Fraud squad urged to investigate ‘catastrophic’ £4.6bn net zero scheme
Report claims ‘failed’ insulation programme left thousands of properties with defects
Britain’s fraud squad has been urged to investigate the Government’s “catastrophic” £4.6bn energy efficiency scheme over fears some households will be left with huge repair bills.
In a scathing report published on Friday, the Public Accounts Committee (PAC) said the home retrofit scheme that left more than 30,000 properties with defects had “failed at every level”.
It warned over possible fraud in the scheme – which the committee chairman branded the “most catastrophic fiasco that I have seen” – and urged ministers to refer it to the Serious Fraud Office (SFO).
The committee took aim at Ed Miliband’s Department for Energy Security and Net Zero (DESNZ), saying senior officials took two years to recognise the scale of the problem.
More than £4.6bn is estimated to have been spent under the two household energy-saving schemes: the Energy Company Obligation scheme, which requires suppliers to install insulation in homes with poor energy efficiency, and the Great British Insulation scheme.
The cost is borne by energy suppliers but ultimately passed on to consumers in the form of higher bills.
Despite the huge costs, the schemes have been derailed by poor-quality installation.
The public spending watchdog found last year that nearly all external wall insulation installed up to mid-January 2025 – about 98pc – had major defects that required fixing, with some posing immediate health and safety risks.
Between 32,000 and 35,000 homes overall are likely to have been affected during this period, while it is unknown how many more faulty installations have been carried out since.
MPs warned that fraud was likely to have played a major role in the poor quality of insulation installed under the scheme.
Ofgem, the energy regulator, has identified a fraud rate of 1.75pc of the work conducted – equivalent to more than £80m.
Thousands now living with ‘safety risks’
However, MPs said this figure was likely to be a “significant underestimate” and called for the SFO to investigate the true scale of fraud across the scheme.
Ministers have said that no household will be liable for paying repair costs as the original installer is required to fix any issues. Costs of up to £20,000 should be covered by a guarantee when the installer has ceased to trade or fails to remediate.
However, the committee warned that the costs in some cases would exceed this guarantee, citing one example where it cost more than £250,000 to fix defects and resulting damage.
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