Recommendations & Conclusions
11 items
6
Recommendation
62nd Report - Faulty energy efficiency …
Rejected
The Department did not give the risk of fraud appropriate priority, and it is likely that the known levels of fraud are a significant under-statement of the true level of fraud. No single organisation has overall responsibility for preventing and detecting fraud on ECO4 and GBIS. The Department did not …
Read more
The Department did not give the risk of fraud appropriate priority, and it is likely that the known levels of fraud are a significant under-statement of the true level of fraud. No single organisation has overall responsibility for preventing and detecting fraud on ECO4 and GBIS. The Department did not carry out a fraud risk assessment during the design of ECO4 and the ownership of some known fraud risks was agreed only in October 2025. Ofgem’s role in relation to fraud is limited to progressing counter-fraud investigations where allegations have been made. Yet no organisation is responsible for pro-actively looking for fraud, nor holds all the data it would require to do so effectively. Ofgem has identified installations worth 1.75% of the scheme value as fraudulent but, given the above, we suspect the true level of fraud to be much higher and above the Departments tolerance threshold of 2%. If the Department had paid more attention to preventing and detecting fraud, it would likely have avoided some of the poor quality installations too. We suggest that the Serious Fraud Office should look at this case. recommendation a. Given the likely role of fraud in the poor quality installations, the Department should refer the issue to the Serious Fraud Office to investigate the extent of fraud across ECO and bring criminals to justice. b. HM Treasury should extend its requirement in Managing Public Money for a Fraud Risk Assessment on all new major areas of public spend to include levy-funded schemes instigated by the government, such as ECO. c. In future schemes, the Department should ensure that one body is responsible for fraud prevention and detection at the system level, enabled by counter-fraud activities of and data from other organisations in the system. d. HM Treasury should amend its guidance in Managing Public Money to recommend public bodies design fraud out of all new schemes as far as is sensible, and have one body responsible for fraud prevention and detecti
Show less
Government response AI summary
The government rejected the recommendation to work with the Serious Fraud Office, stating that investigating suspected fraud is already Ofgem's responsibility and referrals have been made. For the other points about fraud risk assessment and prevention, the government agreed that existing standards and guidance already …
Read full response →
HM Treasury
9
Conclusion
62nd Report - Faulty energy efficiency …
Rejected
The Department and Ofgem believe that an estimated 98% of external wall insulation and around a third (29%) of internal wall insulation fitted under ECO4 and GBIS up to mid-January 2025 have major issues that need fixing. Between 32,000 and 35,000 homes are likely to be affected. This is based …
Read more
The Department and Ofgem believe that an estimated 98% of external wall insulation and around a third (29%) of internal wall insulation fitted under ECO4 and GBIS up to mid-January 2025 have major issues that need fixing. Between 32,000 and 35,000 homes are likely to be affected. This is based on audits of a statistically representative sample of 758 homes that had external and internal wall insulation installed under ECO4 and GBIS before mid-January 2025. The site visits, which were commissioned by Ofgem, took place between June and August 2025.14
Show less
Government response AI summary
The government disagrees with the Committee's assessment regarding the scale of non-compliant insulation, stating it has greater confidence in local authority retrofit programmes. It outlines ongoing actions to offer on-site audits for all EWI and address IWI concerns under ECO4 and GBIS, noting existing 25-year …
Read full response →
HM Treasury
10
Recommendation
62nd Report - Faulty energy efficiency …
Rejected
The audits found: • 98% of homes with external wall insulation have major issues: 92% have defects that will negatively affect the insulation’s performance, often creating the risk of water ingress and mould; 6% have immediate health and safety risks, such as inadequate ventilation, and may also have other major …
Read more
The audits found: • 98% of homes with external wall insulation have major issues: 92% have defects that will negatively affect the insulation’s performance, often creating the risk of water ingress and mould; 6% have immediate health and safety risks, such as inadequate ventilation, and may also have other major issues requiring remediation. Between 22,000 and 23,000 homes are likely to be affected.15 • 29% of homes with internal wall insulation have major issues: 27% have defects that will negatively affect the insulation’s performance, often creating the risk of condensation and mould; 2% have 14 C&AG’s Report, paras 2.2 to 2.4 and Figure 10 15 C&AG’s Report, para 2.2 and Figure 10 11 immediate health and safety risks, such as inadequate ventilation and poor electrical safety, and may also have other major issues. Between 9,000 and 13,000 homes are likely to be affected.16 The Department does not have an estimate of how many additional homes retrofitted after mid-January 2025 are likely to have major issues, so the total number of homes affected will be higher than we set out in this report.17
Show less
Government response AI summary
The government disagrees with the recommendation to supervise and check every new external or internal wall insulation project by an independent, competent, and accountable person, but states that it has greater confidence in local authority delivered retrofit programs and is implementing improvements to the compliance …
Read full response →
HM Treasury
11
Recommendation
62nd Report - Faulty energy efficiency …
Rejected
The Department stressed to us that these failures include a spectrum of issues, from not getting the full benefit of a measure because of gaps in the insulation, through to more serious failings that have caused damp or mould or immediate risks to health and safety, such as an exposed …
Read more
The Department stressed to us that these failures include a spectrum of issues, from not getting the full benefit of a measure because of gaps in the insulation, through to more serious failings that have caused damp or mould or immediate risks to health and safety, such as an exposed electrical wire. However, it accepted that this level of failure is unacceptable.18
