Audit Office Report

98% of External Wall Insulation Defective

The National Audit Office review of ECO4 – the government’s response – and our views

Sytemic Failure – not Systemic Failings

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Key Findings

Widespread defects in solid wall insulation. The NAO reports that 98% of ECO4/GBIS external wall insulation (EWI) installations audited had major issues (with 6% posing immediate health & safety risks), and 29% of internal wall insulation (IWI) had major issues. Headline figures are based on audit work to mid-Sept 2025, including a representative programme. NAO report PDF (Key facts, pp.4–6).
Slow remediation and no overall timetable. By mid-Sept 2025 only ~8% of EWI and ~10% of IWI homes identified for remediation had been fully remediated. DESNZ “does not yet have a timetable or plan” for inspecting and fixing all affected homes. NAO report PDF (§2.23, p.38).
Unclear who pays when costs exceed guarantees. Installers are liable; where an installer has ceased trading, guarantees typically cap at £20,000. The NAO notes government has not clarified how exceptional cases (costs above installer/guarantee cover) will be funded, despite the public line that households should not pay. NAO report PDF (§§2.20–2.21, p.37).
Backlogs and evasion risks. Hundreds of businesses had overdue remediation; the NAO flags risks of directors “phoenixing” to avoid liabilities. NAO report PDF (§2.25, p.38).
Heat pumps and other measures were not the focus. A sub-sample found 23% major issues in “additional measures” (e.g., heat pumps, solar) installed alongside SWI, but the NAO explicitly cautions this cannot be extrapolated to all ECO installs. NAO report PDF (Summary §17, pp.10–11).

See also NAO overview and press release: NAO report hub · NAO press release · Government’s statistical audit summary: GOV.UK – SWI audit results.

Government Response

On 13 Oct 2025, the Minister for Energy Consumers, Martin McCluskey, called the situation “unacceptable… due to systemic failings,” listed 38 installer suspensions, promised centralised oversight and tighter controls (including retrofit coordinator site visits and higher design qualifications), and pointed affected households to Ofgem contact routes (ECOhelp@ofgem.gov.uk and 0808 169 4447). Written Statement HCWS953. Promises were made to reform a broken system and to fully remediate at no cost to homeowners.

Our Thoughts

Here at Nature Society, we have grave concerns. We can say for certainty that neither the installer suspensions, the promises of redress, nor the efforts to fix the system are sufficient.

1) The remediation scheme is not fit for purpose.

While government says “no household should pay,” the NAO shows how this breaks down in practice: capped guarantees, unclear payers of last resort, slow progress, and businesses exiting the market. That is not a credible, humane remediation model for tens of thousands of homes. Furthermore, as insulation issues often take many years to appear, often-vulnerable homeowners who have already endured significant turmoil, are being asked to act proactively to address problems they cannot easily perceived and are not a priority in the immediate future. To the contrary, any scheme must provide a simple ‘hands free’ mechanism for redress with the minimum amount of occupier involvement possible. The current process involves a minimum of 4 organisations and most likely many months – this should be changed to 1 organisation who proactively schedules an audit and delivers all works necesary – with no cap – irrespective of installer status and compliance. (Evidence base: NAO on unclear funding, limits of guarantees, absence of a timetable, backlog and phoenix risk.)

2) Key harms are omitted.

The Minister’s statement and the NAO’s scope focus on EWI/IWI. They do not address heat pump mis-sizing, system design failures, or bill increases that many households report after ECO4 installs—nor the full spectrum of home damage and psychological distress. That absence matters. (Scope caveat evidenced by NAO methodology and ministerial statement.) Hansard

3) “Systemic failings” understates the reality.

This is not just a set of failings within a system; it is systemic failure. When 98% of audited EWI installs are defective and nearly a third of IWI needs remediation, the system has failed in design, oversight, accountability and enforcement. (Evidence: NAO headline rates and conclusion on design/oversight failures.)

4) You can’t ‘fix’ what was never designed to work.

