Background to the report

This report is about recent failures with the quality of installations of external and internal wall insulation and suspected fraud on the Energy Company Obligation (ECO).

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ECO is a government scheme intended to tackle fuel poverty and reduce carbon emissions in Great Britain. It obligates energy suppliers to fund the installation in homes of energy efficiency measures such as insulation.

There are currently two ECO schemes: ECO4 runs from April 2022 to March 2026, and the Great British Insulation Scheme (GBIS), with broader eligibility, runs from March 2023 to March 2026.

The government expects that the schemes will together deliver £280 million in annual energy bill savings for households.

Ofgem reports that 243,900 homes have been upgraded under ECO4 to the end of March 2025, and 60,600 homes under GBIS. Across both schemes combined there have been 28,000 installations of external wall insulation (3% of all measures installed) and 45,200 installations of internal wall insulation (5%).

During 2024, TrustMark (a private not-for-profit company that acts as a government-endorsed quality scheme for energy efficiency retrofits) informed the Department for Energy Security and Net Zero (DESNZ) of two separate issues on these schemes:

  • in April 2024, TrustMark notified DESNZ of suspected fraud, whereby some retrofit businesses were overclaiming for work undertaken. Undetected fraud in the schemes means that fewer consumers may benefit overall.
  • in October 2024, TrustMark notified DESNZ of high levels of external wall insulation installations that were non-compliant with the relevant quality standard. The following month, TrustMark similarly highlighted issues with internal wall insulation. Non-compliance covers a wide range of severity, from major issues that pose immediate risks to the health and safety of the household to minor issues such as missing paperwork.

Scope of the report

This report focuses on DESNZ’s and Ofgem’s responsibilities and sets out:

  • an overview of ECO: how the current schemes are intended to work, how the government became aware of issues, and DESNZ’s plans for reform
  • poor-quality energy efficiency installations: the scale and severity of the non‑compliance issues, the government’s immediate response, and progress with remediating problems caused by non-compliance
  • root causes of widespread quality issues: the likely causes of quality non‑compliance, and the system not identifying it sooner
  • suspected fraud: what is known about the scale and nature of suspected fraud, how the government has responded, and the system’s weaknesses and exposure to fraud

The report is based primarily on information held by DESNZ and Ofgem, which the NAO audits, with support from TrustMark and UKAS, which – as private sector companies – the NAO does not audit.

The NAO has not undertaken its own inspection of the homes affected, nor gather evidence directly from the affected households or retrofit businesses.

The report does not evaluate the overall value for money of ECO or whether it is likely to achieve the expected reductions in consumer bills or carbon emissions. It also does not comment on ongoing investigations on suspected fraud.

Conclusions

Energy company obligations and other retrofit schemes are important to help reduce fuel poverty and meet the government’s ambitions for energy efficiency.

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.

When DESNZ and Ofgem became aware of these issues, they responded quickly. DESNZ has also been very keen to identify what went wrong, to learn lessons and to understand how to improve the system.

But the current system left it with few levers and limited information. The two challenges DESNZ now faces are to ensure that the relevant businesses meet their obligations to remediate all the affected homes as quickly as possible and to reform the system so that this cannot happen again.

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Publication details

Press release

View press release (14 Oct 2025)

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