Source · Select Committees · Public Accounts Committee
Recommendation 4
4
Accepted
Review risk management and internal escalation systems to swiftly address scheme issues.
Recommendation
The Department’s senior officials took two years to recognise the scale of the problems, which led to many faulty installations that could have been avoided. This is unacceptable and demonstrates very poor overall supervision. The Department acted in October 2024 when TrustMark informed it of analysis indicating high levels of non-compliance with quality standards in external wall insulation. TrustMark only developed the analytical capabilities for interrogating its data and producing this kind of analysis in the latter half of 2024–prior to this it did not have the resources or systems to oversee what was happening on the ground. The Department should have done the due diligence on this before Trustmark were appointed to this role, however, the Department had access to other information that should have alerted it to the potential issues much earlier given that the ECO4 scheme started in April 2022. For example, TrustMark told us it had been sharing the results of its audits with the Department from 2022 and that when it started to identify the increased risk from 2023 into 2024, it undertook more audits to better 5 understand the level of risk. The Department’s failure to take minutes of its meetings with TrustMark meant it was unable to defend its position that it had not been alerted sooner. The Department also had risks to quality, assessments and standards on its programme risk register since November 2022 but did not take any proactive steps to prevent the risks materialising in the first place or escalate the risks appropriately. The Department gave the scheme virtually no senior level attention and should have carried out far more investigations much sooner. Its poor oversight of ECO4 and GBIS meant that senior leaders had assumed the quality assurance system was working when it was not. recommendation The Department should review its risk management and internal escalation systems so that issues identified within specific schemes are escalated swiftly and
Government Response Summary
The government accepted the recommendation, stating that risk management and escalation within DESNZ are managed through formal governance. In response to issues, they have established an internal programme board, an external expert panel, and a project board for the find-and-fix programme, with a senior civil servant now observing on the TrustMark board.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. Recommendation implemented Risk management and associated escalation within DESNZ is managed through formal governance across projects, live schemes and portfolios. Each scheme has formal risk management in place with escalation of risks, as appropriate, to portfolio (Director General) level. While there are no further plans to introduce new levy schemes following the closure of ECO4 and GBIS, all new schemes will be subject to the same rigour of risk management processes. As part of the risk management and escalation processes, officials have presented on four different occasions to the department’s Audit, Risk and Assurance (ARAC) Committee about risks associated with the rates of non-compliance identified in ECO4 and GBIS. All schemes are subject to scrutiny from the internal Design Authority, and any spend is subject to agreed approval processes culminating in the Investment Committee for spend over £265 million CDEL or £50 million RDEL. The delegated authority limits are subject to revision by HM Treasury. In addition, government funded-capital schemes (WH: Local Grant and WH: Social Housing Decarbonisation Fund) are subject to external scrutiny from the National Infrastructure and Service Transformation Authority (NISTA) and the Treasury because they are set up as a Government Major Programme (GMPP). Risk is an integral part of providing assurance to all these review bodies. In responding to the issues with ECO4 and GBIS the department is committed to reform of our consumer protection system and has set up both an internal programme board to track progress which includes Treasury and NISTA representation, as well as an external expert panel. The department is committed to external input and challenge. To manage progress on the find-and-fix programme and remediation of all identified non-compliance, the department has set up a project board with robust risk management processes to manage the heightened risks. In addition, a senior civil servant now sits as an observer on the TrustMark board.