In a scandal that has rocked the UK’s energy efficiency drive, tens of thousands of homes insulated under government-backed schemes now require urgent repairs after widespread failures left families grappling with damp, mould, and even life-threatening hazards. A damning report from the National Audit Office (NAO), published on October 13, 2025, has laid bare the scale of the crisis, exposing systemic flaws in the Energy Company Obligation (ECO4) and Great British Insulation Schemes—initiatives meant to combat fuel poverty and reduce pollution.
According to the NAO, a staggering 98% of homes fitted with external wall insulation—between 22,000 and 23,000 properties—are affected by problems that, if left unaddressed, will lead to damp and mould. Nearly a third (29%) of homes that received internal insulation, amounting to up to 13,000 dwellings, also need remedial work. More than 1,000 households are living in homes that pose immediate health and safety risks, including exposed live electrical wiring and blocked boiler ventilation, which could result in fires or carbon monoxide poisoning, as reported by BBC and Sky News.
The NAO’s investigation focused on installations carried out from 2022 through early 2025, under schemes funded by billions of pounds levied on energy bills. These programs, administered by Ofgem, were supposed to target vulnerable households—especially those receiving benefits or living in poorly insulated homes. Instead, the NAO found “clear failures in the design and set-up” of the schemes, which led to “poor-quality installations as well as suspected fraud.” Gareth Davies, head of the NAO, didn’t mince words: “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.”
So, what went wrong? The NAO report points to a perfect storm of incompetence and weak oversight. Work was often subcontracted to individuals and firms lacking proper certification or skills, with uncertainty over which standards applied to which jobs. Businesses, the report said, were “cutting corners” and “gaming the system.” In some cases, installers falsified claims for work that was never properly completed—or, in some instances, not done at all. Ofgem, the industry regulator, estimated that businesses had submitted fraudulent claims for between 5,600 and 16,500 homes, potentially extracting £56 million to £165 million from energy suppliers, costs ultimately borne by consumers.
TrustMark, the consumer protection scheme set up in 2021 to monitor the quality of insulation programs, also came under fire. The NAO said TrustMark’s oversight was “weak” and its auditing insufficient, which allowed widespread problems to go undetected until late 2024. TrustMark acknowledged the criticism, stating it accepted that more needed to be done and that it remained “completely committed to ensuring strong consumer protection and confidence.” The organisation said it took “firm, fair and decisive action” when it first noticed issues in 2024 and kept industry groups and government “fully informed at every stage.”
For families affected, the consequences have been dire. Mohammed Mahedi, whose Luton home received external wall insulation two years ago, described his ordeal to the BBC: “Some mornings I wake up breathing really, really heavily. I feel it in my neck. I feel it in my lungs.” The insulation, meant to make his home warmer and more energy efficient, instead trapped rainwater behind the walls, leading to severe damp and health problems. “We got a scheme done that was meant to be helping us but it’s made everything worse,” he said.
Campaigners say this is just the tip of the iceberg. The SSB Law Victims Support Group, which advocates for those affected by faulty insulation, warns that similar problems have plagued earlier government schemes for over a decade. Debra Sofia Magdalene, a spokesperson for the group, told the Burnley Express: “These failures aren’t new. They’ve been repeating for more than a decade. Poor workmanship, lack of oversight, and even suspected fraud have left thousands of families trapped in cold, damp, mould-ridden homes. People’s health is suffering. We’re seeing respiratory illness, anxiety, and heartbreak while those responsible walk away unaccountable.”
The NAO’s report makes clear that the failures are not only technical but systemic. An overly complex and fragmented consumer protection system, involving the Department for Energy Security and Net Zero (DESNZ), Ofgem, and private sector certification bodies, made it unclear who was responsible for quality and oversight. TrustMark’s limited funding meant its analytical systems weren’t fully operational until late 2024, allowing problems to fester. The NAO recommends that the government take clear responsibility for schemes like ECO, clarify its approach to repairing faulty installations, reform the consumer protection system for retrofit schemes, and report annually on fraud and non-compliance.
In Parliament, the issue has sparked heated debate. Burnley, Padiham, and Brierfield MP Oliver Ryan raised concerns in January about rogue companies dissolving and re-forming to avoid responsibility for repairs. Then-Energy Minister Miatta Fahnbulleh responded that the department was working with certification bodies to prevent such practices and ensure accountability. Her successor, Michael Shanks MP, is now tasked with overseeing reforms.
Energy Minister Martin McCluskey has acknowledged the “unacceptable, systemic failings” left by the previous government and promised comprehensive reforms. “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 said, as reported by Sky News and BBC. The government has pledged that all necessary repairs will be carried out at no cost to consumers and urged households to take up a free audit that will be offered by letter.
Despite the scandal, experts stress that properly installed insulation remains one of the most effective ways to cut energy bills and keep homes warm. Jess Ralston from the Energy and Climate Intelligence Unit (ECIU) told Sky News: “The majority of households that have benefitted from insulation schemes have lower bills and warmer, healthy homes, particularly during the early years of the gas crisis when the UK’s poor quality housing stock was one of the reasons we were so badly hit compared to other European countries.” Simon Francis, coordinator of the End Fuel Poverty Coalition, echoed this, saying: “Insulation and ventilation, when done properly, are among the safest and most effective ways to bring down energy bills and keep people warm.”
But for now, the thousands of families living with the fallout of botched insulation schemes are left waiting for their homes—and their trust in energy efficiency programs—to be restored. The government’s next steps will be closely watched, as campaigners and residents alike demand not just repairs, but accountability and lasting reform.
