Fraud investigation demanded as insulation scandal may put health of 'thousands' at risk

The Serious Fraud Office should be called in to investigate a “clear and catastrophic failure” which has left more than 30,000 homes with defective insulation, a damning report demands. It is feared the health of thousands of people may be at risk and they could face “unaffordable” repair bills.

Initiatives intended to tackle fuel poverty have backfired with an estimated 98% of external cladding and 29% of internal wall insulation defective. The Department for Energy Security and Net Zero is blasted by a cross-party group of MPs for coming up with a scheme that was “almost bound to fail”.

Instead of reducing fuel poverty, the public accounts committee warns, “some of the most disadvantaged households” are left “living in cold, damp or unsafe conditions and experiencing stress, poor mental health and financial costs as they seek repair”. The MPs want the Serious Fraud Office to investigate.

Committee chairman Sir Geoffrey Clifton-Brown cautioned that "potentially thousands of people are now living with health and safety risks" - but the Government said it is "categorically untrue" there are widespread risks.

Energy suppliers are required to fund “energy efficiency measures” in homes with poor ratings but the report gives a scathing verdict on the two schemes, ECO4 and the Great British Insulation Scheme (GBIS). They say the Government should “not allow any more external or internal wall insulation to be installed through its retrofit schemes unless it can ensure that every new project will be supervised and checked by someone who is independent, competent and accountable”.

The MPs call on the Government to come up in the next fortnight with “a credible plan for how it will ensure that no household will need to pay for the repairs”. They also want action to stop “incompetent and dishonest company directors closing and re-starting their businesses”.

The report states that “given the likely role of fraud in the poor quality installations, the Department should refer the issue to the Serious Fraud Office” to “bring criminals to justice”.

Committee chairman Sir Geoffrey Clifton-Brown said: “I have served on the public accounts committee for 12 years. In all that time, a 98% failure rate in a public sector initiative amounts to the most catastrophic fiasco that I have seen on this committee.

“Indeed, our report finds the project was doomed to failure from the start. Government behaved inexplicably in redesigning a similar scheme which was working reasonably well into a highly-complex number of organisations with siloed responsibilities, which did not respond to failures anything like quickly enough to prevent damage being done to people’s homes.

“Potentially thousands of people are now living with health and safety risks in their homes, and despite Government’s protestations we have nowhere near enough assurance that they are not financially exposed to unaffordable bills to repair the defective works.”

Arguing that the “sheer levels of non-compliance found here make it clear to us that these matters should be referred to the Serious Fraud Office,” Sir Geoffrey said: “All involved in the system must now move at far greater pace to make good. The public’s confidence will have rightly been shaken in retrofit schemes given what has happened, and government now has a self-inflicted job of work on its hands to restore faith in the action required to bring down bills and reduce emissions.”

A spokesperson for the Department of Energy Security and Net Zero said: “It is categorically untrue there are widespread health and safety risks - for the vast majority, this means a home may not be as energy efficient as it should be.”

Minister for Energy Consumers Martin McCluskey said: "We inherited a broken system from the previous Government. It was not fit for purpose and had multiple points of failure. We are cleaning up this mess.

"Every household with external wall insulation installed under these two schemes are being audited, at no cost to the consumer. And we have been clear that no household should be asked to pay any money to put things right.

"Of all non-compliant properties found to date, over 50% have been remediated. We have also taken the decision to end the ECO scheme and instead put more investment through local authorities, which have a significantly better record of delivery.

"We are reforming the system of consumer protection to better protect people. We will establish a new Warm Homes Agency, bringing in a single system for retrofit work to provide stronger, formal government oversight and driving up quality.”