Millions of families struggling with the rising cost of living are having to pay an extra £250 a year on fuel bills because of leaky homes, councils have warned.

The analysis by the Local Government Association (LGA) found three million households in fuel poverty in England were paying an extra £250 a year on average as heat is wasted through the walls, roofs and windows of poorly insulated housing.

The LGA, which represents 350 councils in England and Wales, is calling for a redoubling of efforts to insulate all fuel poor homes, which its analysis shows would save millions from energy bills every year.

The demand joins the growing chorus of calls for more Government action on making homes more energy efficient, which – by reducing demand for gas and other fuels – saves on bills, supports security of supplies and cuts carbon emissions.

Investment now will save households further down the line, ease the cost-of-living crisis and mean families have added security and flexibility within their budgets

This week, the independent advisory Climate Change Committee hit out at the “shocking” gap in Government efforts to ensure homes were better insulated, in the face of rising bills.

The advisers called for increased funding for energy efficiency in fuel-poor homes, and policies to incentivise homeowners to improve their properties, and for the Government to work with local councils to deliver retrofits.

Official statistics earlier this year revealed that one in eight homes – some three million households – were in fuel poverty in 2020, even before soaring gas prices took hold.

In England, official statistics now consider a household to be in fuel poverty if their home has an energy efficiency rating of band D or below and their disposable income after housing and fuel costs is below the poverty line.

The LGA analysis, released as local authorities meet for their annual conference in Harrogate this week, suggests that two million homes in fuel poverty will need additional help to implement energy efficiency measures that lift homes up to a rating of band C by 2030.

Councils say the additional help for these homes is needed to hit the Government’s ambition to retrofit 3.1 million fuel poor homes to an energy rating of C by 2030 – almost 900 homes a day this decade.

Focusing on fuel poor homes would save up to £770 million a year from household energy bills by 2030 and save £500 million a year on NHS spending on health problems due to cold, damp and draughty homes, the LGA said.

It would also deliver 670,000 tonnes of carbon dioxide savings a year from 2030.

The LGA said that while the Government has put in a significant package to ease the cost-of-living crisis in the short term, and expanded obligations on energy companies to support energy efficiency measures in poorer homes, paid for on consumer bills, more was needed.

Ministers should consider further investment in energy efficiency, it urged.

The LGA said councils were best placed to deliver programmes to help decarbonise England’s buildings, with local knowledge, experience, trust and partnerships and relationships with residents, and an energy efficiency scheme would create 23,000 skilled jobs across the country.

David Renard, environment spokesperson for the LGA, said: “So many homes are leaking more and more money as energy prices increase.

“This will hit stretched household budgets hard and the public purse, while adding to the climate crisis.

“Investment now will save households further down the line, ease the cost-of-living crisis and mean families have added security and flexibility within their budgets.

“Ensuring homes are well insulated also means fewer people are at risk of the health risks associated with living in cold, damp conditions, and this is work we have to do as part of our drive to net zero.

“Councils are keen to help the Government deliver on this win-win policy and increase the number of buildings insulated by winter.”

A UK Government spokesperson said: “Thanks to Government support, the number of homes with an energy efficiency rating of C or above is at 46% and rising, up from just 13% in 2010.

“We are investing £6.6 billion this parliament to go even further, with planned energy efficiency upgrades delivering savings of £300 a year on average on their energy bills.”

Shadow climate change secretary Ed Miliband said: “Twelve years of failure by the Conservatives to insulate our homes is one of the reasons bills are so high. Too many working people and pensioners live in draughty, cold homes with high heating costs.

“If this Government were serious about cutting energy bills, it could start right now, insulating two million homes this year in order to cut bills, cut imports, and cut emissions. But they are not on working people’s side.

“Labour would give councils the resources they need to deliver the retrofit revolution in their areas. Only Labour can deliver the real long-term plan families need to tackle the cost-of-living crisis.”