How Do Councils Manage ECO4 Funding

How Do Councils Manage ECO4 Funding? The LA Flex Process Explained

Councils do not manage ECO4 funding in the way the question might suggest. No money passes from Ofgem or central government to local authority bank accounts under this scheme. What councils manage is a referral process — identifying households that qualify for free energy improvements, issuing formal documents confirming that eligibility, and directing those households to the energy suppliers who fund the actual work. The mechanism that makes this possible is called ECO4 Flex, or LA Flex.

Important: InstantGrant is an independent grant information and application-support service. We are not the UK government, Ofgem, or any local authority. We do not administer ECO4 or determine council eligibility criteria. All information on this page is drawn from the Ofgem ECO4 and GBIS Flex Local Authority Guidance version 3.0 (published 27 March 2026), the Ofgem LA Flex Audit Report (June 2025), and verified GOV.UK sources. Always confirm current scheme details with your local council or Ofgem directly.

Understanding how this process works matters whether you are a household trying to access ECO4 without qualifying benefits, a housing professional working with vulnerable residents, or a policy researcher trying to understand why some councils deliver far more ECO4 Flex installations than others.

What ECO4 Flex Actually Is and What Councils' Role Involves

ECO4 Flex is a mechanism within the Energy Company Obligation scheme that allows local authorities to widen access beyond the standard benefits-based eligibility route. Under ECO4 Flex, a participating local authority can refer private tenure households that it considers to be living in fuel poverty or on a low income and vulnerable to the effects of living in a cold home.

Councils Are Referral Bodies, Not Funding Bodies

This is the most important structural point to understand. Ofgem does not send money to councils for ECO4 Flex. The physical funding for insulation, boiler replacements, heat pumps, and other measures comes entirely from obligated energy suppliers — companies like British Gas, E.ON Next, EDF, OVO, and Octopus Energy, which are legally required to fund a certain volume of energy efficiency improvements each scheme year as part of their licence conditions.

Councils spend their own staff time and resources identifying eligible households, completing Ofgem documentation, and managing the referral process. That is their contribution. The supplier covers the cost of the measures themselves.

Why Councils Participate

From a council's perspective, participation in ECO4 Flex is optional but valuable. Energy companies can meet up to 50% of their obligations through ECO4 Flex. So clearly, a council's participation in ECO Flex will increase the number of local residents eligible to benefit from ECO4. A council that does not publish a Statement of Intent effectively locks its residents without qualifying benefits out of ECO4 entirely.

How Councils Manage ECO4 Funding: The Four Steps

Step 1: Publishing a Statement of Intent

Every council that wishes to participate in ECO4 Flex must first publish a Statement of Intent on its own website.This document provides guidance for local authorities and devolved administrations who wish to participate in the Energy Company Obligation schemes, outlining how local authorities and devolved administrations can identify and refer households to suppliers, installers or managing agents under GBIS and ECO4 flexible eligibility routes.

The Statement of Intent uses an Ofgem-issued template and must be updated every time Ofgem publishes a revised version. It names the precise conditions under which the council will refer a household for ECO4 Flex. It is a public document — any resident can search for and read their council's SoI to see exactly what criteria the council uses before making contact.

This is one of the most useful but least-known facts about ECO4 Flex. Rather than guessing whether they might qualify, households can search for their council's Statement of Intent, read the income thresholds and vulnerability criteria directly, and self-assess before contacting the council.

Step 2: Assessing Households Against the Four National Flex Routes

Councils do not have unlimited freedom to set their own criteria. Every Statement of Intent must fit within one or more of four national ECO4 Flex routes that Ofgem defines:

Flex Route 1: Low Income. The household is in fuel poverty or at risk of fuel poverty based on an income assessment. Most councils use this route with a gross household income threshold, typically £31,000 to £36,000 depending on household composition and local need.

Flex Route 2: Vulnerable to Cold. The household has a health condition or personal circumstance that makes living in a cold home particularly harmful. Common qualifying factors include respiratory conditions, cardiovascular disease, mobility limitations, age over 65, and having a child under five in the household. Income is not necessarily assessed under this route.

Flex Route 3: Low Income and Vulnerable. The household meets both Route 1 and Route 2 criteria. This is the route for residents who are both on a lower income and at increased health risk from cold housing.

Flex Route 4: Energy Debt. This route allows energy suppliers to self-refer households in significant energy debt without a council Declaration. It operates separately from the standard LA Flex referral pathway.

Understanding which route applies determines what evidence a council needs to collect. A household referred under Route 2 on health grounds requires different documentation from one referred under Route 1 on income grounds. Councils that mix up these requirements create problems at the audit stage.

Step 3: Issuing a Declaration

Once a council confirms a household meets its SoI criteria, it issues a Declaration. Suitable evidence for this includes the signed referral letter, accompanied by proof of eligibility.

