ECO4 and Insulation Schemes

Statement

The following Statement was made in the House of Commons on Thursday 23 January.

“With permission, Madam Deputy Speaker, I would like to make a Statement about energy company obligation 4 and the Great British Insulation Scheme. The Government have identified an emerging issue of poor-quality solid wall insulation installed under those two inherited schemes.

Energy company obligation 4 began in April 2022, and the Great British Insulation Scheme began in May 2023. Around 65,000 households have had solid wall insulation installed under the schemes. In October 2024, TrustMark, the independent body that oversees tradespeople working in homes, did routine audits and found significant examples of solid wall insulation under those schemes that did not meet the requisite standard.

At that point, TrustMark began suspending a number of the installers responsible. After officials in our department were made aware of the issues, they asked TrustMark to conduct a much fuller audit, which concluded in mid-December. Officials informed Ministers at the start of December about the situation, and told them that early findings suggested that there were widespread cases of poor-quality installations that did not meet the required standard. Since that point, we have consulted the certification bodies responsible for overseeing the work, and the building safety regulator, to understand the true scale and nature of the emerging problem.

It became clear to me that there is a serious systemic issue around ECO4 and GBIS solid wall insulation. It ranges from minor problems, such as missing or incomplete paperwork, to major problems, such as exposed insulation or poor ventilation, which, if not fixed, could lead to damp and mould. As more poor-quality work has come to light, a total of 39 businesses have been suspended from installing new solid wall insulation in people’s homes. I can inform the House that suspended installers will not be able to deliver new solid wall insulation under any government schemes until they have fulfilled their obligations to put any issues right.

Additional on-site audits are being conducted as I speak, so that we can get a full picture of the scale of the problem and identify affected households. The auditing work continues at pace, and we have put in place a comprehensive plan for immediate repair and remediation where needed. Let me be absolutely clear about this: installers must fund any repair work themselves and carry it out as soon as possible. Consumers should not be asked to pay a penny towards the cost of getting the problems fixed.

We have instructed Ofgem, the energy regulator, to oversee that work. Ofgem will work with TrustMark and certification bodies to ensure that it is delivered at speed. Non-compliant work found through the audits is already being fixed. In the very small number of cases in which TrustMark audits found health and safety concerns, including wires not being fitted properly, the problems are being fixed urgently, with the expectation that they should be resolved within 24 hours.

Critically, I reassure the House that additional monitoring and checks are being put in place to ensure that future solid wall insulation is done to the requisite standard. It is also important to say that, based on what we know so far, we believe that the issues we have discovered are specific to solid wall insulation installed under ECO4 and GBIS. Stronger systems of checks and balances are in place for other schemes that involve local authorities and social housing providers, so we do not expect to see the same scale of problem there. However, the Government are reviewing the quality of solid wall insulation under other schemes. I will update the House on the results of that work as soon as they are available. We will continue to require the urgent remediation of any issues found across all government energy-efficiency schemes.

I know that this will be concerning news for families who have had solid wall insulation fitted through those schemes. Getting this sorted for those customers is our No. 1 priority. Since I was informed of the problems, I have worked with Ofgem to develop a full plan for assessing all affected properties and getting any problems fixed. Let me set out what our plans mean for those families. Ofgem will now oversee quality checks on all solid wall insulation installed under either scheme, to identify households that might be affected. That will begin with every measure being examined over the coming weeks by qualified professionals, and that will include looking at photographic evidence. If a quality check raises issues, the certification body that oversees the installer, or TrustMark, will arrange an inspection of the property and the problem will be fixed as soon as possible. Installers will be required to provide evidence to TrustMark that issues have been properly fixed. Let me reiterate our assurance that where solid wall insulation under the schemes has not been done right, consumers should not have to pay a penny to fix that.

We are clear that the responsibility for finding and fixing any problems lies with those who carried out the work. Consumers do not need to take any action now. However, given the inevitable concern among those who have had those measures installed, all households with solid wall insulation fitted under the schemes will be sent a letter from Ofgem in the next three weeks. It will set out the steps that we are taking, and how households can proactively raise concerns. We are also setting up a GOV.UK advice page specifically for those affected.

The Government are moving fast to protect households, but I must be honest with the House: these issues are the result of years of failure in a system that must be reformed. Home upgrades are, we believe, one of the best tools to get bills down for good and deliver warm homes. That is why our warm homes plan will cut bills for millions of households by upgrading their homes, including with solar panels, batteries, heat pumps and energy-efficiency measures such as double glazing and loft insulation. However, the Government have inherited a fragmented and confusing system of protections for people who want to insulate their homes—too many organisations with different roles and responsibilities, not enough clarity for consumers about who to turn to if things go wrong, and problems that should have been picked up earlier being missed. The system is in dire need of reform.

