The National Audit Office published a report in October 2025 finding serious failings in the Energy Company Obligation (ECO) and the linked Great British Insulation Scheme (GBIS), with external wall insulation singled out as a major problem1. The report examined work funded under ECO4 and GBIS between 2022 and early 20252.
The two accounts of the scale of the problem differ. The NAO found that 98% of homes that had external wall insulation installed under ECO4 and GBIS between 2022 and early 2025 have problems that will ultimately lead to damp and mould issues if corrective work is not carried out2. Elmhurst Energy's account of the same report says many of the home "improvements" funded by ECO were carried out to a poor standard, with external wall insulation in particular flagged as a major problem, without giving a percentage1. The NAO cited an under-skilled workforce, businesses cutting corners and uncertainty over which standards applied to which jobs as some of the reasons2.
Energy Consumer Minister Martin McCluskey said the government was taking action and that the homes would be fixed "at no cost to the consumer"2. Ofgem has sent letters to affected properties setting out next steps; households that have not received a letter but believe they are affected are directed to contact Ofgem directly2. Work is then checked by qualified professionals, and where faults are found the installer is asked to fix the issue at no cost2. Which? consumer law expert Lisa Webb said: "Watch out for potential scammers and do not part with any money. Bear in mind that all legitimate communications about this process will use your Unique Measure Reference - you can find this information in your letter from Ogem. If you're unsure if someone contacting you is genuine, you can call Ofgem for free on 0808 169 4447 to check."2
The government's response to the failures includes an audit of all homes affected by external wall insulation installed under ECO4 and GBIS, with support for remediation where needed, a simpler certification system and stricter consumer protection rules2. A Warm Homes Agency is to be established to make the system for accessing information, funding and installations easier to navigate2.
Why it matters for households
Insulation is the measure that reduces a home's demand for bought energy, so its quality determines whether a household's energy independence is real or nominal. Faulty external wall insulation can trap moisture and lead to damp and mould, which is a fabric and health problem rather than a saving2. The NAO's finding that 98% of homes with external wall insulation installed under ECO4 and GBIS between 2022 and early 2025 have problems means a large number of households may be living with work that has not delivered the expected benefit and may need remediation2. The government's own figures put the cost of ECO at £1.7 billion a year on household bills, and the Chancellor said that for 97% of families in fuel poverty the scheme has cost them more than it has saved1. For households weighing up solid wall insulation, the report's findings concern work delivered under specific grant schemes rather than the measures themselves; the insulation standards and certification that apply to any installation are the relevant reference point.
What happens next
ECO ends in March 2026, with the current phase due to run until 31 March 20261. GBIS will also end on 31 March 20262. The government announced its new Warm Homes Plan in January 2026, setting out £15 billion to make green technology and energy upgrades more affordable, with grants and low or zero interest loans for solar panels, heat pumps, batteries, double glazing, draughtproofing and insulation, aiming to support up to five million homes2. Further details on eligibility, how to apply and the amounts available should be announced in the first months of 20262. The £1.5 billion remaining for ECO is to be rolled into the new programme via direct taxation, and removing ECO from electricity bills is expected to cut the average household energy bill by about £59, part of an overall £150 saving ministers say will come from moving several green levies into general taxation1.
Sources2 cited
- ECO Scheme to End After March 2026 - Elmhurst Energy, elmhurstenergy.co.uk
- Insulation grants UK: do you qualify for free insulation? - Which?, which.co.uk