ECO4 Scheme Redress

11:00:00

I beg to move, That this House has considered the matter of redress under the ECO 4 scheme. It is a pleasure to serve under your chairpersonship, Sir John. This debate is about a lot of things. It is about the need to retrofit UK homes to improve their fuel efficiency, training the future workforce and the consumer protection landscape, but it is also about the Government taking responsibility for policy failures. Most importantly, it is about people. Therefore, before I cover the issues with the ECO4—energy company obligation 4—scheme and the wider consumer protection landscape, I want to set out the experience of my constituent, Jackie. Jackie and her husband live in a gable end cottage. They have worked hard and done well, and are meant to be enjoying their retirement, but they are not. It all started to go wrong just more than a year ago, when, out of curiosity, they filled in a small quiz about rural homeowners without central heating on the Energy Advice Helpline website. They were contacted by a representative by phone and email very quickly, and found themselves put into a pipeline for works to be carried out. They described that period to my team as dizzying and said that they felt under pressure. Jackie and her husband had checked that the Energy Advice Helpline seemed to be a genuine not-for-profit advice service, but they had not been advised that the project had been given to a company called Central Eco Solutions. Now, some 12 months later, we have just found out that there was a further middle company—a surveyor based in Leeds, who my constituents had never spoken to until yesterday. The workflow that he described was that the Energy Advice Helpline adviser supplied work to him, and then he supplied work to installers. The work was carried out hurriedly in three weeks at the end of July and start of August last year. Alarmed at the poor quality of work being done in their property, Jackie and her husband started questioning the contractors about who was employing them and what instructions they had been given. It was only at that stage that they found out that Central Eco Solutions was involved. There was no project management, contract or design proposals, and when they asked for technical surveys, they were carried out by someone who was not a surveyor. Problems became obvious with the works immediately. No care was taken with the preparation. Floors were taken up and cupboards removed without notice. They described a small bookcase being ripped out with a crowbar, and the promises of it being replaced transpired to be completely false. The insulation and plastering had to be redone three times. The team attempted to insulate around a radiator, until they were stopped, but they did manage to insulate over a double socket, making it unusable. One insulation wall was put in at a very non-vertical angle. A joiner was sent to repair the woodwork, but he was instructed only to use MDF in place of pre-existing solid wood, and clearly, did not have the skillset to do the job in hand. Those are just the snags. The air source heat pump was originally installed on the outside of the gable wall, causing such bad noise and vibration in two bedrooms that they became unusable. Jackie investigated and found it had been bolted directly to the wall, whereas others she had seen were bedded on insulation. When she suggested that as a remedy, the heat pump was removed and placed apart from the building, but pipework was left running at waist height over the pathway to the garden. Most of the snags have still not been resolved. There are uncovered pipes, ruined woodwork, excess pipes creating energy waste, and a slanting kitchen wall. My constituents have had a terrible year dealing with these issues: chasing Central Eco Solutions for the work to be finished properly, trying to find some sort of guarantee scheme, making complaints, and escalating those complaints with no clear route for doing so. They are not alone. I am telling Jackie’s story, but there are many others in North East Fife and around the country. It is not a problem with just one installation company, because I have heard cases with others; I have been contacted by people all around Great Britain since my debate went on to the Order Paper, who have named different companies that have ruined their homes and left. This is a Government problem that must be solved. I have questioned the Minister in the House about it previously, and I think she knows that it is a Government problem because she announced in January that she would review the consumer protection landscape, particularly in relation to solid wall insulations under ECO4. However, I have had sight of a letter sent by her team in response to a complaint by a company outwith North East Fife. I was disappointed that the letter makes it clear that, as the Government do not directly fund ECO4, they do not get involved in private and contractual decisions between the parties involved. That somewhat misses the point. ECO4 may not be taxpayer funded, but it is a Government-backed scheme. For consumers that is the same thing, because that gives the scheme a stamp of Government approval. The Government surely would not, and should not, be backing something that allows traders to carry out unreliable and unsuitable work on somebody’s property. The Government would not be backing something unless they were really sure of what it was—right? In any case, ECO4 is taxpayer funded in some ways, because it is funded by a Government-backed levy on energy customers’ bills. Just because those public funds do not go through the Treasury’s coffers does not mean that there is not a public interest in getting their use right. I am happy to put on the record that I support ECO schemes: it is incredibly important to upgrade properties so that they are energy efficient. Our constituents need to do that to save money on their bills, and energy efficiency is a must-have in the face of a climate crisis.

