The government published its response to the consultation on Energy Company Obligation reforms in April 2022, having held the consultation in summer 20211. The reforms were given effect through the Electricity and Gas (Energy Company Obligation) Order 2022, which was considered in Grand Committee in the House of Lords on 12 July 20221. The order provides for the expanded and reformed scheme, known as ECO4, in Great Britain until March 2026, succeeding the previous order and replacing ECO3, which came to an end in March1.
The scheme's spending envelope rises from around £640 million to around £1 billion per year, and the government estimates that around 800,000 measures will be installed in around 450,000 homes, with around 360,000 homes upgraded to EPC bands B and C1. Mandatory minimum energy efficiency improvements apply to the least efficient homes: EPC bands F and G homes must be improved to a minimum band D, and bands D and E homes to a minimum band C1. A solid wall minimum requirement is intended to see solid wall insulation installed in at least 90,000 homes, and broken boiler replacements are capped at 20,000 homes1. The proportion of a supplier's obligation that can be delivered under flexible eligibility rises to 50%1.
On the consultation response itself, the government said it was proceeding with the main proposals with some key changes in light of the responses received and the final impact assessment1:
"We have increased the EFG minimum requirement from 100,000 to 150,000 private tenure homes, focusing more help to those with the highest energy bills."
The same statement records extra incentives for installing measures in rural off-gas-grid areas in Scotland and Wales, and allows the repair of oil and liquefied petroleum gas heating systems as a last resort in off-gas-grid homes where low-carbon heating measures cannot be installed1. The government said the majority of consultation responses supported extending and expanding the scheme and the proposals for reform1.
The order permits measures installed since 1 April to count towards suppliers' obligation targets, split between interim delivery under slightly amended ECO3 rules and early delivery under the new rules; nearly 33,000 measures had been installed since 1 April on that basis1. The government estimated savings of around £300 on average over the lifetime of the measures, up to £1,600 for those in the least energy-efficient homes, and averaging around £600 next winter1. One peer put the spending increase at £660 million to £1 billion a year and said 25,000 households could have benefited during the delay from 1 April1. The government's own figure was around £640 million1.
Why it matters for households
The Energy Company Obligation is supplier-funded rather than government-funded, so the money comes from obligations placed on energy companies and the work is delivered through installers and local authorities. For a household, the practical effect of the April 2022 response is that the scheme's minimum ambition for the worst private-rented and owner-occupied homes rose, meaning more of the least efficient properties are intended to be brought up to at least band D or C. The shift towards multi-measure, fabric-first delivery, with insulation required alongside most heating measures, changes what a typical ECO4 job looks like compared with earlier single-measure installations. Eligibility continues to rest on means-tested benefits, with flexible eligibility widened to 50% of a supplier's obligation so that local authorities, energy suppliers, Citizens Advice and the NHS can identify households vulnerable to cold homes that are not on benefits1. The scheme runs to March 20261.
What happens next
The order was considered in Grand Committee on 12 July 20221. The government said the legislation had been due to have legal effect on 1 April, and a peer asked when it would finally come into effect; the timing of commencement beyond the 12 July debate is not set out in the record1.
Sources1 cited
- Electricity and Gas (Energy Company Obligation) Order - Hansard - UK Parliament, hansard.parliament.uk