An explosive National Audit Office report has laid bare the collapse of quality control in Britain’s home insulation retrofit programmes, revealing that almost all external wall insulation fitted under government schemes suffer serious faults.

The government’s auditors warn of widespread shoddy workmanship, safety risks and suspected fraud.

The watchdog found 98% of installations need remediation, warning that the £4bn drive to tackle fuel poverty has instead left many homes unsafe, damp and uninhabitable.

The investigation found that nearly all properties with external wall insulation – an estimated 22,000 to 23,000 homes – have major issues requiring remediation. A further 29% of homes with internal wall insulation also need repair work.

The failings stretch across Great Britain and include homes where poor workmanship has led to damp, mould, and in extreme cases, electrical hazards and fire risks.

The audit revealed 6% of external insulation jobs pose immediate health and safety risks, while 92% have serious performance issues that undermine insulation and risk water ingress.

So far, only 2,934 homes – less than 10% of those affected – have been fully remediated, leaving thousands of households still living with potentially unsafe or ineffective insulation.

Remediation costs range between £5,000 and £18,000 per property for external wall insulation and up to £6,000 for internal wall work. In the worst case uncovered, damage caused by botched installations cost more than £250,000 to put right.

The NAO said the Department for Energy Security & Net Zero (DESNZ) designed an overly complex assurance system that left ministers with little oversight or control.

Quality control was delegated to TrustMark, certification bodies and energy suppliers, creating what the NAO called “unclear and fragmented responsibilities” that allowed systemic failures to go unchecked for years.

Ofgem only became aware of the scale of non-compliance in late 2024 after media reports of homes blighted by damp and mould.

The NAO concluded that DESNZ and Ofgem were slow to detect both fraud and widespread substandard work, and that government leaders had “assumed the system was working” despite repeated early warnings.

TrustMark also uncovered suspected fraud worth between £56m and £165m, involving falsified claims for work on between 5,600 and 16,500 homes. The NAO said the full scale remains unknown because DESNZ and Ofgem do not have reliable data or clear accountability for tackling fraud.

The watchdog said the consumer protection and quality assurance regime introduced in 2021 ultimately failed, with too few audits, inadequate funding for TrustMark, and a workforce lacking the skills to deliver compliant work.

DESNZ has promised reforms through its forthcoming Warm Homes Plan, but the NAO warned the department must first “ensure that all affected homes are remediated as quickly as possible and that this cannot happen again.”

The report recommends DESNZ publish annual data on fraud and non-compliance, take full ownership of consumer-funded schemes, and establish clear accountability for quality and remediation.

The NAO said the findings expose “clear failings in the design and set-up of ECO4 and GBIS,” adding: “Consumers were not protected, quality was not assured, and government had limited means to intervene once things went wrong.”