My hon. Friend is making an important speech. One in six properties in Cumbria is more than 100 years old. Almost all of them will be single-walled properties, which are incredibly hard to insulate. Yet the award of grants through ECO4 always tends to favour large companies, not the smaller businesses that are better able to retrofit heritage buildings. Should the Government change that so that my constituents can have warmer homes that are also cheaper to heat?

I will go on to mention the particular challenge with older properties, but my hon. Friend’s example illustrates exactly what the issue is. This scheme is under the auspices of Ofgem and is funded through the Government levy on energy bills, but does not have any real oversight, so consumers end up being let down.

I commend the hon. Lady for securing this debate. She always brings applicable issues to Westminster Hall, and today is as an example of that, with the horrific example of the almost inconceivable standard of work done to her constituent’s house. The ECO4 scheme does not apply in Northern Ireland, where we have a fuel assistance scheme. Eligibility can be very tight and residents with more than a certain amount in their savings accounts find that they may not qualify. Does the hon. Lady agree that more could be done to loosen the rules for our elderly generation, particularly in boiler replacement or energy schemes?

It would not be a Westminster Hall debate without an intervention from the hon. Member. He illustrates that, although this is a GB scheme and not applicable in Northern Ireland, consumers and more vulnerable residents in Northern Ireland face the same challenges regarding energy efficiency. The Government have a responsibility, working with the Northern Ireland Assembly, to improve the situation there. We need to get this right, not just so there is faith in the schemes—although that is vital—but so works under them do not end up costing people even more in lost energy costs. It is clear that some things are going badly wrong under the ECO schemes as they stand. The Government need to address them for the remainder of properties that might do upgrades under ECO4 and for future iterations of the scheme. First, there is a complete lack of transparency in how households are driven to the scheme and, as far as I can tell, there is no regulation either. I have talked about how Jackie and her husband felt railroaded from wondering if they would be entitled to anything for upgrades, to their home being pulled apart. She is not a vulnerable person, but she thinks that the company she dealt with was totally unprepared for being challenged over what was happening. Another constituent who had a terrible outcome under the scheme has described themselves as vulnerable and feels that the system was set up to target people like them. As my team and I have gone further into such cases, I was surprised that more MPs are not shouting about this issue. Clearly, it is not limited just to one company or to North East Fife. When I spoke to Fuel Poverty Action this week, it told me that it is seeing only the most determined victims complaining—the rest are highly vulnerable people. From what I have seen, if companies offer to pay any compensation at all after months of fighting—even if it will not cover the cost of the remedial works—it is on the condition that all complaints be withdrawn. I therefore cannot help but wonder how many people have felt that they had to accept, and now are not in a position to tell us about their experiences. Secondly, the funding model for ECO4 places incentives on companies to upgrade rural homes, which my hon. Friend the Member for Westmorland and Lonsdale (Tim Farron) referred to. I understand the logic of that, but rural homes, as he said, tend to be a lot older and less uniform than urban ones, so we would ideally want a proper survey to be not only done, but carried out by a specialist retrofit co-ordinator. The fact is, however, is that we do not have anywhere near enough of them. TrustMark data indicates that although more than 2,000 individuals have completed the retrofit co-ordinator qualification, just 612 are registered with the quality mark and only 230 are actively lodging work in the data warehouse. Of the 230 active co-ordinators, around 30% are lodging the majority of those projects. That means around 66 specialists are overseeing the vast majority of retrofit works. We clearly need more, and the Government need to worry about that skills shortage. According to Ashden, the UK will need up to 50,000 retrofit co-ordinators in coming years if we are going to reach our goals for making homes energy efficient. In the meantime, what requirements are there for works to be properly overseen by a specialist? Do contractors have to employ one and risk cutting into their margins? Are there requirements for co-ordinators to actually visit a property, provide plans, speak with the owners and review works as they go? I wonder if the mysterious middle man I mentioned earlier