Show less
Government response AI summary
The government disagrees with the recommendation to supervise and check every new external or internal wall insulation project by an independent, competent, and accountable person, but states that it has greater confidence in local authority delivered retrofit programs and is implementing improvements to the compliance …
Read full response →
HM Treasury
12
Recommendation
62nd Report - Faulty energy efficiency …
Rejected
Faulty installations can have wider impacts on households, beyond just living in unsafe, damp or mouldy homes. Respondents to Ofgem’s survey of people who used its ECO helpline reported being left without central heating over winter and having to seek alternative accommodation, wider damage to their homes such as water …
Read more
Faulty installations can have wider impacts on households, beyond just living in unsafe, damp or mouldy homes. Respondents to Ofgem’s survey of people who used its ECO helpline reported being left without central heating over winter and having to seek alternative accommodation, wider damage to their homes such as water damage to ceilings, and having to pay hundreds of pounds to replace carpets and repair decoration.19 Written evidence submitted to us by National Energy Action and Severn Wye Energy Agency highlighted the physical, emotional and financial distress that can be caused by retrofit failures.20 Zak Ashraf gave evidence to the Energy Security and Net Zero Committee in February 2025 about the failed ECO4 retrofit of his mother’s house–he described how his mother had had to move out of her home, and how he had lost sleep over and was exhausted from pursuing the drawn-out remediation process.21 Finding and fixing the defects
Show less
Government response AI summary
The government disagrees with the recommendation to supervise and check every new external or internal wall insulation project by an independent, competent, and accountable person, but states that it has greater confidence in local authority delivered retrofit programs and is implementing improvements to the compliance …
Read full response →
HM Treasury
14
Recommendation
62nd Report - Faulty energy efficiency …
Rejected
The National Audit Office reported that, as of 11 September 2025, 2,934 homes with external and internal wall insulation with major issues had been remediated.25 This means less than 10% of the estimated 32,000 to 35,000 homes with major issues had been found and fixed almost one year after TrustMark …
Read more
The National Audit Office reported that, as of 11 September 2025, 2,934 homes with external and internal wall insulation with major issues had been remediated.25 This means less than 10% of the estimated 32,000 to 35,000 homes with major issues had been found and fixed almost one year after TrustMark notified the Department of its concerns in October 2024.26 In written evidence sent to us following the oral evidence session, the Department confrmed that 4,603 homes had been found and fixed by 7 November 2025. However, the Department did not specify whether this includes homes that had minor issues only.27 It therefore may not be comparable to the estimate of 32,000 to 35,000 homes needing remediation due to major issues. Minor issues may affect insulation performance over time, such as weak points in insulation around gas supply pipes, or may not materially affect the insulation at all, such as missing documentation.28
Show less
Government response AI summary
The government disagrees with the recommendation to supervise and check every new external or internal wall insulation project by an independent, competent, and accountable person, but states that it has greater confidence in local authority delivered retrofit programs and is implementing improvements to the compliance …
Read full response →
HM Treasury
19
Recommendation
62nd Report - Faulty energy efficiency …
Rejected
The National Audit Office also reported that some company directors are closing and restarting their businesses to avoid remediation responsibilities.40 TrustMark told us it has developed a watchlist and can stop a new business operating until it has fixed the faulty work for which its directors were responsible under the …
Read more
The National Audit Office also reported that some company directors are closing and restarting their businesses to avoid remediation responsibilities.40 TrustMark told us it has developed a watchlist and can stop a new business operating until it has fixed the faulty work for which its directors were responsible under the previous business. TrustMark told us it was not working directly with Companies House or The Insolvency Service on these matters but, upon our prompting, accepted that it should do.41
Show less
Government response AI summary
The government disagrees with the recommendation to only allow new external or internal wall insulation to be installed through retrofit schemes if supervised and checked by someone who is independent, competent and accountable, as they have greater confidence in the quality of installation and compliance …
Read full response →
HM Treasury
33
Recommendation
62nd Report - Faulty energy efficiency …
Rejected
The Department did not complete a full fraud risk assessment before ECO4 was implemented in 2022. This became a mandatory requirement in Managing Public Money for any new major area of spend in March 2022, but it would still have been considered good practice at the time.77 The Department clarified …
Read more
The Department did not complete a full fraud risk assessment before ECO4 was implemented in 2022. This became a mandatory requirement in Managing Public Money for any new major area of spend in March 2022, but it would still have been considered good practice at the time.77 The Department clarified that it had completed an initial fraud impact assessment during the ECO4 policy stage, but accepted that it had not done sufficient preparation and had initially failed to understand some of the scheme’s exposure to fraud. The Department confirmed that the fraud risk assessment had since been completed and was being actively managed, with all risks clearly allocated to owners as of October 2025.78
Show less
Government response AI summary
The government disagrees with referring the issue to the Serious Fraud Office, stating that Ofgem has the responsibility for exploring cases of suspected fraud and can make referrals where appropriate.
