Four design recommendations for the UK government’s new fuel poverty scheme
www.nesta.org.uk/blog/four-design-recommendations-for-the-uk-governments-new-fuel-poverty-scheme/
www.nesta.org.uk/blog/four-design-recommendations-for-the-uk-governments-new-fuel-poverty-scheme/
A version of this was originally published by Utility Week.
The gap between how a policy works on paper and how it plays out on the ground can often be vast. I saw this play out right on my street.
The first warning came through my local WhatsApp group when it was flooded with messages warning of a stranger knocking on doors, offering a dodgy-looking energy service, and asking to inspect houses without proper credentials. It looked, to everyone, like a scam.
When the knock came on our door, I was met by someone holding a poorly photocopied sheet adorned with several different major energy companies’ logos, offering a new free boiler. This generous offer seemed suspicious without more explanation.
It turned out that this wasn't a scam at all. This person was genuinely trying to recruit people for the UK’s flagship home retrofit scheme: the Energy Company Obligation (ECO). This brief encounter is the first point of contact most households get. On paper, the scheme was functioning as designed; the problem is that it had been designed badly.
ECO, funded by a levy on energy bills, aimed to tackle fuel poverty and carbon emissions by funding energy suppliers to upgrade the energy efficiency of the country’s coldest, leakiest homes. But the National Audit Office (NAO) uncovere huge failures in how ECO4 - the latest iteration of the scheme - has been delivered. This isn’t just a failed policy, it’s a failure of design. A scheme intended to help people was launched without a credible starting point for households, without enough testing and without a realistic plan for how delivery would work in practice.
In last week's budget, the Chancellor took the decision to abolish the ECO scheme from April 2026. Instead, £1.5 billion over three years (averaging £500 million per year) has been added to the Warm Homes Plan to compensate for the loss of the ECO levy.
Funding to upgrade fuel poor homes remains critical, but it must deliver good outcomes for people. While this is a much smaller amount - and additional funding is likely needed in addition to £1.5 billion - it gives the opportunity for the UK government to develop a more effective, albeit much smaller, scheme for upgrading fuel poor homes.
To do that, the design of the scheme needs to learn the lessons from ECO’s failure, and focus on delivery as much as policy.
Ofgem reports that 304,500 homes were upgraded through ECO4 and the Great British Insulation Scheme from April 2022 to March 2025 - upgrades worth £4.2 billion. A significant share of funding went on external and internal wall insulation, that was put in 28,000 and 45,200 homes respectively.
The mix of measures installed through ECO over time
A grouped stacked bar chart titled "Heat and fabric measures through ECO over time," showing the annual number and type of energy efficiency installations from 2013 to 2025. Total installations peaked around 800,000 for both heat and fabric measures in 2013-2014, dominated by boilers and solid wall insulation. The chart shows a substantial decline in the total volume of measures installed in later years, with the mix shifting towards measures like loft insulation (fabric) and a smaller proportion of boilers (heat).
The reality of many of these installations was revealed by the NAO’s report, with 98% of homes fitted with external wall insulation under the scheme having major issues requiring repair or replacement. Households were left with damp, mould and new structural issues. In some cases, they faced immediate and severe health and safety risks. While poor retrofitting workmanship sadly isn’t new, the scale of failure here is unprecedented, and concentrated entirely on work done since 2022.
Ultimately, the underlying causes behind these failures were systemic, including:
These issues are bound to happen when the policy is well-intentioned, but you don't design it around the reality of delivery and end users.
Beyond issues with sign-ups that I experienced first-hand, the NAO report explains why a complex policy led to failures.
No one was truly in charge, with an "overly complex consumer protection system" that ultimately failed due to "unclear and fragmented roles, responsibilities and accountabilities" among the Department for Energy Security and Net Zero (DESNZ), Ofgem and private certification bodies. The scheme also had "no specific requirements on energy suppliers for the quality of the retrofitting they pay for." Energy suppliers met their obligation by achieving installations, not by ensuring improvements in the quality of life of residents. And the consumer protection system was designed to operate at arm’s length from the government, leading the government to "assume the system was working" right up until thousands of homes were damaged.
Meanwhile, households faced months of disruption and abandonment. As one resident put it: “The installation took over a year with two reworks. We were left for the winter without central heating. We had to seek alternative accommodation for over eight weeks which we have not been fully compensated for.”
The failures detailed above show why a fundamental retrofit programme redesign is needed: one that delivers for people that critically need support and that represents real value for money.
That means integrating policy design with delivery expertise together from the start. As well as taking responsibility for, and assessing, the whole experience for end users.
As we’ve said before, home energy improvements are a complex challenge, and it needs a public design approach. This means utilising design and delivery skills to close the gap between good intentions and what actually happens on the ground. The real challenge is designing policies and services that truly work in practice.
Future programmes must start with a clear understanding of user needs and how these are met through delivery, a recommendation echoed by the Energy Systems Catapult. This requires a shift from viewing the policy as a funding mechanism to seeing it as a public service that people interact with to make their homes warmer and more energy efficient.
That means designing the touchpoints and user experience from start to finish, so it feels safe and trustworthy, and key moments such as sign-up or complaint handling aren’t left to unknown companies turning up unannounced on doorsteps. By taking an end-to-end view of the service, policy teams should also better understand the systems, organisations and processes needed to deliver this successfully rather than leaving these to arms lengths bodies.
The problem of fragmented roles across DESNZ, Ofgem and contractors could be avoided by creating combined teams responsible for both the development of the policy and its delivery from the outset. While these may span different organisations, they should have joint accountability for the programme’s success and have the power to make changes when it’s not working.
An NAO audit three years later is not an effective feedback loop, instead it acts as a post-mortem. The failure of ECO is partly due to policymakers relying on untested assumptions about how the certification system and private sector would operate, and simply assuming the system was working. Policy teams must acknowledge where they have gaps in knowledge and test assumptions early, before they fail on a bigger scale.
This requires an approach similar to the development of modern digital services and is increasingly being used elsewhere in government such as the test, learn and grow programme - putting a dedicated team in charge, giving them the licence to adapt and empowering them to iterate on what’s working. Our test and learn playbook for government has more on this.
The metrics by which ECO was judged, such as bill savings and number of homes upgraded, are not sufficient to determine success of the policy. Work needs to also be aligned around delivering successful outcomes, such as comfort and verified quality. When you measure the right things, you hold yourself accountable for the long-term impact on people's lives, not just the speed of deployment.
The UK government’s decision to scrap ECO and instead allocate £1.5 billion for another fuel poverty scheme represents a reduction in overall spending on fuel poverty. But it also creates the opportunity to build something far more effective that ECO4 ever was.
This is not a moment to retreat from the mission to create warm, energy-efficient homes. It’s an opportunity to support those in urgent need with a programme that is well designed, well delivered and genuinely works in practice. By better linking policy and delivery, we can move past complex, fragmented schemes that benefit contractors and towards coherent services that genuinely serve the public.
That's why we’re actively working to spread and practice public design as a practical way to do policy development and delivery together. Our work around clean heat neighbourhoods is one example. We’d love to learn from and support public sector teams interested in bridging the policy-to-deliver gap through public design. Get in touch with us by emailing [email protected] or [email protected].