The Declaration is the key trigger document in the entire process. Without a council Declaration, an energy supplier cannot proceed with ECO4 Flex measures for a referred household. The Declaration transfers legal responsibility from the supplier to the council for confirming eligibility. If a Declaration turns out to be incorrect or inadequately evidenced, the consequences fall primarily on the supplier and the council under Ofgem audit.

Councils must retain copies of all evidence used to support each Declaration. This is not optional — it is a core governance requirement that Ofgem audits against.

Step 4: Supplier Delivery

Once a Declaration is issued, the council directs the household to an ECO-obligated supplier or the supplier's approved installer network. The supplier or installer then carries out a home assessment, confirms the measures needed, and arranges the installation. The council has no further financial role at this point — the supplier funds and manages the delivery.

The 50 Percent Cap: Why It Matters for Households

While ECO4 Flex is optional, suppliers can deliver up to 50% of their ECO obligation under this mechanism.

This is a critical structural constraint that affects households more than most guides acknowledge. When a supplier has already met 50 percent of its total ECO4 obligation through LA Flex referrals, it cannot take further Flex referrals for that scheme year — regardless of how good the council's Statement of Intent is or how clearly a household qualifies.

In practical terms, this means that later in a scheme year, some suppliers become unwilling to take new ECO4 Flex referrals because they have reached their Flex cap. A household referred by their council may be told that a specific supplier has no more LA Flex capacity. The solution is to approach a different ECO-obligated supplier. Ofgem publishes a list of ECO supplier contact details specifically to allow councils and households to do exactly this.

The 50 percent cap also explains why some councils actively manage the timing of their referrals, batching them earlier in the scheme year to maximise the chance that supplier capacity is available.

The Ofgem Audit Findings: What Went Wrong and What It Means

In June 2025, Ofgem published its LA Flex Audit Report — a review of how councils had been collecting evidence and issuing Declarations across ECO4. The aim of the audits was to test whether LAs had carried out adequate due diligence checks. By making the audits supplier-led, Ofgem was also able to test supplier processes.

The audit found that some councils were issuing Declarations without adequate evidence. In some cases, income assessments were based on data that was several years old. In others, eligibility categories were applied loosely without proper documentation of the household's circumstances.

Ofgem has encouraged better practice for suppliers and LAs to work in closer cooperation with each other as the audit results have shown there are issues surrounding evidencing eligibility for LA Flex. Following the results of the audit, Ofgem has fed back the results to the Department of Energy Security and Net Zero to inform policy development for LA Flex and future schemes.

What This Means for Households

This matters because installations linked to Declarations that fail an Ofgem audit can be queried or invalidated from the supplier's ECO4 obligation tally. This does not typically mean the physical work gets undone, but it can mean the supplier cannot claim the installation against its regulatory obligation, creating a financial loss for the supplier. Some suppliers respond to this risk by tightening their own checks on council Declarations before proceeding — which can slow down the referral process for otherwise-eligible households.

If you are referred by your council for ECO4 Flex and a supplier appears reluctant to proceed despite a valid Declaration, this background audit compliance tension is sometimes the reason. Escalating to another supplier or contacting Citizens Advice for guidance on your rights within the process can help.

Delegated Authority: How Smaller Councils Cope

Some smaller district councils or rural authorities lack the in-house housing or energy team capacity to run a full ECO4 Flex programme independently. Ofgem's guidance allows a council to delegate its LA Flex authority to one other council. The delegating council's residents can then be referred through the other council's Statement of Intent and Declaration process.

A council can only delegate to one other council — it cannot split its authority across multiple partners. This limitation matters in areas where a single dominant council has not established an SoI, because smaller neighbouring councils cannot fill the gap by pooling delegations from several partners.

Some councils address this capacity challenge by working with third-party delivery organisations — energy charities, housing associations, or Citizens Advice offices — who manage the initial household identification and evidence gathering on the council's behalf before the council issues its Declaration.

How Councils Identify Eligible Households

Councils use several different methods to find households who might qualify for ECO4 Flex, depending on their capacity and the data they hold.

Council Tax Reduction and Benefits Data

Local authorities hold council tax reduction records for their area. Households receiving council tax reduction are often on lower incomes and may qualify under Flex Route 1 even without receiving a DWP means-tested benefit. Councils can cross-reference these records against EPC ratings for properties in their area to identify likely candidates.

GP Surgery and Health Authority Referrals

Some councils work with local NHS trusts, GP surgeries, or integrated care boards to identify patients whose health conditions are likely to be worsened by cold housing. These partnerships allow referrals under Flex Route 2 with clinical evidence supporting the Declaration.

Proactive Outreach in High-Deprivation Areas

Several councils run door-to-door outreach campaigns in postcodes with low EPC ratings or high indices of multiple deprivation scores, particularly in areas with older housing stock. This proactive approach is more resource-intensive but reaches households who would never self-refer because they do not know ECO4 Flex exists.

Reactive Applications

Most councils also accept applications directly from residents who contact them. A resident who believes they qualify rings the council's housing team, is assessed against the SoI criteria, and either receives a Declaration or is declined with a reason.