was a retrofit co-ordinator—it is just not clear. What is clear is that none of these steps took place in that case. Similarly, the short-term nature of the scheme means that we are not skilling up the workforce—the plasterers, electricians and plumbers—that we need to do these works. ECO4 is the longest iteration of the schemes and has been running for almost four years, but it is due to close next spring, and we still do not know what will replace it. Short schemes with short-notice changes do not allow businesses to invest in training or properly plan for the future. Even for the best-intentioned companies and tradespeople, that is not commercially viable. That was all underlined by evidence from across the sector in the recent Energy Security and Net Zero Committee report. The industry needs a 10-year plan so that it can invest in upskilling, take on apprenticeships knowing there will be work for them after their training, and be prepared to take on the challenge of making our homes future-proof. Finally on ECO4, there desperately needs to be some clarity over how works are certified and payments are made. These are not just individual contractual disputes; the fact that Ofgem is administering the scheme tells a very different story. As I understand it, to get paid, an installer needs to register the works with TrustMark, providing photos, energy performance certificate ratings and so on. That is then validated before Ofgem releases the funds. Considering the hundreds, if not thousands, of homes being damaged around the country, what precise validation is happening? Is money being released for those ruined homes? What requirements are there on traders not just to say, “Sure, we installed a heat pump,” but to actually prove they have put a home back to the way it was? Where else is the money going in the supply line of referrals that I talked about earlier? Who is getting paid, by whom and for what? I have talked a lot about ECO4, but I want to touch briefly on the wider consumer protection landscape because, now that things have gone wrong, that is where my constituents and many others are battling. I do not think it is controversial to say that it is a bit of a mess. The Competition and Markets Authority confirmed that in its 2023 report on consumer protection in green heating and insulation sector. It was reiterated by Citizens Advice in its “Hitting a Wall” report last year, and again by the ESNZ Committee in its “Retrofitting homes for net zero” report in spring. I am aware—as I am sure the Minister will reference—that the Government are currently considering responses to a consultation on requiring the microgeneration certification scheme to be the sole certification scheme for clean heat installations. Having seen constituents, and my caseworkers on their behalf, battle through a maze of different accreditation and oversight bodies to try to find someone to take responsibility for this work, a single body seems incredibly sensible, but I still have some questions. How would that one body sit alongside TrustMark and Ofgem? Would it replace TrustMark and, if so, how would it be better equipped to accredit and oversee retrofit contractors? Would it solve the problem of traders being able to say they are accredited, and showing that they are accredited, when complaints have already started coming in? At the moment, it is far too easy for them to chop and change logos, or to continue to display a logo that they should not be able to. How do we make that new, single body sufficiently powerful and reactive so that it can be trusted by consumers? Policy specialists recently suggested to me that local authorities could be trusted to keep a list of accredited local traders. I had to tell them that some already do. Indeed, in North East Fife, a contractor just told constituents that they were not displayed yet due to a delay in the application process. That is very believable, given how stretched local government is. What happens to consumers when their homes are left ruined, with works poorly carried out, and the companies have lied about being certified or have now dissolved and vanished? What will happen to people stuck in the original system, whose works were carried out under the current failing scheme, who are being pushed from pillar to post with no end point in sight? Those are the experiences of my constituents and many others. To keep fighting for someone to be on their side is breaking them. Where is their solution? Failures in consumer protection clearly go beyond the ECO4 scheme, but there are particular problems for consumers funded via ECO4. So many people, often vulnerable, are pushed into having work done, and the nature of the schemes increases the chances of being allocated an unskilled or rogue trader. Some of the people I have spoken to in the run-up to today have said that this is a scandal that no one takes responsibility for, and they are very concerned about speaking out about it. I hope that the Minister will address my concerns this morning.

