Failed Insulation Scheme Leaves Homes Damp and Mouldy

For thousands of households, a scheme meant to cut energy bills and keep homes warm instead delivered damp walls, mould and repair bills nobody should have to pay. That gap between promise and reality sits at the heart of a sharply critical annual report from parliament’s spending watchdog, whose chair has branded the insulation programmes among the worst government failures he has ever seen.

Sir Geoffrey Clifton-Brown, chair of the public accounts committee, published his second annual report on Wednesday (14 October). In it, he wrote that the “catastrophic energy installation schemes (ECO4 and the Great British Insulation Scheme) are some of the most shocking failures by government I have ever come across during my 12 years in total on the committee.”

The scale of the problem is stark. More than 30,000 homes were left with defects following failures under the two schemes, according to a PAC report published in January. The programmes were designed to tackle fuel poverty and reduce carbon emissions for low-income households living in poorly rated properties. But an estimated 98 per cent of external wall insulation and 29 per cent of internal wall insulation installed up to mid-January 2025 was found to be defective, with damp and mould appearing in many of the affected homes.

The committee’s central concern is what happens to the people living in those homes. The Department for Energy Security and Net Zero has assured homeowners they should not have to pay for remediation work, but the PAC noted that the current consumer protection system depends on the original installer putting things right. If that installer ceases to trade or fails to fix the problems, a guarantee covers remediation up to £20,000. Some repairs have already exceeded that cap, with one case costing more than £250,000.

“While [DESNZ] have promised that people with defective installations should not have to pay, they have not set out exactly how this will happen,” Clifton-Brown said. He added that the department took “far too long” to understand the extent of the problem, leaving some households to foot the bill for expensive remediation in the meantime.

Meanwhile, the insulation failures were not the only warning in the report. Clifton-Brown renewed concerns about delays, cost escalation and weak financial control across major programmes and critical infrastructure, including Northern Powerhouse Rail, the delayed replacement of reinforced autoclaved aerated concrete (RAAC) in hospitals, and the mounting risks around parliament’s own restoration.

On Northern Powerhouse Rail, he warned the project risks becoming “HS2 2.0”. Despite more than 12 years of planning, the programme remains at an early stage. Although it carries a £45bn funding cap, Clifton-Brown said “there is a real danger” it will not be delivered within that cap if too much money is spent in the early stages. “I am greatly concerned that the litany of failures seen in the HS2 project could be replicated with NPR, particularly given that HS2 Ltd has been brought into the project despite the organisation’s track record of poor cost estimation,” he said.

The report also revisited the PAC’s earlier findings on RAAC in hospitals, which showed seven affected hospitals were scheduled to finish in 2033, three years later than an independent report recommended. Clifton-Brown welcomed the government’s acceptance of a PAC recommendation to report annually to parliament on delays, cost increases and risks to patients and staff.

Parliament’s own building featured too. The committee reiterated warnings that the restoration programme must finally be confronted to avoid further waste and the possibility of a catastrophic incident. Maintaining the Palace of Westminster is estimated to cost £1.5m a week, and Clifton-Brown urged parliament to make a decision on the project rather than continue spending millions maintaining a deteriorating building.

For the families still waiting on damp walls to be fixed, the open question is whether the department’s promise that they will not pay holds in practice, and how quickly.