Hundreds of thousands of homeowners will receive vouchers of up to £5,000 for energy-saving home improvements, with the poorest getting up to £10,000.
Chancellor Rishi Sunak is due to set out a £2bn grant scheme in England for projects such as insulation as part of a wider £3bn plan to cut emissions.
The Treasury said the grants could help to support more than 100,000 jobs.
Labour said renters appeared to be left out and called for a “broader and bigger” plan to cut carbon emissions.
Under the Green Homes Grant, the government will pay at least two-thirds of the cost of home improvements that save energy, the Treasury said.
For example, a homeowner of a semi-detached or end-of-terrace house could install cavity wall and floor insulation for about £4,000 – the homeowner would pay £1,320 while the government would contribute £2,680.
The scheme will launch in September, with online applications for recommended energy efficiency measures, along with details of accredited local suppliers.
Once one of these suppliers has provided a quote and the work is approved, the voucher is issued.
Speaking to BBC Breakfast, Business Secretary Alok Sharma added that the poorest households could receive up to £10,000 towards costs, and that double glazing would also be covered by the scheme.
He continued: “What [the scheme] ultimately means is lower bills for households, hundreds of pounds off energy bills every year, it’s supporting jobs and is very good news for the environment.”
The government said about half of the fund – which is due to be spent in one financial year – will go to the poorest homeowners, who will not have to contribute anything to the cost. Better insulation could save some people £600 a year on energy bills, the Treasury said.
Mr Sunak said the investment would also help to “kick-start our economy” by creating thousands of jobs and providing business for existing skilled workers, as the UK recovers from the economic shock of coronavirus.
“As Britain recovers from the outbreak, it’s vital we do everything in our power to support and protect livelihoods across the nation,” he said.
‘The jobs factor swayed the day’
Insulation gives a triple benefit. It saves on bills, cuts carbon emissions from heating, and – crucially, as the UK’s economy creaks – it creates thousands of jobs for trades people.
England can’t reach its climate targets without a major housing refit, but until now the Treasury has been reluctant to help – because it means transferring cash from the public purse to private bricks and mortar.
Now the jobs factor has swayed the day and some campaigners are delighted – the £2bn figure is more than they expected.
Labour approves of the investment, but says it does little to help people in cold, rented homes, and it warns the programme must be carried on year after year.
But huge questions remain over how the scheme will be set up before the start date of September, and how builders will be prevented from profiteering.
The grants are part of a wider £3bn “green investment” package due to be announced in the chancellor’s summer statement on Wednesday, to support efforts to rebuild the economy after the pandemic.
The plan aims to create tens of thousands of new jobs while helping the UK meet its 2050 target of achieving net zero carbon emissions.
It will involve improving insulation in public buildings such as schools and hospitals and retro-fitting low-carbon heating technology to social housing.
The Conservative manifesto had pledged £9.2bn for improving the energy efficiency of low income housing and public buildings.
Shadow business secretary Ed Miliband welcomed the plan but stressed that it was not “comprehensive”.
“It appears there is almost nothing for the people who rent the 8.5 million homes in the social rented sector and private rented sector, which has the worst energy efficiency standards. That means one-third of people are left out,” he said.
Mr Miliband said the government needed “a much broader and bigger-scale strategy” to meet its target to reduce carbon emissions to net zero, including investing in nature conservation, increasing renewable energy, supporting manufacturers to be greener and improving transport.
Meanwhile, Rosie Rogers, senior political advisor at Greenpeace UK, said the UK still wasn’t “playing in the same league” as other countries, such as Germany, which is investing €40bn (£36bn) in green jobs and energy efficiency, or France, which pledged €15bn to tackle the climate crisis in June.
The UK Treasury said the figures are not like-for-like.
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