The Green Deal will not be enough to retrofit all of the UK’s homes, and the government should bring in compulsory regulation and penalties to force through domestic energy efficiency, according to the Low Carbon Construction Innovation and Growth Team (IGT) report

Paul Morrell said that plans for mandatory standards should be drawn up in the event that the Green Deal, which will give homeowners up to £6,500 each to retrofit their homes, does not put the UK on track to make the country’s 26 million homes more energy efficient by 2050.

Describing the “almost universal perception” held in the industry that regulation was essential to create “mass demand” for retrofitting, the report recommends that the government should “introduce a suite of measures including regulation, fiscal incentives and penalties to ensure success”.

Asked how to incentivise businesses to retrofit existing homes, Mark Clare, chair of the IGT housing group and chief executive of Barratt Developments, said: “I don’t think we should assume that the Green Deal is as far as we will need to go. I think we will have to incentivise and penalise people over the next decade.”

He added that if the UK was not retrofitting a 40th of its housing stock a year - about 650,000 - by 2020, “then you are in serious trouble”.

The Green Deal will give homeowners and businesses grants to improve the energy efficiency of their buildings which will be paid back from the savings in energy bills.