LONDON — Damian Mercer thinks his business shouldn’t exist.
He drives up and down the country removing botched cavity wall insulation from people’s homes — some of it installed under government-backed schemes designed to fix the U.K.’s raft of drafty houses.
“Everybody thought: ‘Well. I’m doing it right … I’m actually having my insulation put in my house,’” Mercer said, his own mother and father-in-law included.
“I’ve been telling them for years that it will cause problems. And, as sure as eggs are eggs, they are starting now to have problems. But they are old school. [They think]: ‘The government [isn’t] going to lie to us.’”
The scale of those problems is only now becoming clear.
In January, the U.K. government suspended work with 39 companies over shoddy installation.
Then in October, the National Audit Office, a public spending watchdog, revealed 98 percent of homes with external wall insulation installed under one longstanding government energy-efficiency scheme, the Energy Company Obligation (ECO), would need work to resolve “major issues” including damp and mold.
It could not come at a worse time for Labour ministers.
The government’s budget statement on Wednesday will be focused on helping hard-pressed voters with cost-of-living pressures, while ministers are weeks away from unveiling flagship plans for bulking up millions of homes with insulation and other energy upgrades. It is banking on the Warm Homes Plan to help it hit lower-emissions targets and, crucially, cut soaring household bills.
Labour came to power promising to bring bills down — but pumping out heat into drafty homes, ministers recognize, is one factor pushing them up. Upgrades like insulation will mean “lower bills to help tackle the cost-of-living crisis,” Energy Secretary Ed Miliband said in a speech at Labour conference this fall.
But flaws in the government-approved program to incentivize home insulation has put all this at risk, some experts say.
“Whenever any scheme from any government is not well-implemented, it damages credibility in the scheme but also in [the] government’s ability to execute. So it’s troubling,” said Nigel Topping, chair of government advisers the Climate Change Committee.
Bills up
The ECO scheme was introduced by David Cameron’s Conservative-led coalition government in 2013, as part of plans to limit climate-wrecking emissions and get energy costs under control for struggling families.
ECO requires energy suppliers to fund upgrades for the poorest families, paid for through a levy on bills.
By this August, around 4.3 million energy-efficiency measures had been installed in 2.6 million homes under ECO — including around 926,000 under the latest version, ECO4.
One of those homes belongs to 45-year-old father and charity founder Duncan Hayes, who had a string of retrofit works in 2023, including insulation, after moving to the countryside in the English west country to be closer to his daughter.
He hoped the upgrades, fitted under ECO4, would bring down his energy bills. He found the opposite.
Hayes claimed he raised issues such as damp with his installers before work was carried out, but these were ignored. He said the company fitted radiators and a heat pump that were incorrectly-sized, pushing up his bills threefold and leaving him unable to turn on his heating. Solar panels started to weigh down the roof, he said, which was defective before the works had begun.
His cottage, he claimed, was “cowboy heaven.”
“There were, like, bangs and cracks in the night, and they were keeping me up. At four in the morning, I was just sat up, listening to the roof failing,” he said.
Hayes said he spent thousands trying to repair the roof. The Department for Energy Security and Net Zero is currently investigating his case, according to emails seen by POLITICO.
Hayes’ daughter hasn’t stayed in his cottage since February 2023.
The installer, which POLITICO has decided not to name, said installations are carried out according to retrofit standards and are “subject to independent technical monitoring and quality assurance.”
System failure
Hayes is not alone.
The NAO found 29 percent of homes with internal wall insulation — another upgrade offered under ECO — also required remedial works.
Its report revealed a complicated picture where a complex web of bodies and responsibilities left it unclear who, ultimately, oversaw ECO. In some cases, poor quality work went unchecked, allowing installers to “game” the system, the NAO said.
The government had “limited oversight” of the scheme after handing more responsibility in 2021 to Trustmark, a private not-for-profit company tasked with overseeing the quality of projects. Trustmark, in turn, didn’t have enough cash to employ the staff it needed to audit installations sufficiently, while a separate web of certification bodies didn’t have full “visibility” of works, the NAO said.
“The government created an overly complex system that ultimately failed,” it said.
There were “failures at every level of the system,” DESNZ’s top official Jeremy Pocklington admitted in parliament this month, including the fact his “department did not oversee these schemes in the way that they should have done.”
A spokesperson for TrustMark said the organization “remains completely committed to ensuring strong consumer protection and confidence in home improvements of all kinds.” But they acknowledged: “It’s time for change and reform to the system, enabling stronger oversight by TrustMark on businesses and strengthening of consumer protection.”
The “poor workmanship” exposed by the NAO was “completely unacceptable,” they added, pledging the firm would work with partners “to help get these problems fixed as soon as possible.”
‘A few steps back’
Ministers are now promising to overhaul the system. “Rather than private companies in the driving seat, the government will be at the fore, instituting tight controls and tough sanctions,” Energy Minister Martin McCluskey said in October.
The government also says that, where insulation has failed, people will not have to pay to fix it — but has not published any timeline for cleaning up the mess.
A DESNZ spokesperson said: “Everyone deserves to live in a warm, energy-efficient home. It is clear that an overhaul of the retrofit system and the consumer protection landscape is urgently required. We are bringing this forward as part of the Warm Homes Plan.”
That’s a reference to the delayed, multi-billion-pound program designed to get insulation and other green tech into people’s homes.
One option being mulled by officials ahead of the budget is scrapping the levy on bills which funds ECO, according to The Guardian. That means the government would have to ditch ECO completely, find cash for it through Miliband’s Warm Homes Plan, or — as suggested by one industry figure, granted anonymity to speak candidly — replace it with a taxpayer-funded energy-efficiency scheme.
However they do it, though, ministers will need to fund home insulation to honor those promises on bills. And that means rebuilding public trust in those programs — a tough ask, one senior Labour MP believes.
“It’s going to be really important to overcome the wider sense the public have about rogue traders and cowboy builders,” said Energy Security and Net Zero Committee Chair Bill Esterson.
It’s about “giving confidence to consumers that somebody coming into your home is going to do a good job and not cause you problems with damp or mold or other damage to your home,” he added.
“I think we need to accept that we’ve probably taken a few steps back in terms of people’s interest in this,” said Gillian Cooper, head of retail energy markets at consumer group Citizens Advice.
Wanted: A plan
“If the Warm Homes Plan does not initiate a concrete plan to fix homes damaged by public insulation schemes, and set out how households won’t be put at risk in the future, then British homeowners will be skeptical that they can trust insulation schemes,” said James Dyson, senior researcher at the E3G think tank.
Reforms must include “proper funding” for organizations tasked with policing installations, said Citizens Advice’s Cooper.
“That is one of the biggest challenges in this country,” she said. “We have rules, [but] we don’t necessarily fund the bodies enough to ensure that they can actually enforce them.”
“Nobody comes out and checks the work, or very rarely does it happen,” confirmed Mercer, the de-installer.
Attention is now turning to the budget and the Warm Homes Plan expected soon after, to see if ministers can fix the system. The findings of the NAO report, Conservative MP and Public Accounts Committee Chair Geoffrey Clifton Brown told parliament, are the “worst I have seen in my 12 years on this committee.”
Insulation is a smart move to make homes warmer and cheaper to run, experts stress. But not when it is bungled.
“It needs to be installed correctly,” said Mercer, “policed and monitored through the life expectancy of that property … because by not doing so, we are just making a perfect storm.”
