ECO scheme ‘beginning to fail’

The government’s flagship home insulation scheme is “beginning to fail” because the criteria for its latest phase means around 90% of homes identified for help are not qualifying, the shadow energy minister has warned.

Alan Whitehead raised the concerns during a short House of Commons debate held to rubberstamp the regulations for the next phase of the supplier-funded Energy Company Obligation (ECO) scheme.

The Great British Insulation Scheme (GBIS), initially known as ECO+ when it was launched, expands eligibility to a wider pool of households than the predominantly low-income earners targeted by ECO4, the current phase.

ECO4, which started last summer, will run in tandem with the GBIS when the latter launches later this year until 2026.

Whitehead said: “There is certainly a general feeling in industry and elsewhere that ECO4 is beginning to fail.”

He said regulations were making it almost impossible for most households to access the grants. In particular, Whitehead criticised the rule stipulating that support will only be offered where an upgrade increases a home by two energy performance certificate (EPC) bands.

Whitehead added: “Most properties cannot achieve that very easily.

“A lot of work has gone into searching for properties and particularly for people who qualify for ECO4, but it has been found that the people qualify and the properties do not.

“Some 90% of found searches are proving impossible to proceed with under ECO. The high rate of aborted programmes adds an enormous cost to the companies that are seeking searches for people who can qualify for ECO4.”

The other main factor cited by Whitehead was build cost inflation that means insulation materials, for example, are now 430% more expensive than the ECO methodology assumes.

The combination of these factors means that the delivery of ECO4, compared with previous rounds of the scheme, is “very seriously behind schedule”, he said.

Both the ECO4 and the GBIS share common cost assumptions.

The Labour frontbencher also called for eligibility for ECO to be widened out from just measures that tackle heating costs to others, such as fitting LED light bulbs, which could make an “enormous difference” to households’ energy bills.

Responding on the government’s behalf, junior energy minister Andrew Bowie said the GBIS is a “crucial element” of the government’s package of measures to cut energy demand from buildings by 15% by 2030.

He said: “We are monitoring ECO4 delivery against the current cost assumptions and will consider changes if necessary. However, changing the cost assumptions may require either a change to the overall energy bill reduction target, the estimated funding scheme policy details or a combination of all three. Such changes would require public consultation, and possibly regulatory change.”

Graham Stuart, the more senior minister of the state for energy, has previously said in a written Parliamentary answer that government officials are examining the cost assumptions underpinning ECO in the light of recent inflation.