ECO4 scheme failing health-vulnerable households

Energy Systems Catapult-ScottishPower trial shows the need for reform to unlock health benefits of home retrofit policy

A new report published by Energy Systems Catapult reveals the UK’s Energy Company Obligation scheme (ECO4) is not reaching health-vulnerable people living in cold homes, despite being explicitly designed to help those people most at risk from fuel poverty.

The report, Making ECO Work for Health: Bridging the Gap Between Policy Intent and Delivery Reality, is based on a service trial delivered by Energy Systems Catapult in partnership with ScottishPower. The trial tested the feasibility of using ECO4 to fund retrofits for people whose health conditions are made worse by living in cold homes, using the Catapult’s Warm Home Prescription® model.

The trial confirmed that although ECO4 includes health-related eligibility routes on paper, the reality of delivery excludes many eligible residents due to cost caps, administrative burden, and a delivery model driven by commercial installer priorities.

Key findings

• Just four out of 42 (9.5%) surveyed homes qualified for a fully funded ECO4 retrofit due to misaligned funding rules and the whole-house approach.
• The average contribution required from residents was £17,850 – unaffordable for most vulnerable households.
• Unlinked or decentralised datasets make targeting eligible homes difficult for public sector bodies, leading to installer-led, profit-driven lead generation.
• Complex rules and admin-heavy procedures limit innovative health-centred delivery models.
• Scheme structure leads to target- and measures-driven delivery over health or consumer-centred outcomes.

Recommendations for ECO reform

The report sets out seven key policy reforms to unlock ECO’s potential to deliver for health, decarbonisation and poverty reduction:

1. Target interventions using local health and housing data
   Empower NHS and local authorities to identify and prioritise homes based on local needs.
2. Establish integrated data tools
   Link health, housing and welfare datasets to allow better targeting of eligible households.
3. Broaden criteria for fully funded jobs
   Reform funding rules to allow for more homes to qualify without requiring resident contributions.
4. Fund independent advice and wraparound support
   Embed advice, handholding, and follow-up into ECO delivery to support vulnerable participants.
5. Run ECO schemes over longer time periods
   Extend the scheme duration to build supply chain stability and reduce stop-start cycles.
6. Move from ‘cost savings’ to outcome-based metrics
   Shift away from narrow financial modelling towards measuring health and social outcomes.
7. Adopt a whole-systems approach to policy
   Align retrofit policy with health, housing, and care strategies to achieve cross-sector value.

Dave Johns, Design Practice Manager at Energy Systems Catapult, said:

“This trial exposed a significant gap between the policy goals of ECO4 and its operational reality. The scheme is failing to support those most at risk from cold homes – not because the need isn’t there, but because the structure of the programme makes it virtually inaccessible to them.

“For government to be successful in using retrofit to support health and tackle fuel poverty, urgent reform is needed to the funding mechanism, delivery model, and metrics.”