting energy savings