Government Insulation Scheme Failure Leaves Thousands At Risk

Thousands of British homeowners are grappling with the aftermath of a government-backed insulation scheme that, according to MPs and watchdogs, has left a trail of costly damage, health hazards, and shaken public trust. The Energy Company Obligation (ECO) programme, launched in 2022 and intended to make homes warmer and greener, is now at the center of what the Public Accounts Committee (PAC) has called the most catastrophic fiasco in recent public sector history.

On January 23, 2026, the PAC published a damning report on the ECO scheme—alongside its successor, the Great British Insulation Scheme (GBIS)—revealing that major defects have been found in over 30,000 houses fitted with insulation since the schemes' inception. The scale of the problem is staggering: the National Audit Office previously found that 98% of external wall insulation installations under the ECO scheme were defective, with immediate health and safety risks such as damp, black mould, and even dry rot cropping up in homes across the country. BBC News has reported several cases where shoddy workmanship led to such severe damage that repair bills soared well beyond £230,000, with one Luton homeowner facing a projected cost of over £250,000.

Many of those affected are among society's most vulnerable—households with incomes under £31,000 or residents suffering from severe long-term health conditions. For them, the promise of lower bills and warmer, healthier living spaces has turned into a nightmare of unaffordable repairs and uncertainty. Jess Ralston, Head of Energy at the Energy and Climate Intelligence Unit (ECIU), put it bluntly: "People's homes and lives have been damaged by these faulty installations, many living in fuel poverty, and lots have faced very difficult times as a result. There has clearly been a lack of proper regulation going back many years, but this Government now has an opportunity to bring in proper standards in the Warm Homes Plan."

While the majority of households that benefitted from insulation schemes did see lower bills and improved comfort—especially during the early years of the gas crisis, when the UK's notoriously poor housing stock left it more exposed than other European nations—the shadow cast by the ECO debacle cannot be ignored. The PAC's report highlights that, by September 2025, only about 3,000 of the estimated 30,000 affected homes had been identified and fixed, leaving thousands still at risk. The Department for Energy Security and Net Zero (DESNZ) is now working with Ofgem and TrustMark to audit the full extent of the problem, but progress has been slow and the scope daunting.

The roots of this crisis, according to the PAC, lie in a combination of poor scheme design, lack of senior oversight, and a regulatory system that allowed unqualified subcontractors and corner-cutting businesses to flourish. The committee noted that for at least two years, senior government officials paid "virtually no attention" to whether the schemes were working, allowing problems to fester until October 2024, when the issue was finally flagged. TrustMark, the body responsible for quality assurance, failed to notify officials of the high rate of faulty installations until then—a delay that has since drawn sharp criticism.

Sir Geoffrey Clifton-Brown, PAC chair, minced no words: "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." He went further, urging the government to refer the issue to the Serious Fraud Office to investigate the extent of possible fraud, noting that the National Audit Office estimated between £56 million and £165 million in fraudulent activity could be involved—though MPs suspect the true figure may be even higher.

For many, the government’s assurances have rung hollow. The Department for Energy Security and Net Zero maintains that it is "categorically untrue there are widespread health and safety risks," arguing that for most, the consequence is simply a less energy-efficient home. However, the PAC and campaigners like Jonathan Bean of Fuel Poverty Action disagree. Bean stated, "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." He warned that unless the government prioritizes fixing the homes already damaged, the new £15 billion Warm Homes Plan could become "an even bigger fiasco."

The government, for its part, has responded with a flurry of reforms. 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.”

Yet, the PAC remains unconvinced that the government’s current response is credible or sufficient. The committee’s report warns that delays in repair not only increase the likelihood of further damage but also expose residents to immediate health and safety risks that demand urgent attention. The guarantee scheme, which covers repairs up to £20,000 if an installer goes bust, is dwarfed by some of the astronomical repair bills being reported. The PAC also expressed doubts that original installers could withstand the scale of potential claims, raising the specter of homeowners being left in the lurch.

TrustMark, meanwhile, has reiterated its "total commitment to ensuring strong consumer protection for all types of home improvements" and is working with government and industry partners to identify and fix cases of poor workmanship. Affected customers are being directed to TrustMark’s Find and Fix scheme for assistance.

The government’s new Warm Homes Plan, announced shortly before the PAC report, promises to provide green technology such as solar panels and heat pumps for free or through low-interest loans. But MPs and campaigners insist that before embarking on another ambitious retrofit program, ministers must first restore public trust by fixing the damage already done and ensuring robust regulation and oversight going forward.

As the dust settles on the ECO scheme fiasco, the stakes could hardly be higher. For the thousands of families still living in damaged, unsafe homes, the need for action is urgent and real—anything less risks repeating the mistakes of the past and deepening the crisis of confidence in government-backed energy initiatives.