Regional energy retrofit specialists are warning of a looming supply-chain crisis following the Government’s decision to scrap the £6.5bn ECO4 programme. The scheme, which targets damp, mouldy and draughty homes occupied by the poorest households, is due to end in March 2026, removing around £1.3bn a year from the market.
ECO4 is currently funded through levies on energy bills rather than Treasury spending, with around 5,000 homes a month receiving measures under the programme. The Budget move is expected to save bill-payers about £48 a year, but contractors say it will strip vital support from low-income households and the SME firms that deliver upgrades.
Ministers plan to replace ECO4 with a taxpayer-funded Warm Homes Plan, originally scheduled to launch in April this year but now delayed. Industry leaders argue that the gap between schemes creates a cliff-edge for the retrofit sector, threatening around 10,000 specialist jobs across insulation, solar and wider retrofit supply chains.
Anna Moore, CEO and founder of consultancy Domna, said a 12‑month extension to ECO4 would help preserve capacity while the Warm Homes Plan is finalised. She welcomed efforts to streamline grants and improve oversight but warned that suddenly removing £1.3bn in funding is “chaotic” and risks undermining efforts to tackle fuel poverty, climate change and the UK’s ageing housing stock.
Moore stressed that retrofit businesses cannot simply be “switched back on later like a light switch” once a new scheme is ready. She cautioned that the loss of skilled SMEs could have long-term consequences for delivery of future decarbonisation and housing upgrade programmes.
Installers on the ground say they will be forced to scale back or shut operations without clear timelines for the replacement scheme. Joel Pearson, director at Newcastle-based solar installer Net Zero Renewables, said his firm employs and subcontracts more than 35 skilled workers and has helped lift over 200 homes out of fuel poverty through ECO.
Pearson urged Chancellor Rachel Reeves to reconsider and at least extend ECO4 by a year to allow an orderly transition. He warned that without continuity, the sector faces a disruptive stop-start cycle that will deter investment in skills and capacity.
Preston-based Eco Approach also raised concerns that thousands of vulnerable households could be left in limbo. Managing director Lee Rix said more than 150 staff and supply-chain partners rely on ECO4 funding each year to make cold, inefficient homes safer and more affordable for families in fuel poverty.
Rix warned that ending ECO4 with no transition plan risks abandoning those households and destabilising the workforce that supports them. He called for urgent clarity on the design and timing of the successor scheme to avoid a damaging break in delivery.
