The Green Deal was launched in January “as the most ambitious home improvement programme since the second world war”. But it was revealed in September that just 12 homeowners were making repayments through its finance package – which offers loans for measures such as loft insulation, draught-proofing and new boilers, with repayments offset by the energy bill savings.
As a result Carillion said it would restructure its energy services division at a one-off cost of £40m. Richard Howson, chief executive, declined to say how many of the 1,500-strong staff in the division would lose their jobs but said the company would close depots and sell vans and lorries as it shifts to a different model where it outsources work to smaller businesses.
Mr Howson said the principles behind the Green Deal were sound but the process needed simplifying. “The assessment of the property, the evaluation of the amount of money saved, the credit checking of the owner, and the undertaking of the work are all too complicated,” he said. “There is also low awareness of the Green Deal and we have a responsibility to work out with [the Department of Energy and Climate Change] how we can promote it further.”
Britain’s opposition Labour party announced last week that it would scrap the Green Deal and replace it with a new energy-saving scheme. Figures released by the energy department show that, by the end of August, 372 households had signed up to the Green Deal and just 12 had taken out a loan and had the work done.
Carillion has been affected by changes to government policies before, including the cuts to public sector construction after the 2010 election.
The company became one of the biggest in the energy services market after it acquired Eaga, which it renamed Carillion Energy Services, in February 2011 for £307m. Since then it has carried out several rounds of job cuts, including more than 1,500 as a result of the government’s surprise decision later that year to halve state subsidies for solar panel schemes.
Despite the restructuring, Carillion said in a trading statement that overall profit and earnings were in line with expectations. It said it had won contracts in Canada and Oman worth nearly £200m in total, including a £92m contract from the Oman Hospitality Company to build a Kempinski hotel in Muscat.
In addition it said it had been named preferred bidder on a £100m, 10-year contract for an energy-saving programme by West Sussex County Council.
Stephen Rawlinson, analyst at Whitman Howard, said: “The shares could be hit in the next few days as the curse of the Eaga deal, which has cost over £400m and yielded little value to shareholders, has struck again. We suspect that this is the last of the major problems.
“The remarkable thing is not that the company did the deal – the facts were different in March 2011 – but that it has been resilient enough to survive and continue to perform very well in all other areas. We are supportive long term of the stock but there may be a lower entry point than 315p.”
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