Understanding ECO Schemes: The Foundation
The Energy Company Obligation (ECO) is a UK government energy efficiency scheme that requires larger energy suppliers to deliver energy efficiency measures to domestic premises. Launched in 2013, the scheme has evolved through multiple phases, with ECO3 and ECO4 representing the most recent iterations.
The fundamental purpose remains consistent: reduce carbon emissions, tackle fuel poverty, and help vulnerable households heat their homes affordably. However, the approach, funding, and standards have transformed dramatically between ECO3 and ECO4.
Key Insight
ECO4 represents a paradigm shift from "helping many households moderately" (ECO3) to "transforming fewer households completely" (ECO4). The focus moved from volume to impact.
What Was the ECO3 Scheme? (2017-2022)
ECO3 ran from September 2017 to March 2022, representing the third phase of the Energy Company Obligation. With a total budget of £640 million spread across approximately 5 years, ECO3 aimed to support around 128,000 households with energy efficiency improvements.
ECO3 Key Characteristics:
Broader Eligibility
ECO3 had relatively broad eligibility criteria, including various benefits recipients and some middle-income households through flexible eligibility routes.
Boiler-Focused
The primary focus was replacing old, inefficient boilers with new condensing models, often without comprehensive insulation measures.
Lower Budget
With £640 million total funding, average support per household was approximately £5,000, limiting scope for comprehensive retrofits.
Basic Standards
Quality standards were less rigorous, with typical 1-2 year warranties and no mandatory whole-house assessments.
While ECO3 helped many households, industry feedback revealed limitations: installations were often piecemeal (boiler only, no insulation), quality varied significantly, and the funding per household wasn't sufficient for comprehensive energy efficiency improvements. These shortcomings directly informed ECO4's design.
What is the ECO4 Scheme? (2022-2026)
ECO4 launched on April 1, 2022, and runs until March 31, 2026. With a massive £4 billion budget, ECO4 aims to support 450,000+ households with comprehensive, whole-house energy efficiency retrofits—a fundamental shift from ECO3's approach.
ECO4 Revolutionary Changes:
Massive Funding Increase (525%)
£4 billion total budget allows for comprehensive retrofits averaging £9,000-£15,000 per household, enabling meaningful, long-term energy efficiency improvements combining heating and insulation.
Whole-House Approach
Mandatory whole-house assessments ensure installations address the property holistically: insulation (loft, cavity wall, solid wall) + heating + ventilation. No more "boiler-only" installs.
Stricter Quality Standards
PAS2035/2030 accreditation mandatory, A-rated boilers only, TrustMark lodgment required, minimum 5-year guarantees, and independent quality audits ensure professional, lasting installations.
Targeted Eligibility (Low-Income Focus)
ECO4 prioritizes vulnerable households on benefits OR low-income families (under £31,000 via LA Flex). Properties must have EPC ratings D-G, focusing resources on worst-performing homes.
Expert Opinion
"ECO4 is genuinely transformative. I've assessed households who received basic ECO3 boiler replacements in 2021, only to see their bills remain high due to poor insulation. ECO4's whole-house approach solves this—one installation, comprehensive improvement, lasting savings." — Hamza Moeen, ECO4 Analyst
Key Differences: ECO3 vs ECO4 Comparison
Let's break down the critical differences between ECO3 and ECO4 across key dimensions that matter most to UK homeowners:
| Aspect | ECO3 (2017-2022) | ECO4 (2022-2026) |
|---|---|---|
| Total Funding | £640 million | £4 billion (6x increase) |
| Duration | 5 years (2017-2022) | 4 years (2022-2026) |
| Households Supported | ~128,000 | ~450,000+ |
| Average Support Value | ~£5,000 per home | ~£9,000-£15,000 per home |
| Eligibility Focus | Broader, less strict | Strict: Benefits OR low-income (£31k) |
| Installation Approach | Single measure (boiler only) | Whole-house (insulation + heating) |
| Boiler Efficiency | Condensing (85%+) | A-rated only (90%+ efficiency) |
| Quality Standards | Basic Gas Safe certification | PAS2035/2030 + TrustMark mandatory |
| Typical Warranty | 1-2 years | Minimum 5 years |
| Pre-Install Assessment | Basic boiler assessment | Mandatory whole-house survey |
| Average Annual Savings | £400-£500 | £700-£1,000+ |
| EPC Requirement | None (any EPC rating) | EPC D-G mandatory (worst homes) |
Funding and Budget: ECO4's Massive Increase
The 525% funding increase from ECO3 to ECO4 represents the single most significant improvement in the scheme's evolution. This isn't just an incremental change—it's a complete reimagining of what government energy efficiency support can achieve.
