Some households have been left with bills of up to £250,000 following the faulty insulation scheme
The Government has responded to claims that households across the country have been left without ‘any real assurance’ that repairs costs of a botched insulation scheme from the previous administration will be covered. It comes after MPs warned today that the scheme has left affected households exposed to unaffordable repair bills.
The Energy Company Obligation (ECO) programme, which aimed to improve energy efficiency and slash bills, instead left more than 30,000 homes with faulty insulation. In some cases, this caused structural issues, damp, mould and health-and-safety risks. Ministers previously said that no household should have to pay to fix the issues, with the original installer liable to foot costs of up to £20,000 covered by guarantee.
However, in a report released on Friday, January 23 the Commons Public Accounts Committee (PAC) warned households do not have any real assurance the repairs costs will be covered where they exceed this guarantee cap. The cross-bench group of MPs said it is sceptical the original installers and guarantee providers will be able to meet the potential scale of claims, citing cases where the damage is worth more than £250,000.
The MPs are now urging the Government to deliver on its assurances, delivering a credible plan for ensuring no household has to pay. This is especially urgent in light of the ECO scheme being axed, the PAC said, arguing it could cause the retrofit market to shrink and too few viable insulation businesses would remain to complete the necessary repair works.
Sir Geoffrey Clifton-Brown, PAC chairman, called ECO’s systemic failure “the most catastrophic fiasco” that he had seen in his 12 years of serving on the committee. He said: “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.
“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.”
Responding to the claims, minister for energy consumers Martin McCluskey said: “We inherited a broken system from the previous government. It was not fit for purpose and had multiple points of failure. We are cleaning up this mess.
“Every household with external wall insulation installed under these two schemes are being audited, at no cost to the consumer. And we have been clear that no household should be asked to pay any money to put things right.
“Of all non-compliant properties found to date, over 50% have been remediated. We will establish a new Warm Homes Agency, bringing in a single system for retrofit work to provide stronger, formal government oversight and driving up quality.”
The committee also found that fraud likely played a major role in the poor-quality installations but that the known levels in ECO could be a significant underestimate. It recommended the issue is referred to the Serious Fraud Office (SFO) watchdog to investigate the extent of fraud across the initiative in order to bring criminals to justice.
Elsewhere, the Government is being urged to explain how it will scale up its programme to find and fix affected homes as soon as possible, given the potential for health-and-safety risks and the likelihood of damage increasing with time.
The group of MPs also accused senior officials at the Energy Department (DESNZ) of paying virtually no attention to the ECO scheme after taking two years to recognise the scale of the issues, which led to many avoidable faulty installations.
A DESNZ spokesperson 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.”
Looking forward to the recently announced warm homes plan, the MPs said it is vital this is accompanied by proper quality oversight as it drives up the number of other energy efficiency installations such as solar panels.
