THE government’s tax break for investment in oil and gas production worth up to £5.7 billion could have insulated two million homes, a think tank said today.

The support, part of the emergency cost-of-living package unveiled last week, could have been used instead to “supercharge” an energy efficiency drive that saved each of the homes £342 on their bills, E3G said.

Chancellor Rishi Sunak performed a major U-turn last week, announcing that he will bring in a windfall tax on the soaring profits of oil and gas companies that will raise an estimated £5bn.

But companies can also avoid almost all their tax bill after Mr Sunak doubled the relief they can get for investing in new oil and gas extraction, raising it to 91p for every £1 they invest in Britain.

The relief for investment only applies to oil and gas production, and not renewables, which could result in more oil will flow from the North Sea.

Campaigners want to see investment in energy-saving measures like insulation to permanently cut the bills people face from living in heat-leaking homes as well as reduce the amount of greenhouse gas emissions produced.

E3G senior researcher Euan Graham said: “New tax relief on oil and gas investment gives companies handouts for undermining our climate safety.

“This is the opposite of what’s needed if we want to end our reliance on expensive gas.”

End Fuel Poverty Coalition co-ordinator Simon Francis said: “The only long-term solution to fuel poverty is improving the energy efficiency of our homes and a move towards a renewable led secure energy supply.

“Sadly, recent government announcements have been neutral on energy efficiency and this research shows they are now in reverse gear on a just transition away from fossil fuels.”