The government’s flagship green policy to transform the energy efficiency of 14 million homes and create 65,000 jobs appears doomed to fail, with the revelation of its own figures showing the number of lofts being lagged is set to plummet by 93 per cent.

The Green Deal is at the heart of the government’s ambition to be the “greenest ever” as it will deliver large cuts in climate-warming carbon emissions, as well as curbing high energy bills by making houses warmer and less expensive to heat.

The disclosure is the most startling yet about the Green Deal programme, which starts in October and has been billed by ministers as the most ambitious national refurbishment scheme in the world.

Britain’s homes are old and leaky by international standards and millions of lofts and cavity walls remain poorly insulated. These home energy efficiency measures are seen as the cheapest way to cut bills and carbon emissions.

But the new data, obtained by Building magazine and from Department of Energy and Climate Change’s (DECC’s) own impact assessment, throws the government’s grand ambition into serious doubt. Current government schemes that subsidise insulation have resulted in just over one million lofts a year being lagged in recent years, yet this will plunge to just 70,000 a year under the green deal, according to DECC figures. This is also far below the two million per year required to meet climate targets. For cavity walls, the current 510,000 a year being filled will fall to 170,000, a drop of 67 per cent, and again far below the 1.4 million a year required.

“These stunning figures show that the government’s Green Deal is in danger of becoming a car crash,” said Luciana Berger, Labour’s shadow climate change minister. “At a time when millions of families are struggling with their energy bills, it beggars belief that this government will cut the number of people getting help to insulate their homes by as much as 90 per cent, scrapping successful schemes introduced by Labour.

“The most effective way people can save money on their bills is by improving their home’s energy efficiency, but this government is so out of touch it is making it harder to do.”

Existing insulation schemes subsidise the cost of insulation with, for example, energy company E.on this week offering free loft and cavity wall insulation plus a £100 incentive. The funding comes from a levy of £25 a year on all bills and from government coffers. The Green Deal, by contrast, offers no subsidy for these measures and instead provides a loan enabling the up-front costs to be paid back using the savings made on heating bills.

However, the new DECC figures show that the take-up of the Green Deal is expected to be very low. In December, in an unprecedented intervention, the government’s official independent advisers warned in an open letter that the Green Deal was set to fail, reaching just two to three million households of the 14 million targeted.

“The paradox is that the government’s own impact assessment suggests the policy will not deliver its objective,” said David Kennedy, chief executive of the Committee on Climate Change. “There is a difference between the rhetoric and their own assessment.”

He said the Green Deal removed the existing obligations on energy companies to deliver installations and left it to the open market to deliver. “We think there is a significant risk in leaving it to the market, as that has never worked anywhere in the world and is unlikely to happen in the UK.”

The government’s plans, currently undergoing a public consultation, do include an energy company obligation (ECO), funded by a levy on all bills. But as it stands that will only be available to so-called “hard-to-treat” homes, in effect those with no cavity wall and hence needing solid wall insulation. The DECC figures show solid wall insulation rising by tenfold to 153,000 a year.
But DECC signalled to the Guardian on Friday that the ECO might be used for some cavity walls.

“One of the things we are considering is whether four million harder to treat cavity wall jobs that still need to be done could be covered under ECO,” said a spokeswoman. “The ECO will provide extra financial support for very expensive jobs that don’t pay for themselves over their lifetime. But the reality is that loft and cavity wall insulation is something that millions have already taken up meaning there’s a finite number of jobs left to do.”

In the UK, DECC statistics show that 10 million (43 per cent) of all lofts remain unlagged and eight million houses with cavity walls (42 per cent) have yet to be insulated.

“DECC has been staring a big question in the face for a long time: why would people take out a loan to pay for something they can currently get cheap or for free?” said Dave Timms, energy campaigner at Friends of the Earth.

“These figures show they won’t and that installation rates of loft and cavity wall insulation are going to drop off a cliff. It needs to turn around and come up with a comprehensive strategy to tackle fuel poverty and energy efficiency. The Green Deal is a finance plan, not a strategy, and as it stands, the results will be disastrous. You need to surround the Green Deal with a much more potent mix of tax breaks, compulsory improvements and other incentives.”

The government has already announced a £200m fund to help incentivise take-up and other measures that have been discussed include cashback offers, council tax or stamp duty rebates, and changing building regulations so that people who renovate their homes improve its energy efficiency at the same time.