Power companies are collectively more than 60% behind their target to deliver energy efficient homes to thousands of vulnerable people, council leaders have warned.

That is despite collecting an estimated £975 million this year so far through the Energy Company Obligation (ECO) levy on consumers’ bills, the Local Government Association (LGA) said. It claims – based on seven months of the insulation programme’s progress – the scheme was 65% behind its targets.

The ECO is one of the green taxes designed to raise money to pay for insulating the homes of people on limited incomes and lower their bills by reducing the amount of energy they use. Energy firms blamed mandatory schemes like the ECO for raising gas and electricity prices this winter. The scheme was defended by Energy Secretary Ed Davey last week.

Councillor Mike Jones, Chairman of the LGA’s Environment and Housing Board said: “Energy companies are collecting this money through a levy which is contributing to the cost of fuel bills and they have an obligation to invest it as swiftly and effectively as possible to deliver upgrades which save vulnerable people money and keep them warm and healthy this winter.”

The LGA, which represents 373 councils in England and Wales, is calling on energy companies to work more closely with local authorities across the country to deliver the energy efficiency upgrades.

The trade body for the energy industry claims it has already been working with local authorities, housing associations, DECC and the Green Investment Bank on the ECO and the Green Deal.

Energy UK said: “We appreciate that ECO, like any major new government programme, takes time to bed in and for people to understand how things work but the industry is committed to helping in that process.”