As the government cuts energy-efficiency schemes, it must ensure retrofit supply chains and jobs are protected

We know that the Warm Homes Plan is expected to plug some of this gap, but details have not yet been released and the funding that has been promised for reducing fuel poverty is only a fraction of what ECO provides. This leaves the energy-efficiency industry in limbo, uncertain of what its future looks like.

A consistent refrain from industry is the need for policy certainty. A clear path is required from the government, to give businesses the confidence to plan their next steps, including training needs and income streams.

When the Social Market Foundation interviewed heating installers, most of whom were sole traders or part of micro-businesses, many of them told us how difficult it was to adapt to sudden, cliff-edge policy changes like this, and how harmful it was to their business.

“Reducing the cost of electricity bills is crucial to making the switch to electric heating a more viable option for households”

The energy-efficiency supply chain, which is similarly made up of small businesses, now finds itself cut adrift, with thousands of jobs at risk.

The government had good motivations for cutting ECO. High energy bills have been a key driver of the cost of living crisis. Lower bills as a result of removing ECO costs will be a relief for many households.

Removing policy costs from bills has long been called for to make energy, and particularly electricity, cheaper. Reducing the cost of electricity bills is crucial to making the switch to electric heating a more viable option for households, as highlighted by the Climate Change Committee, as well as the Social Market Foundation.

The government has also probably been motivated by the poor implementation of the most recent iteration of ECO.

In October 2025, a report by the National Audit Office slammed ECO4 and the Great British Insulation Scheme for faulty installations. It found that poor government oversight, an overly complex consumer-protection scheme, and insufficient audit and monitoring contributed to poor-quality installations. Under ECO4, 98% of external wall insulation and 29% of internal wall insulation were found to be faulty, with up to 23,000 and 13,000 homes affected.

While the implementation of this particular scheme has been abysmal, and thousands of families are now suffering as a result, funding for energy efficiency and the workforce that provides it should not be thrown under the bus as a consequence.

“The concept of funding energy-efficiency improvements remains sound, but the delivery needs to have good oversight, simple processes and, crucially, a skilled workforce”

When energy-efficiency measures are installed appropriately and correctly, they work well. ECO4 has been the outlier, not the rule. Previous schemes have been much more successful at delivering quality retrofit.

Improving the energy efficiency of a home remains one of the best ways to reduce fuel poverty, and to do so for the long run. A home which, by its nature, is warmer and retains heat better reduces the demand for energy. The concept of funding energy-efficiency improvements remains sound, but the delivery needs to have good oversight, simple processes and, crucially, a skilled workforce.

We also expect that this skilled workforce will be instrumental in delivering the Warm Homes Plan. However, we do not yet know when the plan will take effect. There could be a gap of several months between the end of ECO and the start of the Warm Homes Plan. Such a gap and much more limited opportunities for work could be a real survival challenge for small businesses working on fine margins. Even for those better able to weather the uncertainty, it makes planning for the future and decisions over where where to invest their time, training and resources much more difficult.

Energy efficiency in the UK now supports over 80,000 jobs. ECO directly supported 10,000 jobs. The longer the uncertainty lasts, the more at risk these jobs will be.

After much delay, the government has said the Warm Homes Plan will be released by the end of 2025. For the sake of the industry, it cannot be delayed any further.

Niamh O Regan, senior researcher, Social Market Foundation