ECO4 vs the Home Upgrade Grant (HUG2)

The Energy Company Obligation and the Home Upgrade Grant are two different machines aimed at the same household. ECO4 is a supplier obligation worth £4 billion, running in Great Britain, in which medium and large energy suppliers must fund energy efficiency improvements for eligible homes¹. HUG2 was a local authority grant scheme in England, exclusively for off-gas-grid properties, with £630 million allocated for delivery between September 2022 and March 2025³.

The practical difference for a householder is who decides. Under ECO4 the funding decision sits with the obligated supplier, not the council, and the amount a property attracts depends on how far the work improves its Energy Performance Certificate⁴. Under HUG2 the money moved through councils, which set their own eligibility statements and commissioned the work.

HUG2 has closed. ECO4 has not: the obligation period runs to 31 December 2026 following a nine-month extension, with measure transfers allowed until 31 March 2027⁶. For an off-gas-grid home today, the live question is usually whether ECO4 or ECO4 Flex can reach it, and what remains of the local authority route.

Two routes to the same goal

Both schemes take a whole house approach. ECO4 focuses on whole house retrofits for low income and vulnerable households, improving the least energy efficient homes to meet fuel poverty and net zero commitments⁶. HUG provided funding for energy efficiency upgrades and low carbon heat installations, taking a whole house retrofit approach to the worst performing and low income properties⁹. Ofgem's own delivery guidance described HUG as functioning as a whole house upgrade scheme, similarly to ECO4¹⁰.

The scale differs sharply. HUG Phase 1 upgraded 4,000 homes across 2022 and 2023³. ECO4 carries a target to upgrade 400,000 homes, and the National Audit Office warned of a risk of ECO4 running out of funding before meeting that target¹¹. Between 2013 and the end of 2023, over 4 million energy efficiency improvements were installed in 2.7 million homes through these various schemes¹¹.

The geography differs too. HUG was an England-only scheme aimed at low-income households in the worst-performing off-gas-grid homes¹⁰. ECO4 operates across Great Britain, and its Flex element allows local authorities, and the Scottish and Welsh governments, to refer households¹². Northern Ireland sits outside both, with its own arrangements.

For a household's energy independence, the distinction matters less than it sounds. Neither scheme removes a home from the gas grid or from a supplier. Both reduce how much energy a home needs to buy, which lowers exposure to price, but the property remains connected to networks and billing systems it does not control.

Who each scheme is for: eligibility compared

ECO4 eligibility runs through two doors. The first is the benefit route: Housing Benefit is a qualifying benefit under the Affordable Warmth route⁵. The second is ECO4 Flex, which allows local authorities to identify the most vulnerable households who could benefit from energy efficiency improvements¹³. Where no qualifying benefit is claimed, a household may still receive funded measures through the flexible eligibility process, for example with a combined income below £31,000 or where someone in the home has a qualifying medical condition⁷.

HUG2 was built differently. It supported energy efficiency upgrades of low-energy efficiency homes, EPC of D or lower, for low-income households with income below £30,000, across England⁸. It was aimed at people most vulnerable to fuel poverty living in privately-owned, both rented and owner-occupied, off-gas-grid homes¹⁴.

The £1,000 gap between the two income thresholds is not a policy choice anyone has explained; it reflects two schemes designed at different times by different departments. Houses in multiple occupation can be treated as part of ECO4 if at least one household occupying the HMO is eligible⁶.

What each scheme pays for

ECO funding pays for energy efficiency measures such as heating improvements and insulation to be installed⁷. The amount a property attracts is not fixed: it depends on the improvement made to the original Energy Performance Certificate⁴. A home starting at EPC F or G needs to be capable of reaching D for the work to proceed⁴.

HUG2 funded energy efficiency upgrades and low carbon heating through local authority funding¹⁶, with a whole house retrofit approach covering both fabric and heat⁹. That combination, insulation plus a low carbon heating system, is what made HUG attractive to off-gas-grid homes running oil or LPG, where a heat pump or biomass system replaces a fuel that has no price cap.

The measures themselves must be installed to standard. All ECO4 measures except district heating connections must be installed by, or under the responsibility of, a person registered with TrustMark or equivalent, and lodged with TrustMark or equivalent¹⁷. For microgeneration measures, MCS certification for the individual household address is acceptable evidence¹⁷. From 2026/27 installers must hold MCS certification to access the Boiler Upgrade Scheme, ECO4, the Warm Homes schemes and the Clean Heat Market Mechanism, making it the single certification route for funded clean heat work.

Who delivers the work: suppliers versus local authorities

ECO4 is a supplier obligation and not a grant scheme¹⁸. Energy suppliers are legally required to help reduce heating costs for low income and vulnerable households by delivering energy efficiency and heating measures¹⁹. The target for delivery is divided between obligated suppliers according to each supplier's relative share of the domestic gas and electricity market⁶. That means a household's experience depends on which supplier's installer network reaches their area.

HUG2 worked the other way round. The Home Upgrade Grant provided energy efficiency upgrades and low carbon heating via local authority funding¹⁶, and the scheme was delivered through local authorities and social housing providers with stronger checks and balances than the supplier route¹⁴.

The application route follows the money. For ECO4 Flex, applications must come from the relevant council scheme rather than the householder⁵. Some councils state that they will not accept any ECO related requests, referring residents assessed as potentially eligible on to a funding scheme provider or approved installation company⁷. Ceredigion directs households to its approved ECO4 Flex providers or agents¹⁸, and West Lindsey points residents to its local authority partner at YES Energy Solutions².

