Energy Efficiency Retrofits Slammed for Bad Quality and Weak Controls

THE GOVERNMENT’S energy efficiency retrofit schemes for homes are damned in a new National Audit Office (NAO) report.

The report says bad installations, weak government oversight and inadequate audit and monitoring, have led to tens of thousands of households needing repair work to correct major issues.

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 an estimated 22,000 to 23,000 homes with external wall insulation fitted under the scheme (98% of the total) needing repairs.

Another 9,000 to 13,000 homes with internal insulation (29% of the total) have major issues that need fixing.

Dangerous Work

In some of these homes the installations are so bad they are an immediate health and safety risk. Dangers such as exposed live electrical cabling or blocked boiler ventilation were found in 2,000 homes with external wall insulation (6% of the total) and 1,400 homes with internal wall insulation (2% of the total).

Reasons for the shoddy standards include an under-skilled workforce, with work being subcontracted to incompetent or certified firms.

Uncertainty over which standards apply to which jobs and businesses cutting corners on design and installations add to the substandard results.

The Department for Energy Security and Net Zero (DESNZ) applied a new consumer protection system to the scheme in 2021.

Appointing TrustMark to take over technical monitoring from Ofgem, the new regime still failed to warn about the installation quality failings until October 2024. By this time the media had already reported on cases of serious mould being caused in homes.

The NAO Report Finds

• Weak government oversight resulted in widespread issues with the ECO scheme not being identified sooner.
• An overly complex consumer protection system 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 limited its ability to have analytical systems fully up and running until the second half of 2024.
• Insufficient audit and monitoring that allowed installers to ‘game’ the system by either being certified by multiple certification bodies or transferring their certification between bodies. This meant they would have less history with each, and less scrutiny and audit.

Fraudulent Claims

Additionally, in November 2024 Ofgem estimated that businesses had fraudulently claimed £56-165 million for 5,600-16,500 homes from energy suppliers. DESNZ and Ofgem do not have enough quality data to accurately know the exact level of fraud in the ECO scheme.

DESNZ and Ofgem took action once TrustMark made them aware of the extent of the problems. This included suspending the worst installers; informing the potentially affected households and wider public; and changing the consumer protection system.

DESNZ also plans to apply the lessons learned to its upcoming Warm Homes Plan.

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.”

The NAO recommends that DESNZ:

• takes clear responsibility for schemes such as ECO, even when they are funded through consumers’ electricity bills
• clarifies its approach to repairing faulty ECO scheme installations alongside its Warm Homes Plan
• reforms the consumer protection system for retrofit schemes
• reports annually on a statistically robust estimate of the level of fraud and non-compliance in each of its retrofit schemes.

The original installer is liable for the whole cost of repairing faulty installations in affected homes. To arrange repairs, affected households should contact Ofgem on the ECO helpline: 0808 169 4447 or email ECOhelp@ofgem.gov.uk.

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