The Chief Executive submitted a report, the purpose of which, was to update Cabinet on an independent survey, commissioned by the Council and undertaken by  NuVision Energy (Wales) Ltd (NuVision), on Arbed 1 funded properties in Caerau, and for Cabinet to further consider the findings.

By way of background, he confirmed that in 2011 the Welsh Government (WG) introduced a domestic energy efficiency programme which ran until 2013. This was known as the Arbed 1 Programme and had two primary objectives, to reduce carbon emissions and lower fuel bills within properties to alleviate the effects of fuel poverty. More than 6,000 homes across Wales were included in the Arbed 1 Scheme. 

The Chief Executive advised that in the early part of the scheme, work was  undertaken in Caerau which was neither funded by, administered, or involved the Council.  At this time RSL’s sought funding from energy companies to undertake CESP work in social housing in Caerau. In addition Wales Co, a Community Interest Company, were working with private sector home owners to gauge interest in accessing energy efficiency schemes.

In August 2012 Welsh Government provided the Council with an opportunity to bid for additional funding to complement existing Community Energy Saving Programme (CESP) projects.  Funding of £56,050 was approved for the installation of boilers and insulation of lofts. In January 2013, additional funds were made available by Welsh Government to progress CESP schemes.  The Council made a joint bid with Green Renewable Wales (GRW) Ltd for external wall insulation at 25 owner occupied properties in Caerau. The Council were advised that the bid for £259,825 was successful in early February 2013 and completion had to be by 31st March 2013.  Therefore, total funding of £315,875 was received by Bridgend Council from Welsh Government. The funding for both projects was paid to Green Renewable Wales Ltd by the Authority.

GRW Ltd project managed both schemes and appointed sub-contractors to carry out the work, including WalesCo.  The same contractors and sub-contractors were also appointed by GRW Ltd and WalesCo to utilise funding (CESP) they gained via energy companies to work on additional properties in Caerau.  This resulted in properties having similar work being undertaken by the same contractors regardless of the funding stream.  It is evident that the property owners were unaware which funding stream was used on their property.

The Chief Executive continued by confirming that it was estimated that 150 properties in the Caerau ward had boiler replacement, loft insulation, external wall insulation (EWI) and internal wall insulation (IWI) works undertaken during 2012 to 2013, utilising money from different funding streams. 70 of these properties had work undertaken via the funding administered by the Council, of which 25 properties had EWI and IWI work.  Based on information gathered, a total of 104 of the 150 properties had EWI and IWI work undertaken in Caerau at this time, so 79 of these were not funded or administered by the Council.

He explained that since completion of the work in 2013, there had been numerous complaints over the standard of this, carried out by the contractors. The majority of the complaints related to the external and internal wall insulation undertaken via all funding streams.

In view of ongoing concerns brought to the attention of the Council, in 2018, Bridgend’s Internal Audit Service were requested to carry out a review by the previous Chief Executive to ascertain the extent to which the Council’s policies and procedures had or had not been applied in respect of the Arbed funding scheme for the period September 2012 to April 2013 in Caerau. The findings of Internal Audit highlighted a number of internal procedural issues relating to the governance, decision making, procurement, monitoring and control aspects of the funding that the Council administered for this scheme at this time.

Turning to the present situation, the Chief Executive confirmed that he Council and WG agreed to evaluate the work undertaken in Arbed 1 in the Caerau ward. It was anticipated that a jointly commissioned survey would be undertaken, however, the joint commission did not materialise and so the Council subsequently commissioned NuVision Energy (Wales) Ltd (NuVision), to undertake a study on a sample of homes within the whole programme in Caerau.

A non-invasive investigation and evaluation was carried out by NuVision with the objectives of ascertaining:

•           Have the measures lowered energy bills for residents?

•           Have the measures achieved carbon savings?

•           Could the properties currently transition away from a gas boiler to a  heat pump?

•           What is the current condition of the measures installed?

The NuVision report (attached at Appendix 1 to the report) surveyed a total of 32 properties (as a sample) but due to a lack of baseline information, it was not ultimately possible to accurately quantify either the carbon or cost savings generated by the measures.  However, when assessing the current condition of the measures that were installed, defects were identified in each. Seven of these properties surveyed by NuVision had work carried out through the funding stream administered by the Council.  The remaining properties had worked carried out utilising funding from other non-Council administered funding streams.

Appendix 1 concluded, that some of the work was defective, some of it significantly so. It further stated that whilst there was a case for remedial action to be undertaken to every property surveyed, it was possible that not all homeowners would want further work to be undertaken in view of the inevitable disruption. The NuVision report has provided an estimated cost per property of £16,000 which will involve removing the wall insulation, making good and redecorating where necessary.   However, these costs are indicative only and would vary between properties. Whilst only a sample of homes were surveyed it is considered a reasonable sized sample and there is a degree of uniformity in the defects identified.  It was therefore reasonable to assume, that defects would be identified in most or all of the 25 properties where funding was administered via the Council, where internal and external wall insulation was installed. It was also evident from the NuVision report that the same defects were present regardless of how the work was funded.

