Households left with defective homes by government’s failed energy efficiency installation initiative may still be exposed to unaffordable repair bills.
In a new report on the catastrophic scheme which left more than 30,000 homes with defects, the Public Accounts Committee (PAC) finds a system with serious failings at every level.
The National Audit Office found last year that 98% of external and 29% of internal wall insulation installed up to mid-January ’25 were defective, leaving immediate health and safety risks. Given the likely role of fraud that the PAC has found in the poor-quality installations, the report also takes the unusual step of recommending government refer the issue to the Serious Fraud Office (SFO).
The failures in quality of insulation installation under the Energy Company Obligation (ECO) are clear. Ministers said in the aftermath of these findings that no household should have to pay to fix these issues, but the PAC’s report warns that households do not have real assurance that they will be covered. This is due to the fact that the original installer is liable for fixing issues, with costs up to £20k covered by guarantee if they fail to do so or cease to trade.
However, costs will sometimes exceed the guarantee cap; the PAC is aware of cases with damage worth over £250k, and is sceptical that the original installers and guarantee providers will be able to withstand the potential scale of claims.
The report calls on government to live up to the assurances that the Committee was given that there will be a credible plan for how it will ensure that no household will need to pay for the repairs - especially in light of the announcement last year ending ECO, after which the retrofit market may not be big enough to ensure enough installers remain viable businesses able to complete the works.
TrustMark, the government-endorsed quality scheme, has an ambition to audit all relevant homes within 15 months of Nov ’25. The report finds that, by mid-Sept ’25 and nearly a year after the problems emerged, less than 10% of the estimated 30k homes affected had been found and fixed.
The PAC fears government may be overconfident in expecting existing arrangements to identify faulty insulation are adequate.
Given how vital it is for residents to fix these severe issues as soon as possible, as health and safety risks are immediate and the likelihood of damage occurring increases with time, the report calls on government to articulate how it will scale up its find-and-fix programme and deliver it in a much shorter timeframe.
The report further finds that it is likely that the known levels of fraud involved in ECO are a significant underestimate. No single overall organisation in the system had overall responsibility for tackling fraud, or the data to make it effectively able to do so.
Installations worth 1.75% of the scheme value have been identified as fraudulent by Ofgem, but given the high levels of non-compliance in the scheme, the PAC suspects the true level of fraud to be much higher.
The report recommends that the Department should refer the matter to the Serious Fraud Office to investigate the extent of fraud across ECO, in order that criminals may be brought to justice.
The PAC’s inquiry establishes a picture of clear systemic failure. Virtually no attention was paid to it by senior officials at the Department for Energy Security & Net Zero (DESNZ), who took two years to recognise the scale of the problems.
This very poor overall supervision led to many avoidable faulty installations. Its system of quality assurance and consumer protection was overly complicated to the point of being almost bound to fail.
When it comes to the expert organisations within this system, TrustMark accepted it should have realised the levels of risk involved much sooner, and the United Kingdom Accreditation Service* apologised for its role.
The PAC notes that it is not good enough for organisations holding so much expertise and knowledge to say they delivered on their specific responsibilities and instead blame the system of which they were a key part.
The PAC notes that the recent announcement of the Warm Homes Plan is likely to lead to scaling up of other energy efficiency installations such as solar panels. It is vital that this is accompanied by a proper oversight of quality, that was so lacking here.
Chair comment
Sir Geoffrey Clifton-Brown, Chair of the Public Accounts Committee, said: “I have served on the Public Accounts Committee for twelve years. In all that time, a 98% failure rate in a public sector initiative amounts to the most catastrophic fiasco that I have seen on this Committee.
"Indeed, our report finds the project was doomed to failure from the start. Government behaved inexplicably in redesigning a similar scheme which was working reasonably well into a highly-complex number of organisations with siloed responsibilities, which did not respond to failures anything like quickly enough to prevent damage being done to people’s homes.
“Potentially thousands of people are now living with health and safety risks in their homes, and despite government’s protestations we have nowhere near enough assurance that they are not financially exposed to unaffordable bills to repair the defective works.
"All involved in the system must now move at far greater pace to make good. The public’s confidence will have rightly been shaken in retrofit schemes given what has happened, and government now has a self-inflicted job of work on its hands to restore faith in the action required to bring down bills and reduce emissions.
“Finally – this Committee’s remit is financial scrutiny. We are not a law enforcement body. The sheer levels of non-compliance found here make it clear to us that these matters should be referred to the Serious Fraud Office, and our report recommends as such.”