The NAO traces root causes to the architecture itself—fragmented roles, weak levers, privatised oversight and unclear accountability. The solution is not patching; it’s re-architecting consumer protection, investigations, and enforcement with government accountability at the core. (Evidence: NAO recommendations to create a new protection/assurance system and take clear responsibility.)

5) Not “a few rogue installers.”

Even the NAO’s own counts show breadth: 388 registered EWI/IWI installers had outstanding remediation; 38 were suspended; many were later reinstated after limited scopes of work, and the report warns of phoenixing. The behaviour persisted because the system allowed it—there were no real-world, enforced consumer protections. (Evidence: NAO on backlogs, suspensions/reinstatements, evasion risks.)

6) Protections are weaker than when buying a fridge-freezer.

Major ECO4 works routinely run to tens of thousands of pounds and disrupt homes and lives—yet the everyday consumer protections you’d expect for a domestic purchase often don’t apply. Our view: in practice, households have less protection than if they’d bought a fridge-freezer on a credit card.
No Section 75 in most ECO4 cases. Section 75 only protects card purchases between £100–£30,000—and only if the consumer actually pays by credit card. ECO4 measures are funded by energy suppliers rather than being a consumer credit-card purchase, so Section 75 usually isn’t available. UK Finance MaPS Ofgem
Home insurance typically excludes faulty workmanship. UK home/buildings policies commonly exclude loss or damage caused by poor or defective workmanship; the Financial Ombudsman has repeatedly upheld insurers’ refusals on this basis. Financial Ombudsman+1
The Financial Ombudsman Service doesn’t cover builders. FOS only handles complaints about financial firms (banks, insurers, lenders, PayPal/finance providers). It’s generally not a route for disputes with installers—unless there’s a linked finance or insurance product. Which? gives the same steer for building work complaints. Financial Ombudsman+2Citizens Advice+2
Insurance-backed guarantees (IBGs) are mainly “cease-to-trade” safety nets. These typically step in only if the installer has ceased trading—not when the installer is still active but refusing to remedy defects—leaving many households without an insurance route. hiesscheme.org.uk+2MCS Certified+2

Report Conclusions

Publish a full remediation plan with deadlines and a payer of last resort so households aren’t left in limbo. (Aligned with NAO recommendations on a clear approach and timetable.) NAO conclusions.
Create a single, statutory consumer-protection regime for retrofit with central oversight, mandatory on-site assurance, and sanctions that bite—moving beyond the current fragmented, privatised model (as signalled by the Minister). HCWS953.
Expand auditing beyond SWI to include heating system performance and bill impacts, so the full picture of harm (and savings) is measured and acted on. NAO scope caveats.

Help for People Affected

Nature Society was started due to the complete systemic absence of consumer advocacy and support in retrofit – please contact us if you need help with your case, or for media enquiries as to the impact of ECO4 failure on homeowners and tenants.
Ofgem ECO help routes (as per the Minister’s statement): ECOhelp@ofgem.gov.uk, freephone 0808 169 4447 (Mon–Fri, 9:30–16:30), plus webform. HCWS953. See also Ofgem guidance: ECO4 complaints process · Homeowners & tenants.
Citizens Advice can help you prepare a complaint and navigate guarantees/warranties: Citizens Advice – complaining about energy-efficiency work.

References

National Audit Office, Energy efficiency installations under the Energy Company Obligation (14 Oct 2025): report hub · full PDF · press release.
GOV.UK, Solid wall insulation installed under ECO4 and GBIS: statistical audit results (13 Oct 2025): link.
UK Parliament, Written Statement HCWS953 (Martin McCluskey, 13 Oct 2025): link.
MoneyHelper (MaPS), How you’re protected when you pay by card (Section 75): link.
Financial Ombudsman Service, Home & buildings insurance and policy exclusion case decisions: overview · example.
FairTrades, What is an Insurance Backed Guarantee (IBG)?: link.

Nature Society exists to seek justice, clarity, and real-world protections where nature meets society — amplifying unheard voices from the built environment.