To summarise, the Chief Executive stated that the funding mechanisms and implementation of the whole Arbed 1 programme in Caerau during 2012 and 2013, were reasonably complex.  The passage of time with regard to this historical matter and the fact that the Council officers involved in the delivery of the scheme no longer work for the Council, has made the investigation and compilation of the report more difficult.  However, it was clear from the work undertaken and the independent survey carried out, that the Council was involved in administering funding for 70 properties in the Caerau ward.  Of these 25 mainly focused on external wall and internal wall insulation.  It was apparent from the non-invasive survey of building condition that much of the wall insulation work, whether it was on properties where the Council administered the funding or when other parties were responsible, is not of a standard that homeowners would expect.

It was now therefore important he concluded, that the Council seeks to liaise as quickly as possible with other relevant stakeholders involved in the wider EWI / IWI programme in Caerau, to explore available options and determine if a collective and consistent approach can be agreed to address the matters raised in the report/attached Appendix.  

Each of the Cabinet Members, in turn, expressed their deep concerns with regard to the content of the report.

The Cabinet Member – Communities, confirmed that cavity wall insulation and external wall insulation was considered to offer many homes the insulation they needed. However, insulation that is installed incorrectly will cause more harm than good and unfortunately, at the time, the consequences of that happening were not well understood.

The scheme was launched by Welsh Government to address fuel poverty and to contribute to carbon reduction in some of Wales’ poorest areas, and was carried out in more than 6,000 homes across Wales between 2011 – 2013, by a range of contractors, some of which were as it turned out, inexperienced and not fully trained.

In the 1990’s and early 2000’s With rising energy costs, the government was backing various grants and funding schemes like the one subject of the report, to provide more properties with cavity wall insulation using retrofitted insulation, for those properties with cavities and external wall insulation for those without. Insulation work was subsequently completed on properties right across the UK. Though at first reported problems were minimal, there was now a legacy of incorrectly installed insulation in thousands of houses across the whole of the UK, that sadly included the scheme at Caerau, amongst others in a number of different areas all across Wales, as part of the Arbed programme.

This of course was extremely concerning, especially in light of the excellent progress that has been made locally on other unrelated work which is aiming to provide residents with cheaper, cleaner energy solutions.

The Council was contacting other funding administrators to discuss the findings of the NuVision report and further updates in respect of this would be awaited, as the situation further develops.

The result of the works had been devastating to the owners of the properties affected in Caerau, as was portrayed by the photographic evidence in the report, confirmed the Cabinet Member – Future Generations and Wellbeing.

Members felt it was important that this was an isolated occurrence in relation to work carried out by the Council on other different major housing schemes.

The Chief Executive confirmed that evidence suggested that this was a one-off historical issue that related just to the Arbed 1 Scheme in Caerau. There were other associated issues he added that had raised some concerns, with regards to compliance with the Council’s Contract Procedure Rules (CPR’s) and the effective management of external funding, both of which had also come under scrutiny as a result of the project.

It was also felt Cabinet advised, that the Council had to openly acknowledge the devastating effects that had taken place upon residents of the properties affected and apologise for this workmanship. The Authority needed to be totally open and transparent to this end, added the Cabinet Member – Social Services and Early Help.

The Chief Executive added that this had been and would continue to be the case. The Council had involved both Internal and External Audit in the investigations, as well as the Public Service Ombudsman for Wales. The feedback from any key findings would form part of follow-up reports to the relevant Committees.

The Deputy Leader asked when Cabinet would receive a further follow-up report, outlining the way forward in respect of this matter.

The Chief Executive confirmed that this would be in the New Year and hopefully to the February Cabinet meeting.

The Cabinet Member – Education and Regeneration, enquired how many properties in Caerau had been the subject of internal and external wall improvement works and how many of these, had been the subject of Council administered funding.

The Chief Executive advised that a total of 150 properties had been included in the Arbed 1 Scheme. 104 of these had been the subject of internal/external wall works, with only 25 of these having been carried out via funding administered by the local authority. The Council had however, been directly involved in some kind of improvement works at 70 of the above properties. There had been minimal complaints as a result of boiler improvement and loft insulation type works.

The Leader concluded debate on this important report, by extending his apologies to the residents of the properties adversely affected by the project. He added that some of the work carried out had been of an unacceptable standard. He assured the residents who had been affected, that the Council were taking this matter very seriously and that it would resolve these issues by whatever methods were considered both appropriate and necessary, in an open and transparent manner. Further reports he stated would be awaited, as soon as possible, as the Chief Executive had confirmed.

RESOLVED:                              That Cabinet:

•           Noted the content of the NuVision report and that the Council was responsible for administering the funding for 70 properties, of which 25 properties had external wall insulation/ internal wall insulation work.

•           Delegated authority to the Chief Executive to engage with relevant stakeholders involved in the wider external wall insulation / internal wall insulation programme in Caerau, and to further explore available options with a view to bringing a further report to Cabinet for consideration.

•           Noted that the recently completed Internal Audit report on the current Council Contract Procedure Rules and procurement processes for externally funded schemes will be presented to the Governance and Audit Committee.