Delays to Government's flagship energy efficiency policies have cost 1,800 jobs, with a further 1,100 in danger

Almost 1,800 jobs have been lost and another 1,100 are in danger because of delays implementing flagship Government energy efficiency policies, business leaders warned tonight.

They said companies involved in fitting insulation had been forced to lay off hundreds of staff over Christmas because orders have dried up and show no prospect of recovering until the summer.

In a letter to the Energy Secretary, Ed Davey, the Insulation Industry Forum (IIF) protested that plans to insulate 34,000 homes had been cancelled at the coldest time of the year because of lack of funding. A further 27,000 insulation orders have been put on hold.

It said 1,782 people had lost their jobs and 1,124 had been put on notice that they were at risk of redundancy.

The current insulation scheme, which subsidises householders who want to make their homes more efficient, ended a fortnight ago.

In the future insulation subsidies will be funded by the Green Deal and a scheme aimed at the poorest families, the Energy Company Obligation.

Although both have been formally launched, the IIF said money would not be paid under them for many months, crippling small firms that relied on a steady cash flow.

John Sinfield, managing director of Knauf Insulation and the IIF’s spokesman, said: “The Government’s disastrous failure to plan any transition to Green Deal is directly leading to massive job losses in the industry.

“So far nearly 1,800 people have lost their jobs, over half of which have gone since Christmas. Firms around the country are going bankrupt and, without urgent government action, thousands more could go.”

Luciana Berger, the shadow Energy Minster, will condemn the “shocking” job losses” in a Commons debate today.

She said: “The most effective way people can save money on their heating bills is by insulating their homes, but this Government is so out of touch it’s making that harder to do. The Government must act now to support the insulation industry, before even more jobs are lost due to their incompetence.”

A spokesman for the Department for Energy and Climate Change said it was introducing schemes which go “much further than the old system of subsidies for loft lagging and cavity wall insulation”.

He said: “Continuing the old subsidies would have also meant higher bills for consumers. The Green Deal, offering a whole-house solution, will see a huge expansion in the number of jobs in the insulation industry overall – up to 60,000 by 2015.”

The spokesman said only one per cent of lofts had no insulation and the Government was switching to Britain’s 8m solid wall homes, of which only two per cent have been properly insulated.