On October 14, 2025, the National Audit Office (NAO) delivered a stark warning: tens of thousands of British households, many of them vulnerable and seeking lower energy bills, are facing a crisis after government-backed insulation schemes left their homes riddled with damp, mould, and, in some cases, immediate health and safety hazards. The NAO’s findings, reported by multiple outlets including The Telegraph and The Independent, have sent shockwaves through both the energy sector and the halls of government, raising urgent questions about oversight, accountability, and the future of the UK’s net zero ambitions.
At the heart of the controversy are two flagship initiatives: the Energy Company Obligation (ECO), launched in 2022 to combat fuel poverty and reduce carbon emissions, and the Great British Insulation Scheme (GBIS), which followed in 2023 to provide free or cheaper insulation to households. Together, these schemes have delivered insulation upgrades to an estimated 65,000 homes out of the 304,500 total net zero upgrades, according to the NAO. But the scale of the problems is staggering. Nearly every home fitted with external wall insulation—some 22,000 to 23,000 under ECO alone, and 28,000 when including both schemes—is now in need of significant repairs.
The NAO’s report, as cited by The Telegraph, estimates that a jaw-dropping 98% of these homes require remediation due to poor installation. The problems are not minor: affected households are grappling with damp, mould, and rot, conditions that can seriously undermine health and the structural integrity of buildings. In some cases, the cost of repairs is eye-watering. While most homes will need between £5,000 and £18,000 worth of work, one particularly unfortunate homeowner faces a bill exceeding £250,000 to fix extensive damage caused by faulty insulation.
The issues are not confined to external wall insulation. Internal wall insulation, another common upgrade under the schemes, has also proven problematic. The NAO found that between 9,000 and 13,000 homes—about 29% of those fitted—now require major repairs. In total, the watchdog estimates that between 31,900 and 35,300 households are dealing with poorly installed insulation that will need significant remediation. Even more concerning, a small but significant percentage of installations present immediate health and safety risks: 6% for external insulation and 2% for internal insulation. These dangers range from poor ventilation, which could lead to carbon monoxide poisoning, to electrical faults that pose fire hazards.
How did such a large-scale failure occur? The NAO points to a combination of poor quality control, inadequate monitoring, and weak government oversight. According to The Independent, much of the work was subcontracted to firms and individuals lacking the necessary competence, with some businesses cutting corners or operating in the grey area of uncertain standards. Although the Department for Energy Security and Net Zero (DESNZ) introduced a new consumer protection system in 2021 by appointing TrustMark, the system failed to alert the department to the scale of the issues until October 2024—a delay that allowed problems to fester.
The NAO was unsparing in its criticism of the schemes’ design and oversight. "There have been clear failures in the design and set-up of ECO4 and GBIS and their consumer protection and quality assurance system, which have led to widespread issues with the quality of installations and suspected fraud," the watchdog stated. Gareth Davies, head of the NAO, emphasized the importance of such schemes in the fight against fuel poverty and climate change, but lamented, "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 scale of suspected fraud is itself alarming. Ofgem, the energy regulator, estimated in November 2024 that businesses may have falsified claims for insulation work in between 5,600 and 16,500 homes, fraudulently claiming between £56 million and £165 million from energy suppliers. This represents between 1.3% and 3.9% of the £4.2 billion spent on the ECO scheme through March 2025. The NAO noted that fraud levels in ECO and GBIS are higher than in other energy efficiency and low-carbon retrofit programs.
For those living in affected homes, the reality is bleak. Less than 10% of the homes needing repairs have been identified and fixed so far, leaving tens of thousands of families in limbo. The government has responded by offering free inspections to households with external wall insulation installed under the schemes. Installers found responsible for poor workmanship are now liable for the cost of repairs, a move intended to shield consumers from financial harm. Earlier in 2025, Ofgem set up a helpline for impacted households, which by August had received around 3,200 calls and 2,700 emails—a testament to the widespread anxiety and confusion among those affected.
Simon Francis, coordinator of the End Fuel Poverty Coalition, didn’t mince words: "The NAO 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." He added, "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 former ministers has turned what should have been a national success story into a cautionary tale."
On the government’s side, Martin McCluskey, Minister for Energy Consumers, acknowledged the gravity of the situation. "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," he said. McCluskey emphasized that the government is taking "decisive action" to repair all affected homes at no cost to consumers and is introducing comprehensive reforms to ensure clear accountability and rapid remediation in the future. "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," McCluskey assured.
Experts and advocates are now urging the government not to abandon the insulation drive but to fix the system from the ground up. Dr. Richard Lowes, a heating specialist at the University of Exeter, observed that the schemes had "prioritised low-cost installations rather than high-quality work," warning this approach could delay the rollout of improved insulation and undermine public confidence. James Dyson, senior researcher at Third Generation Environmentalism, echoed these concerns: "Every person who has been failed by this scheme deserved better. The new Government has a chance to put things right. It must move urgently to help the people affected to repair their homes at no extra cost, and put in place high insulation standards to ensure this never happens again."
As the government prepares to unveil its Warm Homes Plan, the NAO has called for sweeping changes: clearer government responsibility for retrofit schemes, transparent annual reporting on fraud and non-compliance, and robust customer protections. For the thousands of households left shivering in damp and mouldy homes, the hope is that these reforms will finally deliver the warm, energy-efficient homes they were promised—and restore faith in the UK’s push toward net zero.
