Two government schemes designed to reduce energy use by insulating homes have suffered widespread failures, leaving tens of thousands of properties in need of repairs, a spending watchdog has found.
The National Audit Office (NAO) reported that 98% of homes fitted with external wall insulation under the previous government’s programs show defects that could lead to damp and mould if not fixed. Nearly a third (29%) of homes with internal insulation also require remedial work.
Energy Consumer Minister Martin McCluskey said the government is taking action and assured homeowners that repairs will be carried out “at no cost to the consumer.”
For homeowners like Mohammed Mahedi in Luton, the consequences are already severe. External insulation involves fitting boards to a home’s exterior brickwork and applying a waterproof render. When installation is faulty, rainwater can become trapped, causing problems.
“Some mornings I wake up breathing really heavily. I feel it in my neck. I feel it in my lungs,” he said, adding that he is still struggling to get the issues resolved. “We got a scheme done that was meant to be helping us, but it’s made everything worse.”
The NAO report examined work carried out between 2022 and early 2025 under two schemes: ECO4 and the Great British Insulation Scheme. In 2022, the previous government instructed energy companies to spend billions, funded through energy bill levies, to insulate homes, prioritising low-income households and those with poorly insulated properties.
However, the NAO found “clear failures” in the Energy Company Obligation (ECO) scheme, including poor-quality installations and suspected fraud. It cited an under-skilled workforce, businesses cutting corners, and confusion over applicable standards as reasons for the substandard work.
Gareth Davies, head of the NAO, said the Department for Energy Security and Net Zero (DESNZ) must ensure that all affected homes are repaired promptly and that the system is reformed to prevent a repeat of such failures.
The watchdog estimated that 22,000–23,000 homes with external wall insulation and up to 13,000 homes with internal insulation now need repairs. Over 1,000 properties pose an immediate health and safety risk due to issues like exposed live wiring or blocked boiler vents.
Weak oversight and insufficient auditing allowed some installers to manipulate the system. Last year, Ofgem reported that false claims for ECO installations may have affected up to 16,500 homes, potentially costing energy suppliers £56m–£165m.
TrustMark, the industry body, acknowledged the need for stronger measures and confirmed it had taken “firm, fair, and decisive action” when problems emerged in 2024.
Minister McCluskey described the NAO’s findings as “unacceptable, systemic failings” left by the previous government and pledged comprehensive reforms and clear accountability going forward.
BBC, October, 2025
