MPs advised the SFO to investigate the insulation controversy
A serious failures in a government insulation scheme was identified by the House of PAC. This plan was aimed at reducing household heating bills. At every level of plan a problems were found. MPs believe that more than 30,000 homes received defects not only due to incompetence. Also, it may be a result of widespread fraud. But what exactly did the new report reveal, and how will this affect the UK construction industry in the future?
The main source: Faulty energy efficiency installations
What is the reason for that situation?
Last year, the National Audit Office found that 98% of external wall insulation and 29% of internal wall insulation were defective, posing direct health and safety risks. It was installed by mid-January 2025 under the Energy Company Obligation (ECO) scheme.
Given the likely role of fraud identified by the PAC in the poor-quality installations. The report also takes the unusual step of recommending that the government refer the matter to the Serious Fraud Office (SFO).
Installations worth 1.75% of the scheme’s value were identified by Ofgem as fraudulent. But the PAC suspects that the true level of fraud is far higher. It`s due to the high level of non-compliance across the scheme. No single organisation within the system held overall responsibility for tackling fraud or for holding the data that would allow it to do so effectively.
How will insulation controversy influence the building industry in the future?
The PAC investigation sets out a picture of clear systemic failure. Senior officials at the DESNZ paid little attention to the issue and took two years to recognise the scale of the problem.
This very poor overall oversight led to many faulty installations that could have been avoided. The quality assurance and consumer protection system was overly complex and almost doomed to fail.
Fencyx, as one of the leaders of the UK building industry, is closely monitoring this situation. We hope that the government will conduct a fair investigation and take the necessary actions to ensure that similar situations do not recur in the future.