I beg to move,
That the Committee has considered the draft Electricity and Gas (Energy Company Obligation) (Amendment) Order 2025.
The draft order was laid before the House on 11 June 2025. This Government are committed to delivering warmer homes that are cheaper to heat. That is not just a slogan—although I say it quite a lot—but a necessity for millions of households across the country.
At the heart of that mission is our warm homes plan, a bold, long-term strategy to cut energy bills, tackle fuel poverty and strengthen our energy security. I am proud that the plan has been backed by £13.2 billion of investment by the Chancellor. The funding will support the roll-out of solar panels, heat pumps, batteries and insulation to reduce bills and tackle fuel poverty. To deliver that ambition, however, we must ensure that existing schemes are working as hard as they can for the people who need them most. That is why we are introducing this draft statutory instrument.
The energy company obligation, ECO4, and the great British insulation scheme, GBIS, have been a key part of the effort to upgrade homes across the country. They impose obligations on the larger energy suppliers to achieve annual bill savings for households by upgrading the energy efficiency of their homes. The draft instrument introduces important changes to improve the performance of the schemes for their duration. The legislation makes targeted, practical changes to both ECO4 and GBIS. Those changes will enable suppliers to meet their obligations, while maintaining high standards and delivering better outcomes for consumers.
The most significant change is to allow up to 75% of an energy supplier’s GBIS target to be met through reassigned ECO4 delivery. That is not just moving the goalposts; it is the most pragmatic approach to enable energy suppliers to meet their GBIS targets while maximising bill savings for households and the number of homes treated within the original GBIS cost envelope. In reassigning bill savings from ECO4 to GBIS, we will apply a conversion factor to enable GBIS to come in on time, on target and on budget.
Crucially—I stress this—the changes will not increase consumer bills. They use existing funding already accounted for under the Ofgem price cap. There is no additional cost to households. If we did not act, the GBIS scheme would severely underdeliver and thousands of households would miss out on crucial energy efficiency upgrades.
Alongside that, we are making other important improvements: updating technical standards to reflect the latest best practice; enabling more flexible combinations of insulation measures, especially for low-income households; and encouraging smart meter uptake, helping people to take control of their energy use. The changes are not just administrative; they are essential to meeting our fuel poverty target to ensure that as many fuel-poor homes as reasonably practicable reach an energy efficiency rating of band C by 2030. The changes also support the continuity of the energy efficiency supply chain, protect value for money for bill payers and ensure that the benefits of the energy transition are shared fairly.
I now turn to the critical issue of consumer protection. On 23 January, I informed the House of the discovery of widespread non-compliance with industry standards in the installation of solid-wall insulation under the ECO4 and GBIS schemes. As soon as my Department was made aware of the issues, we worked at pace to establish an expanded programme of checks, which I asked Ofgem to oversee. I am pleased to report that those checks have progressed quickly and, where issues have been identified, they are already being resolved.
Alongside the checks is a comprehensive plan to remedy any poor-quality installations. Where substandard work is identified, it is the installer’s responsibility to put it right at no cost to the consumer. I am pleased to report that, as of last month, 90% of all the issues identified as being not up to standard at the time that I was alerted to this matter had already been fully remediated. We need to do a huge amount more to reach the standards that we want across industry and to do the key job of ensuring and maintaining consumer confidence, but we are absolutely committed to doing what is necessary.
We inherited a situation in which many organisations with different roles and responsibilities are involved in assuring the quality of retrofit activity, which results in a fragmented and confusing system of protection for consumers. We are pressing ahead with large-scale reforms through our warm homes plan, which we are committed to sharing in October. Members can be assured that the draft order will enact important changes to ECO4 and GBIS so that they can continue effectively to deliver warmer homes that are cheaper to heat.