Cowboy builders are among those believed to have exploited a government endorsed energy saving scheme, leading to up to £165million of suspected fraud and households living in damp and mouldy homes
Tens of thousands of UK homes fitted with energy efficiency measures under a government scheme have developed “major” faults such as damp and mould, a spending watchdog has revealed.
In some cases the problems are so serious they pose “immediate health and safety risks,” the National Audit Office warned in a damning report. It also revealed issues with the Energy Company Obligation may have led to up to 16,500 false claims, totalling as much as £165million worth of suspected fraud. Campaigners have said the scheme has been exploited by “cowboy” tradespeople.
The flagship ECO initiative is designed to tackle fuel poverty and reduce carbon emissions by requiring energy firms to fund the installation of measures, such as insulation in homes. The cost is included in all customer bills.
But a scathing study by the NAO has laid bare what its head called “clear failures” with the way it is designed. It found 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 – have major issues that need fixing. Of those, 6% present immediate health and safety risks, it added. The report also found between 9,000 to 13,000 homes with internal insulation (29% of the total) with serious faults.
Possible explanations include an under-skilled workforce, with work being sub-contracted to individuals and firms who are “not competent” or certified, uncertainty over which standards apply to which jobs, and businesses “cutting corners” when undertaking design and installation work.
The Department for Energy Security and Net Zero (DESNZ) implemented a new consumer protection for the scheme in 2021, which included appointing TrustMark. But the report says this system failed to alert DESNZ to significant issues with the quality of installations until October last year.
In November last year regulator Ofgem also estimated that businesses had falsified claims for ECO installations in between 5,600 and 16,500 homes, potentially claiming between £56million and £165million from the energy suppliers operating under the scheme.
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.”
Simon Francis, coordinator of the End Fuel Poverty Coalition, said: “The report reveals a system that has let cowboys through the front door, leaving thousands of victims living in misery and undermining public trust in efforts to tackle the cold damp homes crisis facing many households. Insulation and ventilation, when done properly, are among the safest and most effective ways to bring down energy bills and keep people warm. But sub-standard delivery and weak oversight by the last Government has turned what should have been a national success story into a cautionary tale.
“Now we need to fix the system, not abandon it. The government’s Warm Homes Plan must guarantee quality, with properly trained installers, independent inspections and rapid remediation if things go wrong.”
Minister for Energy Consumers Martin McCluskey 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.”