ECO4 and Insulation Schemes

Lord Teverson Excerpts

Wednesday 29th January 2025 Lords Chamber

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, the energy company obligation scheme and the Great British Insultation Scheme were established to improve the energy efficiency of homes—one of the best ways to cut consumer energy bills and keep people warm. This is particularly true for those experiencing fuel challenges. We took significant steps to improve the energy performance rating of homes. By the time we left office, 70% of social housing had an energy performance rating of A to C, up from 24% in 2010. In fact, almost half of the measures installed under the GBIS have been to low-income households.

The installation of solid wall insulation makes up a small proportion of the work undertaken by the ECO schemes and the Great British Insulation Scheme. It is worrying, however, that we have seen examples of substandard solid wall insulation under the schemes as identified by TrustMark.

It is with that in mind that we welcome and support the action announced by the Government last week, in which Ofgem will oversee the repairs and remediation. We are also grateful to hear of a review into the quality of solid wall insulation in other schemes and that additional on-site audits will be conducted to inform future action. It goes without saying that installers should fund the necessary repair work to remedy impacted households, which may experience issues with damp and mould.

However, we look to the Minister to provide clarity. Will the Government publish a full list of the 39 companies suspended from the scheme for carrying out poor-quality work? Can the Minister explain how the suspended companies will be required to remedy their work, and how will the Government ensure that the remedied work meets the necessary standards? Finally, will the Minister clarify exactly what action will be taken to ensure that every household which had solid wall insulation implemented under the schemes is thoroughly and properly informed and provided with the necessary information to rectify the work?

I am sure that all noble Lords in your Lordships’ House can all agree that households should have warm homes that are both cheap and efficient to run.

[Lord Teverson (LD)]

My Lords, I gather from looking at the press release more than the original Statement that 65,000 applications will be checked through Ofgem procedures. Today I met someone who is affected by this, and I want to emphasise just the worry that the 65,000 or whatever will have over the future of their houses, their saleability, their onward renting or the damages to landlords. This is a real concern.

How many of the 39 companies that the noble Baroness, Lady Bloomfield, mentioned, were part of the TrustMark scheme? That scheme, which I believe all those contractors should have been a part of, is described as “Government Endorsed Quality”. What really worries me regarding future schemes—I know there is a big ambition on the part of this Government to carry on retrofitting—is that there will be a loss of confidence.

The one question I would really like an answer from the Minister on is about what I think is wishful thinking: namely, the Government’s view that all these issues will be replaced or rectified by the original installers. I do not wish to accuse the department of being naive, but let us be clear: the majority building business model is that when you get into trouble, you go into liquidation. I and, I think, other people really want to understand who will then bear the cost of those rectifications where that happens, as I suspect it will quite regularly.

[The Minister of State, Department for Energy Security and Net Zero (Lord Hunt of Kings Heath) (Lab)]

My Lords, I am grateful to the noble Baroness and the noble Lord. The noble Baroness has taken time out from Nuclear Week, which we have both been spending a very enjoyable three days on. She is absolutely right to stress the importance of the scheme. Clearly, there is consensus across the House on dealing with this big problem, as both the noble Lord and the noble Baroness suggested.

I make it clear that we have the evidence of an audit of about 1,100 of those 65,000, and there will now be a massive piece of work to follow up with further audits, which will be overseen by Ofgem. Some of those will be desk based and others will be in-person site visits. There will be a proportionality test to decide how the audits will be undertaken.

The sampling that has been done was geared towards the installers that were thought to be most risky, but the fact is that a significant proportion of that sample showed that there were major issues, which is why we needed to take swift action to conduct further checks and initiate a further programme of remediation. We think it is 38 installers, not 39—a correction has been made by TrustMark. To answer the noble Lord, of course they were all under the auspices of TrustMark, and we are working very hard through certification bodies and TrustMark to require them to remediate the work.

As the noble Lord pointed out, it is a requirement for those schemes to be registered with TrustMark. In the case of those already audited, this is happening. I believe most installers want to do the right thing and do a good job. My understanding is that where issues are being flagged, they are repairing the work, but clearly we are having mechanisms put in place to make sure that the installers deliver on their obligations, and the guarantee system we have acts as a backstop. Clearly, the current system is not working. There is a combination of TrustMark, the companies involved, the certification process and the UK accreditation system—there are a lot of bodies involved and there is not sufficient co-ordination or tight oversight of this. We need to focus on remediation, but then we must move on to establish a better system in future.

On whether remediation will be carried out effectively, we are going to put additional spot checks in across the system to make sure that where insulation faults have been remediated, that work has been done to the required standard. Suppliers have committed to additional checks and monitoring future installations of solid-wall insulation so that householders can be confident that it is done to a better standard. I very much agree that any householder who has learned about this issue will be concerned. They will be concerned about the impact on their home, but also about whether the remediation work will be done effectively.

In terms of information to those households, Ofgem has begun writing to all households that have had solid-wall installation installed under energy company obligation 4 or the Great British Insulation Scheme. As I said, we will be reviewing the quality of all 65,000 solid-wall insulations, and we hope that the vast majority will not have any issues or that any issues found will be minor, but if we see major concerns, we will want action to take place immediately. It is clearly important that we carry out a quality check across all solid-wall insulation under these schemes.

I want to pick up the issue of saleability raised by the noble Lord, Lord Teverson. Clearly, this will be a concern. Householders seeking to sell or perhaps remortgage their home will be worried about lenders’ approach. Our expectation is that the firms that have done this shoddy work must pay for the remediation. Clearly, that must be the principle under which we operate. There is a moral hazard in my saying anything different from the Dispatch Box on that issue.

Looking further ahead, it is clear that the whole system of consumer protection is fragmented and in need of reform. In terms of our overall goal towards net zero and the massive challenge of heating efficiency in our homes, it is essential that in all these programmes the public have confidence in the quality of the installation. That is why what has been discovered has been very disappointing, but we have to take it, look at the whole system and improve it.