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Installers will ‘fall off a cliff’ after Reeves axes £6.5bn retrofit scheme

News28.11.2510.35 AM by James Riding

Retrofit installers have warned that their sector will “fall off a cliff” after chancellor Rachel Reeves axed a £6.5bn energy efficiency scheme.

The Energy Company Obligation scheme delivers green upgrades in 5,000 homes a month (picture: Alamy)

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Installers will ‘fall off a cliff’ after Reeves axes £6.5bn retrofit scheme #UKhousing

Retrofit installers have warned that their sector will “fall off a cliff” after chancellor Rachel Reeves axed a £6.5bn energy efficiency scheme #UKhousing

The chancellor revealed in the Autumn Budget on Wednesday that the government will end the Energy Company Obligation (ECO) scheme, which funds upgrades for homes owned or rented by low-income households, in March 2026.

Ms Reeves said ending the scheme would save households £59 a year on their energy bills, since it is currently funded by energy companies through levies on customers. She added that the government will set out a replacement retrofit scheme in its forthcoming Warm Homes Plan.

However, retrofit bosses urged the chancellor to extend the ECO scheme for 12 months to smooth the transition and support installers.

She continued: “Extending ECO by one year allows an orderly transition while the Warm Homes Plan is finalised, piloted and mobilised. Without that extension, the sector falls off a cliff in March 2026 and we will be rebuilding capacity from scratch at exactly the moment the government needs to accelerate delivery.”

ECO currently installs green upgrades in 5,000 homes a month and delivers £1.3bn a year in energy efficiency works. It would have delivered £6.5bn of investment over this parliament by upgrading 288,000 homes.

Joel Pearson, director at Net-Zero Renewables, a Newcastle-based solar panel installer, said: “We employ and subcontract over 35 skilled individuals and have helped take more than 200 homes out of fuel poverty through the ECO scheme.

“I would urge Rachel Reeves to think again and to at least extend this existing scheme by a year so we can see an orderly transition and support firms like ours helping to mitigate climate change.”

Lee Rix, managing director at Eco Approach, a Preston-based installer, said: “Each year our 150+ staff and supply chain use ECO4 [latest iteration of ECO] funding to make cold, inefficient homes safer and more affordable for thousands of families in fuel poverty.

“With no transition plan, ending ECO4 risks leaving those families abandoned and undermining the workforce that supports them. We urgently need clarity on a successor scheme.”

The ECO scheme has faced fierce criticism in recent months after the National Audit Office found “widespread quality failings” and possible fraud in the programme.

According to the watchdog, 98% of external wall insulations fitted through the scheme – up to 23,000 homes – require remediation, with 6% posing health and safety risks such as damp and mould.

Since the problems emerged, officials have suspended 38 installer businesses from the scheme (21 of which were later reinstated) and set up a dedicated helpline for affected households.

The government has said it will apply lessons from ECO to its forthcoming Warm Homes Plan.

Last year, Inside Housing reported that residents in Burnley, Lancashire, faced damp and mould and tens of thousands of pounds in legal fees after a series of claims around botched cavity wall insulation collapsed.