Installers are responsible for poor-quality installations, but they have been allowed to operate in a failed system that has left some households exposed to bad practices. The system can no longer command confidence, which is why we are committed to overhauling it, and to driving up quality and protecting consumers through the warm homes plan. We will look at the entire landscape —from how installers work in people’s homes and are certified and monitored, to where home owners turn for rapid action and enforcement if things go wrong—and we will ensure that there is more of a guiding mind overseeing upgrades across the system.

The steps I have set out demonstrate that the Government will do whatever it takes to protect consumers. We will regularly report back to the House about the steps being taken. We have set up a process through which colleagues from across the House can raise concerns about their constituents. Above all, we are determined to ensure that families are never let down in this way again. We will put in place a robust system of compliance, audit and regulation, so that consumers have the confidence to take up the offer of upgrading their homes. We will do what is necessary to ensure that families can have warmer homes and lower bills. I commend this Statement to the House”.

My Lords, the energy company obligation scheme and the Great British Insultation Scheme were established to improve the energy efficiency of homes—one of the best ways to cut consumer energy bills and keep people warm. This is particularly true for those experiencing fuel challenges. We took significant steps to improve the energy performance rating of homes. By the time we left office, 70% of social housing had an energy performance rating of A to C, up from 24% in 2010. In fact, almost half of the measures installed under the GBIS have been to low-income households.

The installation of solid wall insulation makes up a small proportion of the work undertaken by the ECO schemes and the Great British Insulation Scheme. It is worrying, however, that we have seen examples of substandard solid wall insulation under the schemes as identified by TrustMark.

It is with that in mind that we welcome and support the action announced by the Government last week, in which Ofgem will oversee the repairs and remediation. We are also grateful to hear of a review into the quality of solid wall insulation in other schemes and that additional on-site audits will be conducted to inform future action. It goes without saying that installers should fund the necessary repair work to remedy impacted households, which may experience issues with damp and mould.

However, we look to the Minister to provide clarity. Will the Government publish a full list of the 39 companies suspended from the scheme for carrying out poor-quality work? Can the Minister explain how the suspended companies will be required to remedy their work, and how will the Government ensure that the remedied work meets the necessary standards? Finally, will the Minister clarify exactly what action will be taken to ensure that every household which had solid wall insulation implemented under the schemes is thoroughly and properly informed and provided with the necessary information to rectify the work?

My Lords, I gather from looking at the press release more than the original Statement that 65,000 applications will be checked through Ofgem procedures. Today I met someone who is affected by this, and I want to emphasise just the worry that the 65,000 or whatever will have over the future of their houses, their saleability, their onward renting or the damages to landlords. This is a real concern.

How many of the 39 companies that the noble Baroness, Lady Bloomfield, mentioned, were part of the TrustMark scheme? That scheme, which I believe all those contractors should have been a part of, is described as “Government Endorsed Quality”. What really worries me regarding future schemes—I know there is a big ambition on the part of this Government to carry on retrofitting—is that there will be a loss of confidence.

The one question I would really like an answer from the Minister on is about what I think is wishful thinking: namely, the Government’s view that all these issues will be replaced or rectified by the original installers. I do not wish to accuse the department of being naive, but let us be clear: the majority building business model is that when you get into trouble, you go into liquidation. I and, I think, other people really want to understand who will then bear the cost of those rectifications where that happens, as I suspect it will quite regularly.

My Lords, I am grateful to the noble Baroness and the noble Lord. The noble Baroness has taken time out from Nuclear Week, which we have both been spending a very enjoyable three days on. She is absolutely right to stress the importance of the scheme. Clearly, there is consensus across the House on dealing with this big problem, as both the noble Lord and the noble Baroness suggested.

I make it clear that we have the evidence of an audit of about 1,100 of those 65,000, and there will now be a massive piece of work to follow up with further audits, which will be overseen by Ofgem. Some of those will be desk based and others will be in-person site visits. There will be a proportionality test to decide how the audits will be undertaken.

The sampling that has been done was geared towards the installers that were thought to be most risky, but the fact is that a significant proportion of that sample showed that there were major issues, which is why we needed to take swift action to conduct further checks and initiate a further programme of remediation. We think it is 38 installers, not 39—a correction has been made by TrustMark. To answer the noble Lord, of course they were all under the auspices of TrustMark, and we are working very hard through certification bodies and TrustMark to require them to remediate the work.

As the noble Lord pointed out, it is a requirement for those schemes to be registered with TrustMark. In the case of those already audited, this is happening. I believe most installers want to do the right thing and do a good job. My understanding is that where issues are being flagged, they are repairing the work, but clearly we are having mechanisms put in place to make sure that the installers deliver on their obligations, and the guarantee system we have acts as a backstop. Clearly, the current system is not working. There is a combination of TrustMark, the companies involved, the certification process and the UK accreditation system—there are a lot of bodies involved and there is not sufficient co-ordination or tight oversight of this. We need to focus on remediation, but then we must move on to establish a better system in future.