MPs slam ‘abject failure’ over insulation scheme as victims up to £230k out of pocket

A senior MP has called the issue a ‘catastrophic fiasco’

Tens of thousands of homeowners are facing “unaffordable bills” to repair defects caused by a failed government energy efficiency scheme, MPs have warned.

A report from the Pubic Accounts Committee finds that the “abject failure” of the government-backed Energy Company Obligation (ECO) programme to install insulation in homes has left some facing costs of over £230,000.

The Commons spending watchdog warns that the government has not given real assurance that it will deliver on its promise that no one affected will have to pay to resolve the issue, pointing to cases where the cost of repair far exceeds the £20,000 cap.

The group also casts doubt on the ability of original installers to withstand the scale of potential claims after they were made liable to make the fixes.

Those who applied for the scheme needed to have either a household income of under £31,000, or a person with a severe long-term health condition living in the home.

An example of shoddy insulation shared with The Indepedent (Katie Barrett)

Last year, the National Audit Office found that external wall insulation installed under the scheme was defective in 98 per cent of cases, presenting immediate health and safety risks.

It found that the reason there were so many poor quality installations could be down to work subcontracted to firms and individuals who were not competent, businesses cutting corners and uncertainty over standards.

The issue was not flagged until October 2024, more than two years after the ECO scheme began. However, by September 2025, only 3,000 of the estimated 30,000 affected homes had been identified and fixed.

The Department for Energy Security and Net Zero (DESNZ) is currently working with Ofgem and TrustMark to conduct audits to establish the full extent of the issue.

Sir Geoffrey Clifton-Brown, PAC chair, said: “I have served on the Public Accounts Committee for twelve years. In all that time, a 98 per cent failure rate in a public sector initiative amounts to the most catastrophic fiasco that I have seen on this Committee.

“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.”

The senior MP adds that the “sheer levels of non-compliance” seen has led the PAC to recommended the government refer the issue to the Serious Fraud Office to investigate the extent of fraud across the scheme.

Fuel Poverty Action spokesperson, Jonathan Bean, said: “The Government home retrofit scandal is growing, and before continuing down the same path ministers need to focus on fixing the already damaged homes and ending the suffering of the tens of thousands of often vulnerable people who live in them.

Sir Geoffrey Clifton-Brown (Chris McAndrew/UK Parliament/PA) (PA Media)

“Victims of botched retrofits are sick of vague promises – what they want is a public inquiry into this scandal and a guarantee their homes will be fixed.”

The report comes shortly after the government announced its £15bn Warm Homes Plan, which will enable homeowners to get green tech like solar panels and heat pumps for free or through low interest loans.

MPs and campaigners argue the government must restore public trust in government schemes like this by ensuring it is delivered effectively.

Sir Geoffrey said: “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.”

Mr Bean adds that there is a “huge risk that history will repeat itself” in the roll out of the Warm Homes Plan, adding that it could turn into an “even bigger fiasco”.

Minister for energy consumers Martin McCluskey said:"We inherited a broken system from the previous Government. It was not fit for purpose and had multiple points of failure. We are cleaning up this mess.

"Every household with external wall insulation installed under these two schemes are being audited, at no cost to the consumer. And we have been clear that no household should be asked to pay any money to put things right.

"Of all non-compliant properties found to date, over 50% have been remediated. We have also taken the decision to end the ECO scheme and instead put more investment through local authorities, which have a significantly better record of delivery.

"We are reforming the system of consumer protection to better protect people. We will establish a new Warm Homes Agency, bringing in a single system for retrofit work to provide stronger, formal government oversight and driving up quality.”