A government-backed effort to improve home energy efficiency across the United Kingdom has resulted in widespread construction failures, with tens of thousands of properties now facing potential health and safety hazards. A new report from the National Audit Office (NAO) revealed that two flagship insulation schemes—ECO4 and the Great British Insulation Scheme—were poorly executed, leading to damp, mould, and in some cases, serious structural damage.
The audit found that 98% of homes with external wall insulation installed under these programmes show signs of defects that could allow water to seep behind the insulation, eventually causing mould growth and rot. Nearly a third of homes that received internal wall insulation were also affected. These schemes, launched by the previous government in 2022, directed billions of pounds from energy companies—funded through consumer energy bills—toward improving insulation in low-income and poorly insulated homes.
Instead of improving energy efficiency, many households were left battling moisture and decay. Homeowner Mohammed Mahedi, who had external insulation installed at his Luton property two years ago, described his living conditions as “worse than before,” citing respiratory problems linked to mould and damp.
External wall insulation is designed to trap heat by fitting insulating boards to exterior brickwork, which are then sealed with render to protect against rain. When installed incorrectly, rainwater becomes trapped behind the insulation layer, damaging the structure and creating an environment for mould and rot.
In Luton and other towns, similar complaints have surfaced. Residents have reported dry rot spreading through their homes and insulation layers deteriorating beneath floorboards. The NAO has warned that if the problems remain unresolved, thousands of properties could suffer long-term damage, posing both financial and health risks to residents.