Small businesses threaten legal action after investing in HIPs

Small businesses that have invested millions of pounds preparing for the introduction of home information packs threatened the Government yesterday with legal action after its decision on Tuesday to suspend the launch of the scheme.

Michael Lawson, the chief executive of Si Reports, a company set up specifically to produce home information packs and energy performance certificates, said it stood to lose nearly £1m worth of investment because of the postponement.

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"I'm angry and in shock," he said. "I've spoken to dozens of colleagues that like me have invested millions of pounds, and none of us in this industry thought there was a chance of this."

Mr Lawson said many of his colleagues in the sector believed the Government would now abandon altogether its commitment to home information packs, which had been due for launch on 1 June, particularly once Gordon Brown became prime minister. "We've bought into the idea and the principles of the European directives [on home energy]" Mr Lawson added. "We trusted the Government, especially when we saw it had invested more than £4m in advertisements for the scheme. Our savings are gone and we are terrified about the prospect of Gordon Brown and his new team not committing to home information packs."

The postponement has also hit the 2,000 people who have trained to become home energy inspectors, to implement the energy efficiency part of the scheme. One of the inspectors, David Keen, said he had spent £20,000 training for the home energy qualification over the past 14 months, even setting up a business to produce the ratings.

"The phasing-in programme that starts on 1 August for four-bedroom houses will only provide me with 10 per cent of the housing market to exist as a business," Mr Keen said.

"Will we have to wait indefinitely for a further decision from the Government, while my business is haemorrhaging money?"

Mike Ockenden, the director general of the Association of Home Income Pack Providers, said many members were considering their own legal action, after the decision earlier this month by the Royal Institute of Chartered Surveyors (Rics) to launch a judicial review designed to stop the launch of the packs on 1 June. He said: "It appears to have been Rics, through its call for a judicial review, which has ultimately derailed this vital house buying and selling reform, so soon before its planned implementation."