Ed Miliband has taken a blow after a fraud squad was urged to investigate a “catastrophic” £4.6 billion net zero scheme under the watch of his department.
The damning report by the Public Accounts Committee (PAC), which monitors the effectiveness of government spending, urged ministers to refer home insulation schemes to the Serious Fraud Office, after it left more than 30,000 properties with defects. The committee described it as the “most catastrophic fiasco” that had “failed at every level”, and slammed the Energy Security and Net Zero department, claiming it had received ”virtually no attention” from senior government officials, so it took them two years to recognise the scale of the issue.
The Energy Company Obligation scheme (ECO) and the Great British Insulation scheme aimed to insulate homes with poor energy efficiency. However, the committee feared fraud was involved due to the extremely poor quality of the installation.
The ECO was a Government programme first introduced in 2013, which underwent different iterations, and the GBI was launched in July 2023, both during the 14-year Tory rule.
The parliamentary committee said the schemes ECO 4 and GBIS, which began in 2022, were so badly designed they were almost “bound to fail”.
Some 98% of external wall insulation installed up to mid-January 2025 had major defects requiring repair, and some posed immediate health and safety risks, as revealed by the public spending watchdog last year.
The defects likely impacted 32,000 to 35,000 homes during that time, and less than 10% have been located and fixed since.
While energy suppliers bore the costs of the estimated £4.6billion for the schemes, the committee feared the repair costs would fall on customers.
Sir Geoffrey Clifton-Brown, the PAC chairman, warned: “Potentially thousands of people are now living with health and safety risks in their homes and despite government’s protestations, we have nowhere near enough assurance that they are not financially exposed to unaffordable bills to repair the defective works. All involved in the system must now move at far greater pace to make good,” reports The Telegraph.
Ministers stressed that the installer is liable, that no household will have to pay for their repairs, and costs of up to £20,000 should be covered by a guarantee if the installer has ceased trading or fails to remediate.
Around 98% of the insulation was found to be faulty (Image: Getty)
However, they pointed out that installers and guarantee providers were closing and reopening businesses to avoid taking on the responsibility.
MPs also feared the scale of the problem may be much larger than present understanding, and called on the SFO to investigate.
It comes at a disastrous time for the energy department, after Ed Miliband announced a £15billion Warm Homes Plan, to roll out solar panels, heat pumps and insulation.
Sir Geoffrey added: “The public’s confidence will have rightly been shaken in retrofit schemes given what has happened and government now has a self-inflicted job of work on its hands to restore faith in the action required to bring down bills and reduce emissions.”
A DESNZ spokesman said: “It is categorically untrue there are widespread health and safety risks – for the vast majority, this means a home may not be as energy efficient as it should be.”