How to Find Your Council's Statement of Intent

Because every participating council must publish its Statement of Intent on its own website, residents can find and read their council's exact eligibility criteria directly. Search the following on your preferred search engine:

[Your council name] ECO4 Flex Statement of Intent

For example: "Sheffield City Council ECO4 Flex Statement of Intent" or "Cornwall Council LA Flex Statement of Intent."

If your council does not appear to have a published SoI, they may not be participating in ECO4 Flex. In this case, contact the council's housing team directly to ask whether they plan to participate before the scheme closes in December 2026, or explore the benefits-based ECO4 route and the Warm Homes Local Grant as alternatives.

ECO4 Flex by UK Nation

The local authorities in Wales and Scotland, as well as the Welsh and Scottish governments, are all able to make household referrals for ECO4 Flex. Where local authorities and governments in Scotland and Wales refer households for the scheme, they must issue a SoI and a declaration.

Scotland

Scottish councils and the Scottish Government can both make ECO4 Flex referrals. Home Energy Scotland additionally administers the Warmer Homes Scotland scheme for lower-income Scottish households, providing an alternative non-ECO4 route that does not depend on council capacity or supplier Flex quotas. Contact Home Energy Scotland free on 0808 808 2282.

Wales

Welsh councils and the Welsh Government can both make ECO4 Flex referrals. The Welsh Government's Nest scheme also provides a parallel route for lower-income Welsh households that operates independently of ECO4.

Northern Ireland

ECO4 does not apply in Northern Ireland. The Affordable Warmth Scheme through the Northern Ireland Housing Executive covers lower-income NI households. Contact the NI Energy Advice line on 0800 111 44 55.

What Happens When ECO4 Closes in December 2026

ECO4 and its LA Flex mechanism close on 31 December 2026. Installations must be completed by that date. The government is developing successor programmes under the Warm Homes Plan, but the design of post-ECO4 supplier obligation schemes has not been fully confirmed at the time of writing.

For households who have been told they may qualify through their council's LA Flex route, the urgency is real. The time from first council contact to completed installation runs to 10 to 18 weeks under normal conditions. With the scheme closing on 31 December 2026 and demand peaking as the deadline approaches, applications starting after September 2026 carry a genuine risk of not completing in time.

Frequently Asked Questions

Do councils receive money from Ofgem for ECO4? No. Councils receive no funding from Ofgem or central government for ECO4 Flex. They spend their own staff resources to identify and refer households. The physical improvement work is funded entirely by obligated energy suppliers.

What is a Statement of Intent? A Statement of Intent is a formal Ofgem-template document that every participating council publishes on its website. It names the precise conditions under which the council will refer a household for ECO4 Flex. Households can read their council's SoI directly to see exact eligibility criteria.

What are the four ECO4 Flex routes? Route 1 covers low-income households. Route 2 covers households vulnerable to cold due to health conditions. Route 3 covers households meeting both income and vulnerability criteria. Route 4 allows suppliers to self-refer households in significant energy debt.

Why might a supplier refuse a council referral? A supplier that has already delivered 50 percent of its total ECO4 obligation through LA Flex cannot take further Flex referrals for that scheme year. If this happens, approach a different ECO-obligated supplier.

What is a Declaration? A Declaration is the formal document a council issues for each referred household, confirming they meet the SoI eligibility criteria. It is the trigger that allows a supplier to proceed with ECO4 Flex measures. Without a Declaration, no work can proceed.

What happened in the Ofgem audit? Ofgem's June 2025 LA Flex Audit Report found that some councils were issuing Declarations without adequate evidence, including using outdated income data. Ofgem fed back findings to DESNZ to inform future policy. Councils must now maintain robust evidence for every Declaration to avoid compliance issues.

How do I find out if my council has a Statement of Intent? Search "[your council name] ECO4 Flex Statement of Intent" online. The SoI must be published on the council's own website. If you cannot find one, contact the council's housing or energy team directly.

Can ECO4 Flex referrals be made in Scotland and Wales? Yes. Both Scottish and Welsh local authorities and their respective devolved governments can make ECO4 Flex referrals on the same basis as English councils.

Is ECO4 Flex available in Northern Ireland? No. ECO4 does not apply in Northern Ireland. The Affordable Warmth Scheme is the main equivalent for NI households.

How InstantGrant Can Help

If your council is not actively running an ECO4 Flex programme, or if you have been told you do not qualify through the standard benefits route and are unsure which alternative applies to your situation, InstantGrant can help you work through the options before the December 2026 deadline.

InstantGrant is an independent grant information and application-support service. We help UK households understand the full range of eligibility routes — ECO4 standard, ECO4 Flex, the Warm Homes Local Grant, and the Boiler Upgrade Scheme — and identify which combination best fits their property and circumstances.

We are not the government, Ofgem, or any local authority. We do not administer ECO4 and we do not guarantee any outcome. We help you start the right process with accurate information.

Check your eligibility at instantgrant.co.uk