Households will have to pay hundreds of pounds more to insulate their homes if Britain loses a legal battle over VAT with Brussels.
The row threatens to further undermine the Government’s “Green Deal” energy efficiency programme, which ministers have billed as the biggest home improvement project since the Second World War.
Many energy-saving measures are charged at the lower VAT rate of 5 per cent, covering products such as controls for heating and hot water systems, as well as having solid wall or loft insulation installed.
But the European Commission has ordered the UK to apply the standard higher rate of 20 per cent, claiming that the 5 per cent charge breaches European Union legislation to remove what it sees as tax distortions.
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