The NAO Insulation Report, Explained

Key finding: 32,000 to 35,000 homes likely affected

Between 22,000 and 23,000 homes with external wall insulation and 9,000 to 13,000 with internal wall insulation under ECO4 and GBIS are likely to need remediation (NAO, October 2025; Public Accounts Committee, January 2026).

Executive Summary

On 14 October 2025 the National Audit Office published Energy efficiency installations under the Energy Company Obligation (HC 1334). It drew on audits of 758 homes with external or internal wall insulation fitted under ECO4 and the Great British Insulation Scheme (GBIS) before mid-January 2025. The audits were carried out between June and August 2025.

They found major issues in 98% of homes with external wall insulation and 29% of homes with internal wall insulation. Repairs normally cost between £250 and £18,000 per property. The original installer is liable, and households should not be asked to pay.

What the NAO Report Found

1. How Serious the Defects Are

External wall insulation: 92% of homes had issues affecting performance, often creating a risk of water ingress and mould; 6% had health and safety risks needing immediate correction, such as inadequate ventilation
Internal wall insulation: 27% had issues often creating a risk of condensation and mould; 2% had health and safety risks, such as inadequate ventilation and poor electrical safety
Scope: the figures cover installations before mid-January 2025 only, so the total number of affected homes will be higher

2. The Numbers Behind the Crisis

98%

Audited homes with external wall insulation that had major issues

22,000–23,000

Homes with external wall insulation likely to need remediation

£250–£18,000

Normal repair cost per property, paid by the installer or guarantee

3. Types of Defect

The audits and the Public Accounts Committee describe a spectrum of issues, including:

Gaps in the insulation: so the home does not get the full benefit
Damp and mould: from water getting in or condensation
Ventilation problems: inadequate ventilation after insulating
Electrical safety: for example an exposed electrical wire
Minor issues: such as weak points around gas pipes or missing paperwork

Government Response & Accountability

TrustMark's Oversight

TrustMark is the government-endorsed quality scheme for retrofit work. The Public Accounts Committee reported that:

TrustMark only notified the department of high levels of non-compliant external wall insulation in October 2024, although installations began in 2022
TrustMark accepts it should have realised much sooner that the system under-estimated the risk
38 installers were suspended by the end of January 2025, which the department said was 81% of the external wall insulation market

The Department's Position

The Permanent Secretary of the Department for Energy Security and Net Zero told the Public Accounts Committee:

"Serious failings at every level of the system that are systemic."

The Committee called it a "clear and catastrophic failure". In its response (Treasury Minutes, April 2026) the government disagreed with halting wall insulation under the schemes, but confirmed that referrals had been made to the Serious Fraud Office.

What Happens Next?

Find & Fix and Who Pays

There is no government compensation scheme. Instead:

TrustMark offers a free Find & Fix audit to every home with external wall insulation under ECO4 or GBIS; the programme is intended to finish by May 2027
Internal wall insulation households can raise concerns with Ofgem's ECO contact centre, which triages them for audit
The original installer pays for repairs; if it cannot or will not, the 25-year guarantee covers up to £20,000, or £25,000 for Installation Assurance Authority guarantees since 17 June 2026
The National Energy Foundation covers some homes where the guarantee was cancelled, fraudulent or missing

Fraud Investigation

In April 2026 the Serious Fraud Office opened an investigation into suspected fraud involving ECO4 work carried out from 2022 to 2024. The case is open.

What Homeowners Should Do

If You Had Wall Insulation Under ECO4/GBIS

Document everything: take dated photos and keep installation paperwork, guarantee certificates, Ofgem letters and correspondence.
External wall insulation: book TrustMark's free audit on 0333 555 1234 (option 1). See our guide to the free audit.
Internal wall insulation: contact Ofgem's ECO contact centre on 0808 169 4447 or ECOhelp@ofgem.gov.uk.
Beware of claims callers: the audit is free and you can book it yourself. Anyone contacting you about it should be able to quote your Unique Measure Reference Number.
Other losses: the guarantees do not cover ill health, belongings or loss of earnings. Get independent advice, for example from the Citizens Advice consumer helpline on 0808 223 1133.

Warning Signs to Watch For

Report it through the routes above if you notice:

Damp patches or staining on internal walls
Mould growth, especially in corners or around windows
Cracking or bulging in the external render
Water stains or drips after rain
More condensation since the installation
Cold spots or draughts from walls

Where We Fit In

If a free route covers your home, use it first. If none does, you can send us an enquiry and we may introduce you to a specialist through Better Home Hub. Sending an enquiry is free; any survey or work is agreed and paid for between you and the specialist, who may pay Better Home Hub a fee. Check any specialist's registration, insurance and guarantee yourself, for example on TrustMark's register.

No Free Route Covers You?

Tell us about your home and we can introduce you to a specialist.

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Additional Resources

Sources

Last reviewed September 2026