Tag: Department for Energy Security and Net Zero

Weak controls and oversight blamed for faulty home installations under energy efficiency scheme

SCATHING REPORT HIGHLIGHTS HOMES INSULATION SCANDAL

  • 98% of homes with external wall insulation installed under the UK government’s ECO scheme require work to correct major issues that will cause problems such as damp and mould. 
  • DESNZ’s consumer protection system, which was set up in 2021, did not alert it to significant issues with the quality of installations until late 2024.
  • The NAO recommends that DESNZ sets out how and when affected households can have faulty installations repaired, and reforms the consumer protection system.
  • Download the embargoed report (PDF)

A new National Audit Office (NAO) report sets out the reasons for failures in the government’s energy efficiency scheme for homes, including poor-quality installations, weak government oversight and inadequate audit and monitoring, which the Department for Energy Security and Net Zero (DESNZ) believes have led to tens of thousands of households needing repair work to correct major issues that will cause problems such as damp and mould.

The government’s Energy Company Obligation (ECO) scheme aims to tackle fuel poverty and reduce carbon emissions in Great Britain by requiring energy companies to fund the installation of energy efficiency measures, such as insulation, in homes.

But 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) and 9,000 to 13,000 homes with internal insulation (29% of the total) having major issues that need fixing. A small percentage of these installations also pose immediate health and safety risks.

Possible explanations why so many installations have been carried out to such a poor standard include an under-skilled workforce, with work being subcontracted 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.

DESNZ implemented a new consumer protection system for the scheme in 2021, which included appointing TrustMark as its government-endorsed quality scheme. 

But this system failed to alert DESNZ to significant issues with the quality of installations until October 2024, by which time the media had already reported on individual cases of bad mould in homes.

Reasons for the ECO scheme’s shortcomings include:

  • weak government oversight resulting in widespread issues with the ECO scheme not being identified sooner;
  • an overly complex consumer protection system that ultimately failed due to unclear and fragmented roles, responsibilities and accountabilities among DESNZ, Ofgem and private sector certification bodies and scheme providers;5
  • TrustMark’s funding arrangements limiting its ability to have analytical systems fully up and running until the latter half of 2024; and
  • insufficient audit and monitoring, in part due to weaknesses that allowed installers to ‘game’ the system.6

In addition to these issues, in November 2024 Ofgem estimated that businesses had falsified claims for ECO installations in between 5,600 and 16,500 homes, potentially claiming between £56 million and £165 million from the energy suppliers operating under the scheme.7

DESNZ and Ofgem took action once TrustMark made them aware of the extent of the problems. This included asking certification bodies and scheme providers to suspend the worst performing installers; communicating the issues to potentially affected households and to the wider public; and implementing immediate changes to the consumer protection system.

DESNZ also plans to apply the lessons learned from this experience to the design of its future schemes and its forthcoming Warm Homes Plan.

To improve the consumer protection system, and to boost householders’ confidence in government-backed schemes, the NAO recommends that DESNZ:

  • takes clear responsibility for schemes such as ECO, even when they are funded through consumers’ electricity bills;
  • clarifies its approach to repairing faulty ECO scheme installations alongside its Warm Homes Plan;
  • reforms the consumer protection system for retrofit schemes; and
  • reports annually on a statistically robust estimate of the level of fraud and non-compliance in each of its retrofit schemes.

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.”

Sir Geoffrey Clifton-Brown MP, Chair of Westminster’s Committee of Public Accounts. said: “The failures of the two current Energy Company Obligation (ECO) schemes are stark, with nearly all external and nearly a third of internal wall insulation fitted under the schemes requiring remediation.

“The potential impact of major issues to the health and safety of affected households must not be understated.

“Despite allegations of fraud, lack of sufficient quality data means that overall levels of fraud in ECO remain unknown.

“DESNZ and Ofgem have been quick to act after becoming aware of widespread problems, but their efforts remain hampered by weak government oversight and an overly complex consumer protection system.

“It is imperative that households receive clarity on how they can fix their homes and a system is put in place whereby these failings do not reoccur.”

