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The Green Deal, the government's flagship energy efficiency scheme, has been launched today.

Householders and businesses can take out loans to fund energy efficient home improvements, such as cavity wall insulation, with the repayments coming from the savings made on the energy bill.

The Department of Energy and Climate Change (Decc) has also made a £125 million cashback fund available for Green Deal customers, where homeowners can claim more than £1,000 on their energy efficiency purchases.

Deputy prime minister Nick Clegg said: “The Green Deal will help of thousands of homes stay warm for less. Those people will benefit from energy saving improvements – and their energy bills will fall.

“The UK green sector is a success story – it is the sixth largest in the world and has a crucial part to play in building a strong economy. The Green Deal will support thousands of jobs – not just over the next few years, but in the long-term.”

Energy and climate change secretary Ed Davey said: “More and more families are being hit by the rising cost of fuel bills and the best way people can protect themselves from increased costs is to use less energy.

“This is where the Green Deal comes in, giving people a whole new way to pay for energy saving home improvements. The Green Deal is a great deal.”