I remind hon. Members that the Member in charge does not have the opportunity to wind up the debate. I call the Under-Secretary of State for Energy Security and Net Zero.

11:16:00

It is a pleasure to serve under your chairmanship, Sir John. I thank the hon. Member for North East Fife (Wendy Chamberlain) for securing this important debate and shining a light on the problem, which I agree is systemic, and also for sharing the case of her constituent, Jackie, which is both worrying and heartbreaking. I want to reaffirm the Government’s unwavering commitment to driving up standards—we know we must do this—and to strengthening consumer protection and rebuilding public trust in home upgrades. On 23 January I informed the House of the discovery of widespread non-compliance in the insulation of solid wall insulation under the ECO4 and Great British insulation scheme. I am clear that blameless families have fallen victim to work that is not up to standard and which, if untreated, could lead to chronic issues of damp and mould spoiling their homes. This, for me, was a wake-up call and clearly shows that the system needs reform. Since then, we have taken clear and co-ordinated action to address the issues and protect affected households. I will set out the steps we have taken. As I set out in my statement to the House in January, as soon as my Department was made aware of the issues we worked at pace to establish an expanded programme of checks, which we have asked Ofgem to oversee. I am pleased to report that those checks have progressed quickly; where issues have been identified they are already being resolved. I encourage all households who are contacted to have an audit on their property to take up those checks, even if they do not think there is a problem. We are building up a comprehensive picture of the scale and size of the problem and I will update the House in due course. Our immediate priority was to protect consumers. Alongside the ongoing checks, we are implementing a comprehensive plan to remedy poor quality installations in accordance with the required standards. Where substandard work is identified, we have been clear that it is the installer’s responsibility to put it right at no cost to the household. Some 90% of the installations identified as not being up to standard have already been remediated, I am glad to say. We will continue to apply pressure on installers to take responsibility to fix the issues and not put the burden on individual consumers. If Jackie is struggling to get the system to respond in the way that it should, I will be happy for her to meet me and for us to take up that specific case. Beyond energy efficiency measures, we are also verifying the quality of installations of two microgeneration technologies—heat pumps and solar panels—that were installed under ECO4. Installers use the publicly available specification standard for energy efficiency, and a standard set by the microgeneration certification scheme for heat pumps and solar. The MCS has been carrying out additional site audits of the microgeneration installations. So far, we have not seen concerning evidence of consumer detriment, but we are completing further checks before we can be assured that there are no systemic problems in the installation of microgeneration technologies. If substandard work is found, the MCS makes installers put it right. It is very important that the people who get this wrong are not allowed to walk away. They must be the ones to remediate the problems. We were clear that we need further oversight of the system while we bring in bigger reforms, which I will come on to. The National Audit Office is undertaking an investigation into the issues with ECO4 scheme. We welcome that investigation and the insights it will bring. We have also taken steps to strengthen oversight of the wider consumer protection system, so that in the short term, while we bring in wider reforms, we stop problems happening. That includes the UK Accreditation Service increasing rates of inspection of certification bodies, and agreement with TrustMark that a senior Department for Energy Security and Net Zero official will attend its board in an advisory capacity, so that we keep a firm grip on issues as they arise. Certification bodies have agreed that installers will only be PAS 2030 certified for each measure by one certification body. The latest iteration of PAS 2035/2030 standards, which came into force on 30 March, introduced strengthened requirements to ensure high-quality installations. Energy suppliers have also strengthened their oversight of solid-wall insulation measures, so that there are additional audits and oversight of any measures brought forward. Those are all important, necessary short-term steps, but it is clear to me that there is a systemic problem. We recognise that and are very clear that we need to put it right. We inherited a situation of many organisations with different roles and responsibilities involved in ensuring the quality of retrofit activity, resulting in a fragmented and confusing system of consumer protections. To address that and to create a clear, more comprehensive set of standards for consumers, we are moving forward with reforms, which we will announce in our warm homes plan to be published in October. That plan will look at the entire of spectrum, including the training and the capacity building of installers, who are key. It will look at how installers who work in people’s homes are certified and monitored, and the quality assurance regime that we put in place. One insight we found was that capital schemes that tend to be overseen by local authorities and devolved Administrations have far fewer issues because of the level of quality assurance. The plan will also inform people where to turn for redress when things go wrong, making that as simple as possible. The situation where consumers have to jump through multiple hoops just to get things sorted cannot be allowed to continue. Guarantees must be in place to ensure that, when things do go wrong, consumers do not foot the bill, and work is remediated by the system.

I am grateful to the Minister for her response. It appears the Government do recognise the scale of the problem. Does she have anything to say about the worrying reports I received when preparing for this debate of people being forced to withdraw complaints before remedial work is carried out by companies? Is there anything we can do there?

I thank the hon. Member for raising that. We will take that away because that is unacceptable. We have been in regular touch with every part of the system since this issue came to light. We are talking to installers, certification bodies, TrustMark, the MCS and Ofgem. I will take that issue away and write to her. My final point on the reform agenda is that we clearly need a guiding mind overseeing the system. One reason we are in this bind is because we do not have that guiding mind. Let me reassure the hon. Member, who has spoken eloquently, passionately and with great insight about this issue time and again. the Government will take the decisive action that is necessary to protect the interests of consumers. It is essential to restore consumer trust, because we must take people on this journey of upgrading their homes, not just for our clean power mission but because that is the route to drive down bills and tackle the cost of living crisis. If people do not trust the system, do not trust that upgrades will be of the utmost standards and that, if things go wrong, they will be fixed, they will not come with us on that journey. I am clear that we take these issues seriously. We inherited them but they are ours to fix. We will put in place a reform agenda and, critically, for people who have been affected by ECO4, we are working hard to ensure that the system does what it needs to do—that is, when issues are identified, installers go in and certification bodies TrustMark and MCS do their job to ensure that it is remediated at no cost. In the short term, we are trying to fix the problem we inherited. Then we will draw a line and put in place a system that is fit for purpose so that we can build consumer trust. Question put and agreed to.

11:25:00