Recommendation 18

HM Government Not Addressed

1. PAC conclusion: A clear and catastrophic failure with external and internal wall insulation installations under ECO4 and GBIS has left more than 30,000 homes with defects. 1. PAC recommendation: The Department should not allow any more external or internal wall insulation to be installed through its retrofit schemes unless it can ensure that every new project will be supervised and checked by someone who is independent, competent and accountable. 1.1 The government disagrees with the Committee’s recommendation. 1.2 The extent and scale of non-compliant external and internal wall insulation under the ECO4 scheme was unacceptable and must never be repeated. The department has greater confidence in the quality of installation and compliance in local authority delivered retrofit programmes and therefore disagree with the recommendation insofar as it relates to schemes other than ECO4 and GBIS. 1.3 Every household with external wall insulation (EWI) installed under ECO4 and GBIS is being and will be offered an on-site audit. Subject to the householder accepting the offer, all EWI installed under ECO4 and GBIS will be checked by an independent, trained and accountable auditor. 1.4 All households that received internal wall insulation (IWI) under ECO4 and GBIS are being written to and can raise concerns and request an audit via the Ofgem contact centre, which will be subject to triage. Where cases meet the threshold of risk factors, households are referred for an on-site audit by an independent, trained and accountable auditor. This includes all ongoing installations. This approach manages priorities and audit capacity in a practical way, taking account of the measured rates of non-compliance. 1.5 All EWI and IWI measures installed under ECO4 and GBIS schemes should have a guarantee that lasts for 25 years, meaning should issues be found in the future, the protections within the guarantee can be invoked within this timeframe. 1.6 The non-compliance rates found under ECO4 and GBIS for EWI and IWI are not replicated in government-funded capital schemes. In October 2025, the department published audit results for the Social Housing Decarbonisation Fund (SHDF) Wave 2 and the Home Upgrade Grant Phase 2 (HUG 2) showing a 0.7% category 1 and 9% major non-compliance rate for all measures and 0% category 1 and 11.7% major non-compliance for solid wall insulation. The system in place for these schemes is much more effective in managing compliance due to the additional controls from Local Authorities and Housing Associations, including mandatory audits from Grant Recipients, as well as separate independent audits by the delivery partner PWC. There is no evidence to require an onsite audit for all solid wall insulation installations under government-funded capital schemes. Where there are non- compliances, the Grant Recipients are responsible for resolving these issues through working with their supply chain as well as supporting residents through the IBG process if necessary. The department is confident that when non-compliance is identified it is swiftly resolved without intervention from the department due to existing checks and the department monitors this process directly when non-compliances are identified through our delivery partners. 1.7 In addition to the ongoing programme of onsite audits, the department continues to implement improvements to the current system of compliance, assurance and wider consumer protections. Improvements include: