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George Osborne has rejected claims by former Liberal Democrat energy secretary Chris Huhne that the Treasury has blocked policies aimed at incentivising far greater uptake of the Green Deal.

Chris Huhne, a Liberal Democrat and former energy secretary, told the BBC鈥檚 Radio 4 Today programme this morning that it depressed him the government was missing some 鈥渧ery easy hits鈥� to incentivise take up of energy efficiency.

However, the chancellor, responding later in the same programme, said that the government already had a programme funded by the Treasury that did help insulate the homes of those who are the poorest or in fuel poverty.

He said: 鈥淚t鈥檚 not just the Green Deal. We also have something called the Energy Companies Obligation (ECO), which is a scheme that energy companies use to go into some of the poorest homes or the homes with the highest energy bills relative to their income and the size of their home to make sure they鈥檝e got all the energy efficiency that they can possibly have.

Huhne had earlier said: 鈥淥n energy saving we could be saving a lot of energy and reducing our bills if there were greater incentives for the Green Deal.

鈥淥ur homes are incredibly inefficient. They leak energy, and that costs an incredibly amount. It has been the Treasury that has really been the obstacle to that.鈥�

The Liberal Democrats adopted as official party policy at their party conference earlier this month.

The proposals included commitments to introduce incentives for people to take-up the Green Deal by bringing in variable rates of stamp duty and council tax based on the energy efficiency of a property.

, which would require householders to upgrade the performance of their homes when building extensions.

The news comes as the Federation of Master Builders (FMB) warned that the Green Deal would fail unless the government takes swift and decisive action to incentivise consumer demand for energy efficiency.

The FMB said a recent survey of their members found that more than 70% thought that a reduced rate of VAT would be a 鈥渟uccessful鈥� or 鈥渉ighly successful鈥� way of encouraging their customers to commission energy efficiency work.

Almost two thirds of FMB members surveyed (65%) thought a free energy-efficiency assessment would encourage more of their customers to improve the energy efficiency of their home. 

Brian Berry, FMB chief executive, said: 鈥淚t鈥檚 time for the government to accept the Green Deal has not been a success.

鈥淭he FMB has worked hard to promote the Green Deal to small construction firms, but until our members see a clear demand for Green Deal work and a more straightforward route to the Green Deal market, they will not engage with the scheme.鈥�

鈥淎 reduction in VAT would reduce the overall cost of the work and make Green Deal finance more attractive to home owners who may be deterred by a large debt against their property.鈥�

鈥淥ur latest research also supports the government鈥檚 own findings that just having a Green Deal assessment is enough to encourage a significant number of people install energy efficiency measures in their home, regardless of how they choose to pay for it.

鈥淕overnment research found that from a sample of households that had a Green Deal assessment, 81% have already, are in the process of or intend to install at least one energy efficiency home improvement.

鈥淭hat鈥檚 why the government should consider offering free energy efficiency assessments alongside a reduction in VAT.鈥�

Berry concluded: 鈥淎bove all the government needs to seize the opportunity to announce how it intends to light the touch paper to the flailing Green Deal scheme.鈥