The only types of ESM that this change removes completely from eligibility for the 5% VAT rate are wind and water turbines - so not relevant to your client. However, there was doubt expressed earlier in this thread as to whether the works would even qualify under the existing rules as being the installation of ESMs - rather than being more general home improvement works that just happen to also improve energy efficiency. This factor still needs to be considered.
If it is accepted that the job is for the installation of eligible ESMs, the new 60% rule states that the job as a whole is only eligible for the 5% VAT rate if the materials element of the charge is no more than 60% of the total charge - i.e. labour must be at least 40%. If the materials element is over 60%, the materials element will become subject to 20% VAT, although the labour element will remain at 5%.
The HMRC guidance refers to a European Court ruling which is worth taking a quick look at, as it helps explain the background of the change. Essentially the existing rules on the 5% rate go beyond what European VAT law allows, so the UK law has been tweaked as little as possible, while still bringing it within what European law allows. The European law allows national governments to have reduced VAT rates for:
(10) provision, construction, renovation and alteration of housing, as part of a social policy;
(10a) renovation and repairing of private dwellings, excluding materials which account for a significant part of the value of the service supplied.’
So the 60% rule is needed to bring the law into line with item (10a) above. The 60% rule doesn't need to be applied to certain customers (those aged over 60 or receiving certain benefits) as this could be regarded as a "social policy" and meet item (10) above.