The NAO Insulation Report: Complete Analysis

Executive Summary

On 14 October 2025 the National Audit Office (NAO) published Energy efficiency installations under the Energy Company Obligation (HC 1334). It drew on audits, commissioned by Ofgem, of a representative sample of 758 homes with external or internal wall insulation fitted under ECO4 and GBIS before 16 January 2025. The audits took place between June and August 2025, and the results were extrapolated to all such homes.

To March 2025, there had been 28,000 external wall insulation and 45,200 internal wall insulation installations under the two schemes, out of 243,900 homes upgraded under ECO4 and 60,600 under GBIS. Non-compliance ranges from major issues to minor ones such as missing paperwork; the figures on this page are for major issues.

The 98% Finding

For external wall insulation, 98% of homes had major issues requiring remediation. 92% had issues that will affect the insulation's performance, often creating a risk of water ingress and mould, and 6% had health and safety risks needing immediate correction, such as inadequate ventilation.

For internal wall insulation, 29% had major issues. 27% had issues affecting performance, often creating a risk of condensation and mould, and 2% had health and safety risks such as inadequate ventilation and poor electrical safety. (The minister's statement of 13 October 2025 gave this last figure as 3%.)

• Between 22,000 and 23,000 homes with external wall insulation, and 9,000 to 13,000 with internal wall insulation, likely need remediation
• By mid-September 2025, 1,901 external and 1,033 internal wall insulation homes had been fully fixed (2,934 in total)
• Repairs normally cost £250 to £6,000 for internal and £5,000 to £18,000 for external wall insulation if done before major damage; the worst case cost over £250,000
• The original installer is liable, and a guarantee should cover costs up to £20,000 if it cannot pay

Public Accounts Committee Evidence

The House of Commons Public Accounts Committee took evidence on 13 November 2025 and reported on 23 January 2026 (HC 1229). It called the failure "clear and catastrophic", estimated that 32,000 to 35,000 homes are likely to be affected, and said it was the worst rate of failure seen in the Chair's roughly twelve years on the Committee.

"Serious failings at every level of the system that are systemic."
— Jeremy Pocklington, Permanent Secretary, Department for Energy Security and Net Zero, as reported by the Public Accounts Committee

What Went Wrong?

1. TrustMark Oversight

TrustMark is the government-endorsed quality scheme for retrofit work, not a regulator. The Public Accounts Committee reported that:

• TrustMark 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 design under-estimated the level of risk
• TrustMark does not do a "full dive" into an installer's finances before registering it
• TrustMark has developed a watchlist and can stop a new business operating until faulty work by its directors' previous business is fixed

2. Installers and Slow Repairs

The NAO reported problems getting installers to put work right:

• 225 of 388 external and internal wall insulation installers had over 1,500 projects where repairs took more than 12 weeks
• 27 of 194 businesses with outstanding repair work were no longer registered
• 38 installers were suspended; 21 had been reinstated by September 2025
• Some company directors were closing and restarting businesses to avoid remediation

3. Fraud

Ofgem estimated (November 2024) that falsified claims may have been made on 5,600 to 16,500 homes, worth £56 million to £165 million. The Public Accounts Committee found:

• The department did not complete a full fraud risk assessment before ECO4 began
• No single organisation was responsible for proactively looking for fraud
• Ofgem had identified 1.75% of the scheme's value as fraudulent, and the Committee suspected the true level was higher

4. Government Scheme Design

The Committee found the system was "too layered, fragmented and complicated":

• The department did not know whether the scheme as a whole was working for at least two years
• No one spotted that moving from single-measure to multi-measure retrofits would add risk
• There was no requirement for the retrofit coordinator to be independent of the installer
• Responsibilities were unclear, with organisations focusing on their own roles

Affected Schemes

ECO4 (Energy Company Obligation 4)

• Running: April 2022 – 31 December 2026 (extended; now winding down)
• Homes upgraded to March 2025: 243,900
• Target: low-income households in homes with poor energy efficiency ratings
• Funded through energy bills rather than general taxation

GBIS (Great British Insulation Scheme)

• Running: April 2023 – closed 31 March 2026
• Homes upgraded to March 2025: 60,600
• Mostly single measures such as cavity wall and loft insulation, but also some external and internal wall insulation
• The audit findings above cover wall insulation under both schemes

What Has Happened Since

• 13 October 2025: a ministerial statement confirmed the audit findings and a free home check for households with external wall insulation, at no cost to the consumer
• 23 January 2026: the Public Accounts Committee report was published
• Late January 2026: TrustMark's Find & Fix programme reached full operation; it is intended to finish by May 2027
• 2 April 2026: the government's response (Treasury Minutes) disagreed with halting wall insulation under the schemes, but confirmed referrals to the Serious Fraud Office
• 22 April 2026: the Serious Fraud Office opened an investigation into suspected fraud involving ECO4 work from 2022 to 2024; the case is open
• 17 June 2026: the Installation Assurance Authority raised its repair cap to £25,000 for ECO4 and GBIS solid wall insulation guarantees, and the National Energy Foundation will cover some homes whose guarantee was cancelled, fraudulent or missing
• 10 September 2026: a consultation on reforming consumer protection for home upgrade schemes closed

There is no government compensation scheme. The official offer is a free audit for external wall insulation and repairs at no cost to the household.

What This Means for Homeowners

If you had insulation installed under ECO4 or GBIS:

• External wall insulation: book TrustMark's free Find & Fix audit on 0333 555 1234 (option 1). See our guide to the free audit.
• Internal wall insulation: raise any concerns with Ofgem's ECO contact centre on 0808 169 4447 or ECOhelp@ofgem.gov.uk.
• Document everything: photos, dates, letters and guarantee paperwork.
• Know what is covered: repairs should be free, but the guarantees do not cover ill health, belongings or loss of earnings. For those, get independent advice, for example from Citizens Advice on 0808 223 1133.
• Act promptly: damp damage tends to get worse over time.

Read the Full Report

The complete report is free on the National Audit Office website. It sets out the audit method, the full figures, progress on repairs, and the fraud estimates. The Public Accounts Committee report covers the evidence session and the Committee's recommendations.