Thousands of skilled workers face redundancy and low-income households risk spending winter in cold, damp homes following sudden cuts to a vital insulation scheme, industry experts have warned.
Funding Withdrawal Creates Crisis
The climate thinktank E3G estimates that 10,000 skilled jobs could be lost across the retrofit sector after Chancellor Rachel Reeves announced the termination of the £1.3 billion Energy Company Obligation (ECO) scheme. This workforce reduction would be roughly equivalent to the entire employment at Jaguar Land Rover's Solihull plant.
In her recent budget, Reeves pledged to cut £150 annually from average energy bills, partially funded by axing the ECO programme that supported insulation and heat pump installations for households earning under £31,000. The scheme is scheduled to conclude in March, despite the government's replacement "warm homes plan" experiencing significant delays.
Businesses and Households Face Immediate Impact
Small and medium-sized retrofit companies are already feeling the effects, with funding for solar panels and insulation being withdrawn immediately. Anna Moore, former head of UK construction at McKinsey and founder of retrofit company Domna, has written to Energy Secretary Ed Miliband requesting urgent intervention.
"Suddenly yanking £1.3bn in funding is chaotic, and has created a cliff edge for thousands of low-income households in fuel poverty as well as small and medium enterprises," Moore stated. She revealed that funders have already begun pulling support, with approximately 1,500 homes having insulation or solar installations paused just before Christmas during a cold snap.
Industry Leaders Demand Action
Joel Pearson, director at Net Zero Renewables, emphasised the human impact: "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."
Preston-based installer Eco Approach, which employs over 150 staff, also expressed concern. Managing director Lee Rix warned: "With no transition plan, ending ECO4 risks leaving families abandoned and undermining the workforce that supports them."
Scheme Legacy and Future Concerns
Despite some controversies around faulty external wall insulation affecting approximately 23,000 properties, the ECO scheme has delivered retrofits to more than 15 million homes since 2013, generating estimated energy bill savings of £110 billion.
The current cuts are expected to affect around 222,000 future retrofit projects that would have reduced bills for vulnerable households. Experts fear this will exacerbate fuel poverty as insulation and solar installations typically lower energy costs significantly.
A Department for Energy Security and Net Zero spokesperson defended the decision: "The ECO and great British insulation schemes were not delivering value for money. We are instead investing an additional £1.5bn into our warm homes plan, taking it to nearly £15bn."
However, industry professionals argue that without a clear transition plan and immediate extension, both jobs and household warmth remain at serious risk as winter approaches.
