NAO Exposes Retrofit Failings While New Projects Showcase Hope

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A recent report from the National Audit Office (NAO) has sounded a stark warning for the government-backed retrofit programme under the Energy Company Obligation (ECO). It revealed that 98% of external wall insulation installations across approximately 22,000 to 23,000 homes suffer from major defects, with 6% posing immediate health risks such as damp, mould, or inadequate ventilation. Internal wall insulation fared better but still saw 29% defective and 2% presenting serious risks. Remediation rates remain low, with only 8% of external and 10% of internal cases fixed by September 2025. The estimated repair cost ranges from £5,000 to £18,000 for external works and £250 to £6,000 internally. In extreme cases, structural damage has cost homeowners over £250,000. The report also highlights suspected large-scale fraud, with potential wrongful claims of £56–165 million. These failures are attributed to fragmented governance spanning the Department for Energy Security and Net Zero, Ofgem, certification bodies, and energy suppliers with no single accountable entity. What this means:

What this means:
The NAO’s findings underscore deep systemic flaws in quality control and oversight within retrofit delivery, jeopardising public trust, expanding homeowners’ costs, and undermining net-zero ambitions. There is now an urgent need for DESNZ to enforce remediation and rebuild regulatory integrity.

Despite these setbacks, several retrofit initiatives are proving effective. In the London and South region, a retrofit project delivered by Abri and Low Carbon Exchange transformed over 150 homes, using a fabric-first approach that raised average Energy Performance Certificate (EPC) ratings to B and delivered almost 50% savings on energy bills. The project’s success stems from strong community engagement, post-upgrade evaluation, and sustainable delivery models that build green skills capacity. Meanwhile, Birmingham City Council’s SHDF programme supported by Equans retrofitted 300-plus homes, achieving at least EPC C across properties, with many reaching EPC A. Real-time energy monitoring via Switchee systems improved comfort and energy usage awareness among residents.

In social housing, Riverside is lining up a £72 million retrofit programme across 3,064 homes in locations including Liverpool, Carlisle, and London, backed by government funding from the Warm Homes: Social Housing Fund and matched by the association, continuing its mission to deliver warmer, more efficient homes.

Financial support is also emerging. Lewisham Council recently secured £7.1 million from DESNZ’s Social Housing Fund Wave 3 to retrofit up to 800 council homes, aiming to enhance energy efficiency, reduce costs, and improve tenant well-being while contributing to the borough’s goal of net zero by 2030.

Meanwhile, Nottingham City Council, as part of the Midlands Net Zero Hub, secured a £47 million bid to improve up to 4,226 social homes’ energy efficiency. Part of this funding nearly £600,000 is set aside for digital technologies such as sensors that monitor retrofit performance and identify issues like damp, future-proofing retrofit interventions.

On new-builds, construction firm Willmott Dixon was appointed to redevelop Speedwell House into a new net-zero operational office for Oxfordshire County Council. The 5,200 m2 project, set to begin construction in 2025 and completed in 2027, is central to the council’s plans to move services and catalyse Oxford’s West End regeneration.

Separately, the Future Homes Hub released its Embodied and Whole Life Carbon Options report in March 2025. The report helps builders assess embodied as well as operational carbon, reinforcing the need for bespoke calculations rather than oversimplifying material choices. In June 2025, the Hub launched a Biodiversity Net Gain Good Practice Guide to help the homebuilding sector navigate biodiversity obligations with clear instructions and professional insights.

The Hub also recently published the New Homes Sector Net Zero Transition Plan a collaborative framework for homebuilders, supply chain partners, and organisations to align on net-zero pathways. At launch, 35 leading UK homebuilders pledged to support sectoral decarbonisation through data sharing and coordination. An updated iteration of the plan is slated for early 2026 to enhance usability and relevance.

In education and research, the University of Salford’s Energy House Labs received a prestigious Queen Elizabeth Prize for Education. The lab’s advanced facilities simulate extreme weather conditions from –23 °C to 51 °C with wind, rain, snow, and solar gain offering vital data that accelerates the development of energy-efficient housing solutions.

Collectively, these developments reveal a sector grappling with delivery challenges while demonstrating pockets of effective action. Success hinges on improved governance, investment in evaluation, and collaboration to scale what works  from retrofit innovation to low-carbon new build frameworks and evidence-based approaches.

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