£640M
ECO3 Total
5 years (2017-2022)
£4B
ECO4 Total
4 years (2022-2026)
525%
Increase
6.25x more funding
What This Funding Increase Enables:
Comprehensive Retrofits: Average £9,000-£15,000 per household allows for A-rated boilers + full loft insulation + cavity wall insulation + ventilation improvements in a single installation.
Solid Wall Insulation: Previously prohibitively expensive (£8,000-£12,000), solid wall insulation is now viable for ECO4 households, transforming pre-1930s properties with single-brick walls.
Premium Equipment: Funding supports Worcester Bosch, Vaillant, and Ideal boilers with 10-year manufacturers' warranties, smart controls, and extended installer guarantees.
More Households: Despite higher per-household spending, ECO4 supports 450,000+ homes vs ECO3's 128,000—true scale transformation.
Eligibility Changes: Who Qualifies Now?
ECO4's eligibility represents a strategic narrowing: instead of casting a wide net to help many households moderately (ECO3), ECO4 focuses intensive support on those who need it most—low-income and vulnerable households living in the UK's worst-performing properties.
Critical Change: Income Verification Now Required
Unlike ECO3, which accepted self-declarations, ECO4 requires documented proof of benefits OR verified household income under £31,000 through LA Flex. This stricter verification ensures funding reaches genuinely eligible households.
ECO4 Eligibility Routes (2025):
If you receive ANY of these benefits, you automatically qualify for ECO4:
- Pension Credit (Guarantee or Savings)
- Universal Credit
- Income-based JSA
- Income-related ESA
- Income Support
- Working Tax Credit (with income ≤£18,000)
- Child Tax Credit (with income ≤£18,000)
- Child Benefit (income ≤£21,000)
If you DON'T receive benefits but meet these criteria:
- Household income under £31,000 per year (verified by local council)
- Property has EPC rating D, E, F, or G
- Your local council participates in LA Flex (most major councils do)
- You meet council-specific vulnerability criteria (if applicable)
NEW in ECO4: LA Flex is significantly more accessible than ECO3's flexible eligibility, with clearer income thresholds and council participation across England, Scotland, and Wales.
Who Lost Eligibility from ECO3 to ECO4?
Some household groups that qualified under ECO3's broader criteria no longer qualify under ECO4's stricter rules:
- Middle-income households (£31,000+) without benefits
- Properties with EPC ratings A, B, or C (already energy-efficient)
- Private landlords who don't have tenants on qualifying benefits (now require 33% contribution)
Installation Standards: Quality Improvements
Perhaps the most tangible improvement from ECO3 to ECO4 is the dramatic elevation of installation quality standards. ECO4 mandates professional accreditation, comprehensive assessments, and long-term guarantees that simply didn't exist in ECO3.
PAS2035/PAS2030: The Game-Changer
Under ECO3, basic Gas Safe certification was sufficient for boiler installers. ECO4 requires ALL installers to hold PAS2035 and PAS2030 accreditation—industry-recognized standards for retrofit coordination and installation.
- •Gas Safe certification only
- •No mandatory whole-house assessment
- •Boiler-only focus (no insulation requirement)
- •1-2 year typical warranties
- •Inconsistent quality auditing
- PAS2035/2030 accreditation mandatory
- Whole-house assessment before installation
- Combined measures (insulation + heating)
- Minimum 5-year guarantees required
- Independent quality inspections mandatory
What PAS2035 Means for You:
1. Whole-House Survey
A qualified Retrofit Assessor visits your property for 1-2 hours, evaluating current insulation, heating efficiency, ventilation, damp/condensation risks, and property condition. This comprehensive assessment identifies ALL improvements needed—not just a boiler.
2. Retrofit Design
Based on the assessment, a Retrofit Coordinator designs a tailored improvement plan. For example: loft insulation first (to prevent heat loss), then cavity wall insulation, then A-rated boiler installation. This ensures optimal efficiency and prevents issues like condensation.
3. Professional Installation
All work must be completed by PAS2030-certified installers using approved materials and methods. Every installation is documented, photographed, and lodged with TrustMark—the government-endorsed quality scheme.
4. Post-Installation Verification
An independent evaluator inspects the completed work, verifying all measures meet PAS standards. You receive certification documents, warranty details, and maintenance guidance.
Savings Comparison: ECO3 vs ECO4 Benefits
The financial impact difference between ECO3 and ECO4 is substantial. Because ECO4 addresses insulation AND heating in a coordinated approach, households achieve 40-60% greater annual savings compared to ECO3's boiler-only installations.
