UPDATED 1 Sept: The EI library in London is temporarily closed to the public, as a precautionary measure in light of the ongoing COVID-19 situation. The Knowledge Service will still be answering email queries via email , or via live chats during working hours (09:15-17:00 GMT). Our e-library is always open for members here: eLibrary , for full-text access to over 200 e-books and millions of articles. Thank you for your patience.
New Energy World™
New Energy World™ embraces the whole energy industry as it connects and converges to address the decarbonisation challenge. It covers progress being made across the industry, from the dynamics under way to reduce emissions in oil and gas, through improvements to the efficiency of energy conversion and use, to cutting-edge initiatives in renewable and low-carbon technologies.
Audit reveals major failures in UK government energy efficiency retrofit scheme
22/10/2025
News
A new National Audit Office (NAO) report has set out the reasons for failures in the UK government’s energy efficiency scheme for homes, including poor-quality installations, weak government oversight and inadequate auditing and monitoring.
The Department for Energy Security and Net Zero (DESNZ) believes failures outlined in the report have led to tens of thousands of households needing repair work to correct major issues that will cause problems such as damp and mould.
The government’s Energy Company Obligation (ECO) scheme aims to tackle fuel poverty and reduce carbon emissions by requiring energy companies to fund the installation of energy efficiency measures, such as insulation, in homes.
But poor installation work has resulted in almost all of the homes fitted with external wall insulation, and about a third of homes fitted with internal insulation having major issues that need fixing. That amounts to 22,000–23,000 homes in the first instance, and 9,000–13,000 homes in the second. A small percentage of these installations also pose immediate health and safety risks, the report finds.
Possible explanations why so many installations have been carried out to such a poor standard include an under-skilled workforce, with work being subcontracted to individuals and firms who are not competent or certified; uncertainty over which standards apply to which jobs; and businesses ‘cutting corners’ when undertaking design and installation work.
While DESNZ introduced a new protection framework in 2021 and appointed TrustMark as the government-endorsed quality scheme, it failed to alert DESNZ to widespread quality concerns until October 2024. By that time, media reports had already surfaced, highlighting severe mould in homes with recent ECO-funded upgrades.
The report outlines the reasons for the ECO scheme’s shortcomings, including:
- Weak government oversight resulting in widespread issues with the ECO scheme not being identified sooner.
- An overly complex consumer protection system that ultimately failed due to unclear and fragmented roles, responsibilities and accountabilities among DESNZ, Ofgem and private sector certification bodies and scheme providers.
- TrustMark’s funding arrangements limiting its ability to have analytical systems fully up and running until the latter half of 2024.
- Insufficient audit and monitoring, in part due to weaknesses that allowed installers to ‘game’ the system.
In addition to these issues, Ofgem revealed in November 2024 that fraudulent claims may have been submitted for ECO-funded installations in 5,600–16,500 homes, with the potential financial impact estimated at between £56mn and £165mn. These claims may have been wrongly paid to businesses from funds provided by energy suppliers participating in the scheme.
Gareth Davies, Head of the NAO, notes: ‘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.’
