Chancellor Rachel Reeves this week announced the scrapping of scheme that impose a levy on gas and electricity bills to fund energy-saving improvements to damp and draughty homes.
From 1st April 2026, with the Energy Company Obligation axed, the Treasury reckons that households in England, Scotland and Wales will see their energy bills reduced by 拢150 a year on average.
Good news, right?
Not everyone thinks so, given that the replacement scheme is not yet in place.
The closure of the ECO scheme 聽risks a collapse in the retrofit supply chain,聽it is argued, and will leave hundreds of thousands of UK households without energy efficiency upgrades, and hundreds of SMEs fearing closure.
The ECO scheme installs energy saving measures in approximately 5,000 homes a month and delivers 拢1.3bn a year in home improvement works.聽The government plan is to transfer the work currently carried out through ECO to its Warm Homes Plan, a new scheme, the funding for which was this week increased by 拢1.5bn to 拢14.8bn.
However, the Warm Homes Plan was due to start in April this year but has been delayed and remains in limbo.
The retrofit industry would prefer the see the Warm Homes Plan up and running before ECO is ended to prevent a crippling hiatus.
Anna Moore, McKinsey鈥檚 former head of UK construction and now a founder at Domna, a retrofit company working with major housing associations, social landlords and councils to upgrade thousands of homes, is calling for ECO to be extended for at least 12 months to ensure an orderly transition. Moore wants cash to be ring-fenced for low-income households and is writing to energy secretary Ed Miliband to request a greater level of joined-up thinking in government.
Joel Pearson, director at Net Zero Renewables, a Newcastle-based solar panel installer, said:
鈥淲e 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.鈥�
Lee Rix, managing director at Eco Approach, a Preston-based installer, said: 鈥淓ach year our 150+ staff and supply chain use ECO4 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 鈥� we urgently need clarity on a successor scheme.鈥�
Anna Moore, chief executive and founder at retrofit consultancy Domna, said: "It makes sense to streamline grants and increase oversight. The Warm Homes Plan is a welcome initiative. However, suddenly yanking 拢1.3bn in funding is chaotic, and has created a cliff edge for thousands of low-income households in fuel poverty as well as SMEs employing some 10,000 people. With fuel poverty growing and business under pressure, it beggars belief that a successful scheme funnelling utility firm funding to the poorest households in society should be brutally cut. And for what? To create a few short-term headlines around cutting net zero levies.
"This fundamentally goes against Labour鈥檚 stated values of wanting to help the poor and to fight climate change. This is not the moment to pull up the ladder. Bridging ECO to the Warm Homes Plan is essential if we are to protect residents, protect jobs and protect progress. Right now, we risk losing the installers, coordinators and surveyors 鈥� those SMEs who have built up capability over a decade, and whose expertise we critically need. Companies cannot simply be switched back on later like a light switch and the ramifications of this could massively undermine our wider battles to fight climate change and upgrade our ageing housing stock.
"We need clarity and continuity. 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."
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