Read full response →
HM Treasury
34
Recommendation
62nd Report - Faulty energy efficiency …
Rejected
The Department explained that no single organisation has overall responsibility for preventing and detecting fraud on ECO4 and GBIS.79 Ofgem’s role in relation to fraud is limited to progressing counter-fraud investigations where allegations have been made.80 Ofgem explained to us that it has neither a legislative role nor the ability …
Read more
The Department explained that no single organisation has overall responsibility for preventing and detecting fraud on ECO4 and GBIS.79 Ofgem’s role in relation to fraud is limited to progressing counter-fraud investigations where allegations have been made.80 Ofgem explained to us that it has neither a legislative role nor the ability to detect fraud across the whole system. It told us it had identified installations worth 1.75% of the scheme value as fraudulent as of November 2025, which is below the 2% departmental threshold for fraud.81 However, this is detected rather than estimated fraud. The National Audit Office reported that Ofgem had estimated businesses could have fraudulently claimed between £56 million and £165 million from energy suppliers under ECO, which would be up to 3.9% of the £4.2 billion scheme delivery costs to the end of March 2025. It also reported that there were separate suspicions of other fraudulent activity that was not included in this estimate.82
Show less
Government response AI summary
The government disagrees with referring the issue of fraud to the Serious Fraud Office, stating Ofgem already has the responsibility to explore suspected fraud and make referrals where appropriate. The department will prioritise deterrence and prevention, before harm is done.
Read full response →
HM Treasury
35
Recommendation
62nd Report - Faulty energy efficiency …
Rejected
Ofgem relies on energy suppliers, TrustMark, certification bodies and scheme providers to alert it to any suspicions of fraud. However, while these bodies have responsibilities to report fraud that they have identified, they 76 Qq 20, 28, 56; Letter from the United Kingdom Accreditation Service, dated 27 November 2025 77 …
Read more
Ofgem relies on energy suppliers, TrustMark, certification bodies and scheme providers to alert it to any suspicions of fraud. However, while these bodies have responsibilities to report fraud that they have identified, they 76 Qq 20, 28, 56; Letter from the United Kingdom Accreditation Service, dated 27 November 2025 77 Q 122; C&AG’s Report, para 4.10; HM Treasury, Managing Public Money, June 2025 78 Qq 122, 123, 125 79 Q 127 80 C&AG’s Report, para 4.12 81 Qq 128, 130, 131 82 C&AG’s Report, para 4.3 21 have no requirement to proactively look for fraud, and poor information sharing across the system hinders their ability to do so.83 For example, in its written evidence submission, Energy UK set out how more rapid dissemination of intelligence on fraud trends by Ofgem would help energy suppliers improve their fraud controls.84
Show less
Government response AI summary
The government disagrees with referring the issue to the Serious Fraud Office, stating that Ofgem has the responsibility for exploring cases of suspected fraud and can make referrals where appropriate.
Read full response →
HM Treasury
36
Recommendation
62nd Report - Faulty energy efficiency …
Rejected
We pushed Ofgem and the Department on what they were doing to actively look for fraud, and highlighted that fraud is likely contributing to the high level of defects on external and internal wall insulation.85 Written evidence submitted by members of the Green Homes Group (Ashden, Centre for Sustainable Energy, …
Read more
We pushed Ofgem and the Department on what they were doing to actively look for fraud, and highlighted that fraud is likely contributing to the high level of defects on external and internal wall insulation.85 Written evidence submitted by members of the Green Homes Group (Ashden, Centre for Sustainable Energy, Citizens Advice, E3G, Friends of the Earth and Greenpeace) reported that people have experienced fraud and intentional bad practice as part of their faulty retrofits.86 The Department assured us that it is “bringing together the parties that might have information that would allow Ofgem to identify cases of potential fraud.” It explained that it is working to make sure data about households—such as their likely eligibility for schemes—can be shared across the system. It also told us that TrustMark had introduced different software systems that enable it to identify potentially fraudulent installations from the data it holds.87 Addressing current issues and reforming the system for the future
Show less
Government response AI summary
The government disagrees with referring the issue of fraud to the Serious Fraud Office, stating that Ofgem already has the responsibility to explore suspected fraud cases and make referrals to relevant bodies.
Read full response →
HM Treasury