Government insulation scheme may cause mould and damp

Almost all homes which have had external wall insulation fitted under a Government scheme will need repair work as they could cause dangerous issues including damp and mould, a damning report today reveals.

Some 98 per cent of external wall insulation fitted under the scheme will need to be fixed due to shoddy and potentially unsafe installation, according to public spending watchdog the National Audit Office, which has today laid bare the failings of the flagship ECO scheme. Meanwhile, almost one-third of the homes fitted with internal wall insulation are facing major issues due to poor installation. This poor-quality insulation could cause family homes to be riddled with unsafe damp and mould due to subcontractors cutting corners, the report claims. Families were promised warm homes which would save them energy in the long run. But vast swathes have been landed with potentially unsafe insulation as so-called 'cowboy builders' have been bankrolled by the public purse, experts claim.

ECO – Energy Company Obligation – is an energy efficiency scheme designed to slash fuel poverty by forcing energy companies to stump up the money for energy upgrades to people's homes, such as insulation. Households who receive one of several benefits and whose homes need energy efficiency upgrades could be eligible for the scheme, which is designed to battle fuel poverty and save consumers money on their energy bills. According to Ofgem, there have been 304,500 installations under ECO4 and GBIS schemes to the end of March 2025 But the NAO today says there have been 'clear failures' in the ECO programme. Some 22,000 to 23,000 of the homes with external wall insulation fitted under the scheme have major issues that need to be fixed – some 98 per cent of the total installations. For internal insulation, it's 9,000 to 13,000 homes, some 29 per cent of the total installations.

Plus, a small percentage of these pose an immediate healthy and safety threat due to issues such as exposed live electrical cabling or blocked boiler ventilation, the NAO claims. For external insulation, some 6 per cent of installations face this while for internal insulation it is 2 per cent of homes. An under-skilled workforce is one of the reasons such poor quality work has been carried out. Jobs may have been 'subcontracted out to firms not 'competent' or 'certified'. They may have bene unsure of which standards applied to which jobs or they may have cut corners. The report claims weak government oversight has caused a failure to identify the widespread issues with the scheme. This wasn't helped by what the NAO calls an 'overly complex consumer protection programme' which eventually failed.

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. The Department for Energy Security and Net Zero (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.' In 2021, a new consumer protection scheme was set up for ECO. It included appointing a quality scheme TrustMark. However, this protection programme failed to alert DESNZ to significant issues with the quality of installations until October 2024.

Sir Geoffrey Clifton-Brown, Chair of the Committee of Public Accounts, said: 'The failures of the two current ECO schemes are stark, with nearly all external and nearly a third of internal wall insulation fitted under the schemes requiring remediation. 'The potential impact of major issues to the health and safety of affected households must not be understated. DESNZ and Ofgem have been quick to act after becoming aware of widespread problems, but their efforts remain hampered by weak government oversight and an overly complex consumer protection system. It is imperative that households receive clarity on how they can fix their homes and a system is put in place whereby these failings do not reoccur.' The NAO has recommended DESNZ takes clear responsibility for ECO and clarifies its approach for repairing the faulty installations.

Paula Higgins, chief executive of website the HomeOwner's Alliance, said: 'This is an absolute disgrace. Once again, public money has been used to fund cowboy builders, leaving homeowners with damp, mouldy and unsafe homes. This report lays bare how weak oversight and a broken consumer protection system have failed the very people these schemes were meant to help. We fear this is only the tip of the iceberg. External and internal wall insulation account for just 8 per cent of installations under these schemes, leaving 92 per cent still unexamined. We urge the Government to take action on these other measures — and in particular to look at spray foam insulation, which extends beyond government-endorsed schemes. 'In the meantime, we are deeply concerned for the stress and upheaval this will cause affected homeowners.'

Martin McCluskey, Minister for Energy Consumers, 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. 'Having inherited a flawed system of oversight and regulation established by the previous government, this Government has taken decisive action to protect households and ensure all poor installations of solid wall insulation are fixed at no cost to the consumer. People should not be expected to navigate a complex web of organisations when they want to improve their homes - and with this Government, they won't.'

'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.' Are you worried you've had poor inuslation fitted under this scheme? Get in touch: [email protected].