The shock Budget decision scraps the £1.3bn-a-year programme in March 2026, handing bill-payers a saving of around £48 while pulling vital funding from low-income homes and the SME contractors that deliver the work.
Around 5,000 homes a month currently receive measures through ECO4, which is funded by levies on energy bills rather than Treasury cash.
The Government’s current plan is to replace ECO4 with a new taxpayer-funded scheme called the Warm Homes Plan. This was planned to start in April this year but has been delayed.
Industry leaders warned the cut creates a cliff-edge that threatens around 10,000 specialist jobs across insulation, solar and retrofit SMEs.
Anna Moore, CEO and founder at consultancy Domna, said extending ECO4 for 12 months would protect capacity while the successor Warm Homes Plan is finalised.
She said: “It makes sense to streamline grants and increase oversight.
“The Warm Homes Plan is a welcome initiative. However, suddenly yanking £1.3 billion in funding is chaotic, and has created a cliff edge for thousands of low-income households in fuel poverty as well as SMEs employing some 10,000 people.
“Companies cannot simply be switched back on later like a light switch and the ramifications of this could massively undermine our wider battles to fight climate change and upgrade our ageing housing stock.”
Installers warned they will start shutting down operations without clarity on when the replacement scheme will begin.
Joel Pearson, director at Newcastle-based solar installer Net Zero Renewables, said: “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 so we can see an orderly transition.”
Preston-based Eco Approach said the move risks abandoning thousands of vulnerable households left waiting for upgrades.
Managing director Lee Rix said: “Each year our 150-plus staff and supply chain use ECO4 funding to make cold, inefficient homes safer and more affordable for thousands of families in fuel poverty.
“With no transition plan, ending ECO4 risks leaving those families abandoned and undermining the workforce that supports them – we urgently need clarity on a successor scheme.”
