Carillion could axe 1,000 solar panel jobs in Newcastle

Carillion's energy services division evolved from the takeover Eaga in Newcastle and its 1,000 staff

From BBC

One thousand workers on Tyneside are being warned they could face redundancy from the UK's largest installers of solar panels.

Carillion has launched a 90-day consultation with employees at its energy services division.

It blames government plans to halve the money people get when they sell solar energy to the national grid.

But energy Secretary Chris Huhne said it had acted to conserve the solar panels budget by the end of 2012.

The government said the decision to cut the feed-in tariff was intended to make subsidies sustainable given that the cost of solar panels was falling.

Mr Huhne said he was not convinced many jobs will be lost.

'Price worth paying?'

He added: "A lot of the businesses that have been involved in it have been growing at an incredible pace precisely because there's been such a big fall in the cost of solar panels.

"The original subsidies which had been designed without any view of the real world by the last labour government have not been brought down in line with the fall in cost of the solar panels.

"All we've done is move them back in line so that the industry can grow sustainably."

Carillion bought the Newcastle company Eaga, one of the UK's biggest suppliers of heating and renewable energy services, in February for £306m.

The electricity produced by the solar panels it supplies to homes across the country had earned 43p per unit when fed into the national grid because of government subsidies to encourage green energy.

But the company said the government's proposed cut to the feed-in tariff to 21p per unit on 12 December was greater and sooner than expected.

Because of the resulting "significant" reduction in its market, Carillion said it had put all the staff in its solar panels business on notice of redundancy.

Labour's shadow energy secretary, Caroline Flint, said the plan could leave many people on Tyneside out of work and asked whether the government believed "creating unemployment on this scale is a price worth paying".

In a statement Carillion added that solar panels were only part of its business, which "remains focused on energy services markets that continue to offer strong prospects for growth".