Carillion counts the cost of Government Green Deal flop

The Government's struggling Green Deal scheme has led to one of the companies aiming to benefit from the extra work fitting new boilers and insulation writing off £40m.

Ministers said they planned to sign up 10,000 households by the end of the year to take out loans for energy-efficient works, but so far only around a dozen have signed up.

Construction and support-services group Carillion had hoped to cash in from the scheme and has been forced to admit the failure will lead to layoffs and a complete restructuring of its energy division.

Launched earlier this year, the Green Deal replaced previous schemes that offered free or highly subsided insulation and draught-proof services in the hope of reducing energy bills.

The new scheme saw a 97 per cent fall in people insulating their homes, leading to critics calling it a failure and leaving Carillion with too many staff and not enough business.

The company is expected to lay off dozens of staff , but bosses refused to reveal how many jobs would be lost.

The scheme works alongside the Energy Company Obligation, which forces large energy suppliers to promote energy efficiency measures.

Carillion said in a statement: "The development of the Green Deal market continues to be slow and Energy Company Obligation may now be subject to further delays.

"Consequently, we will restructure this area of our business during the remainder of 2013 to ensure that it is aligned in size to the markets in which it operates."

It is not the first time Carillion has suffered from the Government's decision to change its subsidy policies.Last year, more than 1,000 staff were made redundant after its energy-services business lost out when the Government halved state subsidies for solar panels.

Carillion has previously warned of the slow start to the Green Deal programme, but yesterday was the first time bosses have said how much impact it is having on the business.