Serious Fraud Office has arrested four people in connection with alleged fraud on failed ECO 4 scheme
The Serious Fraud Office has launched an investigation into three businesses suspected of defrauding energy companies of at least £44m of public money through a failed government retrofit scheme.
Cannock-based Warmfront, Sheffield-based JJ Crump, and Fareham-based South Coast Insulation Services are all under investigation by the SFO in connection with projects on the ECO4 scheme between 2022 and 2024.
It comes four months after the Public Accounts Committee (PAC) called for the SFO to investigate the failure of the scheme and the parallel Great British Insulation Scheme, which were found by the National Audit Office (NAO) to have a failure rate of 98%.
Almost all homes fitted with external insulation under the schemes need repairs to fix issues including damp and mould in what PAC chair Geoffrey Clifton-Brown described as the most “catastrophic fiasco” he had seen in 12 years of sitting on the committee.
The NAO’s report also uncovered evidence of widespread suspected fraud, with energy regulator Ofgem estimating businesses had falsified claims for installations in up to 16,500 homes.
The SFO said its investigation is focusing on allegations that the three firms were involved in a “sophisticated conspiracy across the country to undermine a government scheme by submitting claims where little or no work was undertaken”.
Working with the National Crime Agency, the SFO has arrested four people on suspicion of conspiracy to defraud, searching four homes in Cannock, Wolverhampton, Chilworth, and Southwell as part of the UK-wide Operation Henhouse.
Two commercial sites were also searched at Cannock and Killamarsh.
SFO director Graham McNulty said the ECO 4 scheme was designed to reduce carbon emissions and help households cut costs but “instead in many cases we suspect little or no work was done”.
McNulty said the office would like to hear from installers and assessors who worked on these contracts and “know what really happened”, adding: “Our door is open, and coming forward is the right thing to do.”
Solicitor general Ellie Reeves KC MP said: “This scheme was meant to tackle fuel poverty and improve people’s homes. Instead, the Serious Fraud Office is investigating claims £44m in public money was paid to companies that allegedly did little more than submit false invoices for work they failed to carry out.
“I am sickened by those who want to profit off the back of a scheme designed to help vulnerable people, and I’m confident the SFO’s investigation into allegations of substantial fraud will deliver the answers victims and the public deserve.”
Warmfront was sold in 2024 and now trades under new management not connected to this investigation, according to the SFO.
Warmfront, JJ Crump and South Coast Insulation Services have been contacted for comment. South Coast Insulattion Services went into administration earlier this year with PwC appointed as administrators in February.
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