A new government incentive to improve the energy efficiency of UK homes will have an impact on utility bills, it has been said.

The boiler scrappage scheme, which came into force today (January 5th), gives homeowners with G-rated boilers the chance to swap them for more eco-friendly models.

They will receive £400 off the cost of a new A-rated boiler, or a heat pump, biomass boiler or renewable heating system.

Prime minister Gordon Brown commented: "Today's announcement will slash household energy bills and carbon emissions while providing an important boost for the British heating industry."

Meanwhile, climate change secretary Ed Milliband said that utility bills could be slashed by as much as £200 per annum if a new, more efficient boiler is installed.

"In total [this] will save the same amount of carbon equivalent to taking around 45,000 cars off the road," he revealed.

Mr Milliband indicated that the government was reeling out a number of measures to make people smarter in their energy use, which in turn will reduce emissions and household bills.

If 125,000 boilers are replaced through the new scheme, the government estimated that around 140,000 tonnes of CO2 will be saved per year.

Meanwhile, people have the chance to shave a maximum of £235 a year off their bills, it revealed.

The Climate Change Act of 2008 sets a legally-binding target of at least an 80 per cent cut in greenhouse gas emissions by 2050, which is to be achieved through action in the UK and overseas.

Introducing the boiler scrappage scheme may be one step towards achieving this, but Andrew Leech, executive director of the National Home Improvement Council, believes caution needs to be exercised.

"We need to make it easier for people to make environmental changes - but we also need to keep a little bit of control on them so they don't go overboard," he suggested.