"This is a damning indictment of a failed scheme, where poor oversight has allowed rogue traders to cause huge damage to people’s homes and lives"
- Sue Davies - Which?
A scathing new National Audit Office (NAO) report has found that virtually all homes with external wall insulation fitted under the government’s Energy Company Obligation (ECO) scheme require remedial work to correct defects such as damp and mould.
Almost all the external insulation fitted under the previous government’s energy efficiency scheme was installed so poorly that it will have to be repaired or replaced, according to a new investigation by the NAO. Thousands of homeowners who took part in the insulation programmes have been left with badly fitted cladding that, in many cases, is expected to cause damp and mould.
Of the roughly 23,000 homes fitted with external wall insulation under the Energy Company Obligation (ECO) and Great British Insulation Scheme (GBIS), 98% require remedial work, the NAO report found. A further 9,000 to 13,000 homes with internal insulation, representing 29% of installations, also have major problems, and more than 3,000 properties are thought to pose immediate health and safety risks that must be urgently addressed.
Weak oversight, audit failures and system design flaws are to blame
The NAO attributed the widespread issues to an under-skilled workforce, subcontracting to uncertified installers, inconsistent standards and commercial incentives to cut corners. The consumer protection framework, introduced in 2021 under TrustMark, failed to raise red flags until October 2024, well after widespread media reports of mould and damp had surfaced.
Gareth Davies, head of the NAO, said, “ECO and other such schemes are important to help reduce fuel poverty and meet the Government’s ambitions for energy efficiency. But clear failures in the design and set-up of ECO and in the consumer protection system have led to poor-quality installations, as well as suspected fraud. DESNZ must now ensure that businesses meet their obligations to repair all affected homes as quickly as possible. It must also reform the system so that this cannot happen again.”
Anti–fuel poverty campaigners responded with strong criticism. Simon Francis, co-ordinator of the End Fuel Poverty Coalition, said, “The NAO report reveals a system that has let cowboys through the front door, leaving thousands of victims living in misery and undermining public trust in efforts to tackle the cold damp homes crisis facing many households."
"Insulation and ventilation, when done properly, are among the safest and most effective ways to bring down energy bills and keep people warm. But sub-standard delivery and weak oversight by former ministers has turned what should have been a national success story into a cautionary tale. Now we need to fix the system, not abandon it.”
Paula Higgins, chief executive of HomeOwners Alliance, added, “Once again, public money has been used to fund cowboy builders, leaving homeowners with damp, mouldy and unsafe homes. The National Audit Office report lays bare how weak oversight and a broken consumer protection system have failed the very people these schemes were meant to help."
"It’s yet more evidence that the government must act urgently to regulate and license builders and installers — something we have long campaigned for. Without proper regulation, homeowners will never have the confidence to invest their hard-earned money in improving their homes.”
Sue Davies, head of consumer protection policy at Which?, said, “This is a damning indictment of a failed scheme, where poor oversight has allowed rogue traders to cause huge damage to people’s homes and lives.”
Following TrustMark’s alerts in 2024, DESNZ and Ofgem instructed certification bodies and scheme providers to suspend the worst-performing installers, notify affected households, and strengthen the consumer protection framework.
The NAO recommends that DESNZ:
- take clear responsibility for ECO and related retrofit schemes, even when funded through consumers’ energy bills
- define how and when households with faulty work can access repairs under the forthcoming Warm Homes Plan
- reform the consumer protection regime for all retrofit schemes
- publish annual estimates of fraud and non-compliance
The Public Accounts Committee is set to review the findings, while homeowners concerned about their installations are advised to contact Ofgem for assessment and potential remediation.
The minister for energy consumers, Martin McCluskey, said, “Today’s report shows unacceptable, systemic failings in the installation of solid wall insulation in these schemes, which have directly affected tens of thousands of families.”
He added, “We are fixing the broken system the last government left by introducing comprehensive reforms to make this process clear and straightforward, and in the rare cases where things go wrong, there will be clear lines of accountability, so consumers are guaranteed to get any problems fixed quickly.”