• New boiler efficiency: 85-88%
• No insulation improvements
• Heat loss remains high
• 20-30% bill reduction typical
A-rated boiler efficiency: 90%+
Full loft + cavity wall insulation
Heat loss reduced by 60-70%
40-50% bill reduction typical
Real-World Example: 3-Bed Semi-Detached
| Measure | ECO3 | ECO4 |
|---|---|---|
| Old Annual Bill | £1,680 | £1,680 |
| New Boiler (A-rated) | ✓ | ✓ |
| Loft Insulation | ✗ | ✓ |
| Cavity Wall Insulation | ✗ | ✓ |
| New Annual Bill | £1,200 | £780 |
| Annual Savings | £480 | £900 |
| 10-Year Savings | £4,800 | £9,000 |
💰 Long-Term Financial Impact
Over a typical 10-15 year boiler lifespan, ECO4 households save £4,200-£6,300 MORE than ECO3 households due to comprehensive insulation reducing heat loss. This doesn't account for future energy price increases, which make insulation even more valuable.
Which Scheme is Better and Why?
ECO4 is unequivocally superior to ECO3 for households who qualify. The improvements aren't marginal—they're transformative. Here's my professional assessment after guiding thousands of installations through both schemes:
Holistic Improvement
ECO3 installed boilers into poorly insulated homes—like putting a new engine in a car with flat tires. ECO4 fixes the whole system.
Professional Quality
PAS accreditation, 5+ year warranties, and independent audits mean installations last longer and perform better.
Higher Efficiency
A-rated boilers (90%+ efficiency) vs ECO3's standard condensing models (85-88%) means every £1 spent on gas delivers more heat.
Greater Savings
£700-£1,000/year (ECO4) vs £400-£500/year (ECO3). Over 10 years, that's £3,000-£5,000 additional savings.
Future-Proofed
With energy prices volatile, ECO4's insulation investments protect you regardless of future price changes.
Comfort Improvement
Proper insulation eliminates cold spots, drafts, and condensation—improving quality of life beyond just bills.
The Trade-Off: Stricter Eligibility
ECO4's only disadvantage is stricter eligibility. Middle-income households (£31,000+) without benefits who qualified for ECO3 may not qualify for ECO4. However, for those who DO qualify, ECO4 delivers vastly superior outcomes.
Expert Verdict
"After witnessing both schemes firsthand, I tell every eligible household: ECO4 is a once-in-a-generation opportunity. The combination of free A-rated equipment, professional installation, comprehensive insulation, and government backing is unprecedented. If you qualify, apply immediately—ECO5 may have even stricter criteria."
— Hamza Moeen, ECO4 Analyst
The LA Flex Route: ECO4's Flexibility
One of ECO4's most significant improvements is the enhanced LA Flex (Local Authority Flexible Eligibility) route. While ECO3 had a flexible eligibility option, ECO4's LA Flex is better funded, more widely available, and has clearer income thresholds.
£31,000
Household income threshold for LA Flex eligibility
300+
UK councils participating in LA Flex scheme
40%
Of ECO4 grants issued through LA Flex route
How LA Flex Works in ECO4:
Council Declaration: Your local council declares you eligible based on their assessment of your circumstances (income, vulnerability, property condition).
Income Verification: You provide proof of household income (payslips, P60, tax returns, Universal Credit statements) showing total income under £31,000.
Property Assessment: EPC rating must be D, E, F, or G. Properties with A-C ratings don't qualify (already energy efficient).
Council Approval: Your council issues a LA Flex declaration confirming your eligibility. This allows energy companies to provide ECO4 funding.
Who Benefits Most from LA Flex?
- Self-employed individuals with variable income under £31,000
- Pensioners on basic State Pension (not Pension Credit)
- Low-income working families above benefits threshold
- Vulnerable households identified by social services
- Homeowners in fuel poverty without qualifying benefits
LA Flex represents approximately 40% of all ECO4 installations—a significantly higher proportion than ECO3's flexible eligibility route. This demonstrates ECO4's commitment to reaching working low-income households, not just those on benefits.
What's Next: ECO5 on the Horizon
ECO4 ends on March 31, 2026. The UK government has announced ECO5 will launch immediately after, running from April 2026 to March 2030. While full details aren't finalized, early indications suggest:
Expected ECO5 Changes
- Even stricter eligibility (likely lower income thresholds)
- Greater emphasis on heat pumps and renewable heating
- Possible expansion to solar panel installations
- Continued focus on worst-performing properties (EPC E-G only?)
- Potential move away from gas boilers toward low-carbon heating
Critical Timing Consideration
If you currently qualify for ECO4, apply NOW. Don't wait for ECO5. Here's why:
- • ECO5 eligibility will likely be STRICTER than ECO4
- • Free gas boiler replacements may end under ECO5 (heat pumps only)
- • ECO4 has proven processes—ECO5 may have early implementation delays
- • Current ECO4 waiting times are 3-4 weeks vs potential ECO5 backlogs
Based on the ECO3 → ECO4 transition, I recommend eligible households secure ECO4 funding before March 2026. Even if ECO5 launches smoothly, the shift toward heat pumps and renewables may exclude households preferring traditional gas boilers.