That split is the main consumer protection difference between the two routes. A council-run scheme carries the council's procurement behind it. A supplier obligation scheme carries the installer's own registration and the TrustMark lodgement requirement, with the council out of the picture once the referral is made.

Can you use ECO4 and HUG2 together? The blending rule

No. Funding cannot be blended within the ECO4 package of measures⁶. Funding for measures delivered under ECO4 must not be blended with funding from other government schemes or grants, including but not limited to the Warm Home Discount, Boiler Upgrade Scheme, Social Housing Decarbonisation Fund and Home Upgrade Grant¹². The same rule applies to the Great British Insulation Scheme: funding for measures delivered under ECO4 and GBIS cannot be blended with funding from other government schemes or grants²¹.

The restriction extends to the supplier's own accounting. A supplier cannot partially or wholly fund a measure with funding from other government schemes or grants⁶. Funding from the Boiler Upgrade Scheme and ECO cannot be blended for the same measure or be included within an ECO4 project, and the same applies to Social Housing Decarbonisation Fund money⁶.

What is permitted is sequencing. Any measures outside ECO4 delivered to the same property must be installed either before the ECO4 retrofit project was started or after the entire project is complete and all measures have been installed¹². A household can therefore use a different scheme on a different measure, at a different time, but not inside the same project.

For an off-gas-grid home that missed HUG2, this closes off the idea of topping up an ECO4 heat pump with a Boiler Upgrade Scheme voucher on the same unit. The two grants exist, but they cannot meet on one measure. The Boiler Upgrade Scheme and ECO4 pages set out each route separately, and ECO4 and other grants covers the sequencing rules in more detail.

How long each scheme runs

HUG2 has finished. It was exclusively for off-gas-grid properties and allocated £630 million for delivery between September 2022 and March 2025³. In its final release, there were an additional 30 households, 60 measures, upgraded compared to the previous release, all installed in April or May 2025³.

ECO4 has been extended. The scheme was due to end on 31 March 2026, with no subsequent ECO5 replacement¹⁸, and a government consultation proposed a scheme extension of 6 to 9 months to maintain support for households²². The scheme now runs until 31 December 2026, following a nine-month extension⁷. The obligation period for ECO4 runs from 27 July 2022 to 31 December 2026 and is split into four phases⁶.

After the end date, the administrative tail continues. Suppliers may apply to transfer ECO4 measures and projects on or before 31 March 2027, and all project notifications are subject to that same overall scheme deadline⁶. Ofgem will notify all suppliers of its final determination no later than 30 June 2027 and submit its final report to the Secretary of State by that date²³. Applications and declarations may be subject to Ofgem audits during the time ECO4 is in effect and up to three years after the scheme ends¹⁸.

How the schemes have been assessed independently

The National Audit Office examined energy efficiency installations under the Energy Company Obligation and found a risk of ECO4 running out of funding before meeting its target to upgrade 400,000 homes¹¹. That assessment sits alongside the scheme's £4 billion value and its focus on low income and vulnerable households¹.

HUG Phase 1 was evaluated by government, based on findings from 10 case studies of local authority led projects under the scheme²⁴. The evaluation route, case studies rather than a single national dataset, reflects how locally varied the delivery was.

Parliamentary scrutiny has continued into the current period. A June 2026 Commons debate on energy market consumer protection covered the Find and Fix programme, which offers a full house audit to families who had external wall insulation installed under ECO4 and GBIS²⁵. That programme exists because of concerns about installation quality under supplier-funded schemes.

Delivery data shows what local authority Flex work looks like in practice. Cumberland reported over 100 homes with upgrades in progress and a total of 387 upgraded homes under its ECO4 Flex scheme between August 2024 and October 2025²⁶. In Wales, the New Warm Homes Programme states that its advice services will signpost people to and seek to leverage ECO4, the Great British Insulation Scheme and Boiler Upgrade Scheme funding from the UK Government²⁷.

The pattern across these assessments is consistent: the supplier obligation reaches far more homes, the local authority route was smaller and more closely evaluated, and quality assurance has been the recurring weakness on the supplier side.

Which scheme fits which household

For an off-gas-grid home in England today, HUG2 is not an option: it closed in March 2025³. The live routes are ECO4, ECO4 Flex through a council, and the devolved equivalents. The Home Upgrade Grant page covers what the closed scheme did and who it reached.

ECO4 suits a household on a qualifying benefit, or one that a council is willing to identify under Flex, in a property whose EPC can be improved. The scheme focuses on whole house retrofits for low income and vulnerable households⁶, and the funding follows the EPC improvement rather than a fixed grant⁴.

ECO4 Flex suits a household just above the benefit line. The Flex route exists precisely because benefit receipt is a poor proxy for vulnerability: a household with a combined income below £31,000, or with someone who has a qualifying medical condition, may still be identified⁷. The ECO4 Flex page sets out how councils build their statements of intent.

The devolved picture differs. ECO4 Flex allows local authorities, and the Scottish and Welsh governments, to refer households¹², and the Welsh Government's Warm Homes Programme explicitly seeks to leverage ECO4 and GBIS funding²⁷. Northern Ireland is outside ECO4, and its households depend on separate arrangements.

What none of these schemes delivers is independence from a supplier or a network. A funded heat pump or insulation package reduces the energy a home must buy, and that is a real reduction in exposure. The home remains connected, metered and billed. The grants and energy independence page sets out where that line falls, and the home energy grants pillar covers the full set of schemes.