900,000 more households to benefit from £400 of energy bill support

UK Government launches portal for more households to apply for £400 payments towards energy bills

  • Households without a direct relationship to a domestic electricity supplier will be able to apply for government support with their energy bills from today
  • With government energy bill support covering roughly half of typical winter bills, ministers urge over 900,000 households eligible for the £400 lump sum to apply as soon as possible
  • A telephone helpline is also available from today for people without access to the internet to apply for the payment

900,000 more households across England, Scotland and Wales will benefit from the government’s £400 help with energy bills, as an online application portal opens today.

Households without a direct relationship to an electricity supplier, such as those living in park homes and care homes, can now apply via a secure online portal to receive the support as a one-off, non-repayable lump sum under the ‘alternative funding’ route of the government’s Energy Bills Support Scheme (EBSS AF). For those without online access, a dedicated customer helpline is available to assist eligible customers.

The launch of applications follows months of close work with stakeholders across the country to deliver the government’s help for households with the cost of living. The alternative funding route is the latest in a range of targeted measures which are covering around half of a typical household’s energy bills this winter.

To ensure people feel the benefit of this support as quickly as possible, the payment will be provided directly into people’s bank accounts. Over £7.2 billion has been provided so far to 97% of households across England, Scotland and Wales through monthly instalments, which most households receive automatically in the same way they pay these bills.

The alternative funding route is designed to make sure the same level of support reaches those without a direct relationship to an electricity supplier. It’s also available for households who get their energy through a commercial contract or who are off-grid.

Ministers are today urging all eligible households to apply as soon as possible for their support, whilst also warning households to stay alert to potential scams and report them to relevant authorities where they are suspected.

The government will never provide any links to the application portal, or directly ask individuals to apply for the £400 support. Those that require additional help when applying for support may wish to seek assistance from a family member or trusted friend.

Minister at the Department for Energy Security and Net Zero, Amanda Solloway, said: We understand the pressure households are under which is why we’ve already stepped in to pay around half of people’s energy bills this winter, and from today, thousands more will be able to apply securely for their £400.

“Today I’m urging everyone who couldn’t get their EBSS discounts in the regular way to apply via our secure channels. If you don’t have a direct contract with an electricity supplier, it’s essential you submit your application as soon as possible. The sooner you do, the sooner help can get to you.”

The launch of the portal follows a successful pilot scheme with local authorities in England, Scotland and Wales to refine the process, making sure the system can deliver support in a robust, secure and efficient manner.

Once customers have applied to receive energy support and their applications have been processed and verified, eligible customers’ details will be shared with Local Authorities across England, Scotland and Wales, who will deliver the support in one lump sum. Local authorities may request additional information to assist their verification process – but only once an application has been made via the secure portal or helpline. Applicants will only be able to submit information through these channels and should not contact their local authority.

The exact date that an eligible household will receive support will depend on when the application is made and when the payment can be processed by the relevant local authority.

Energy Security Secretary Grant Shapps will shortly write to local authorities, thanking them for getting the scheme over the line after working hand in hand with his department over the last three months, and urging them to process applications as quickly as possible so households aren’t left waiting weeks after applying.

He’ll also say there must be no further delays to rolling out the Alternative Fuel Payment Alternative Fund – a similar scheme for households who use alternative fuels as their main source of heating, providing £200 towards energy costs, adding it will be live by 6th March.

This will help people who use alternative energy sources such as heating oil, biomass and liquefied petroleum gas (LPG) to heat their homes, but who were unable to receive the government’s £200 Alternative Fuel Payment automatically via their electricity supplier. Of nearly 2 million people who use these sources as the main means to heat their homes, around 15% will need to apply through a similar GOV.UK portal which will shortly open to applications.

These schemes are the latest part of a range of targeted measures to help households across the country with the cost of living, which are covering around half of a typical household’s typical energy bills this winter.

In addition to the £400 of total support provided through the EBSS, the government’s Energy Price Guarantee (EPG) is saving a typical UK household £900 over this winter by reducing the unit cost of electricity and gas.

Together, the support provided through the EPG and EBSS cover around half of a typical household’s energy bills. The EPG will continue to provide support for another 12 months from April 2023, providing an average of £500 support for households in 2023 to 2024 in the face of energy prices that are forecast to remain high.

A further £1,200 of support in direct payments is also being provided to vulnerable households this year, with £26 billion worth of targeted support to help protect the most vulnerable announced by the Chancellor for the next financial year.