Insulation sector’s funding crisis

That is the stark warning from the Insulation Industry Forum (IIF), which represents more than 70 per cent of the £700m-a-year sector.

At the end of this year, the current insulation schemes – which have seen cavity wall and loft insulation installed in thousands of homes – will be closed and two new schemes, the Green Deal and the Energy Company Obligation (ECO) will come into force.

However, insulation companies have warned that the new schemes will not be up and running until at least the third quarter of 2013, leaving them with a drastically reduced income for at least the first nine months of the year.

The IIF estimates that 16,000 jobs could be lost across the country – around 45 per cent of the total insulation industry workforce. It also believes the Green Deal will leave the Government struggling to reach its carbon targets, while ECO will only offer support to 230,000 poor households when there are five million in fuel poverty.

Sue Lamb, managing director of York-based insulation company Solarwall and a council member for the National insulation Association (NIA), said unless something was done soon, it could be catastrophic for the industry.

“Ever since the government got involved in the 1990s, it has always been stop and start,” she said.

“We have always been promised seamless transitions from one scheme to another.

“Although it has never been seamless, I’ve had more confidence in the past. We’ve always been able to foresee what’s going to happen in six months’ time. We’ve known well in advance.

“We were always promised a seamless transition (this time) because it’s a very different scheme. This just hasn’t happened.”

Meanwhile, those who most need help – the elderly and those living on very low incomes – could suddenly find themselves unable to access essential support when they need it most.

“We’ve got people in fuel poverty who are going to miss out at the worst time of the year for it,” said Ms Lamb. “If they can’t access that funding, say for an emergency repair to their boiler, what are they going to do?”

Figures from the Department of Energy and Climate Change show that, even if the Green Deal and ECO are up and running in time, there will be an enormous fall in the insulation market: 87.5 per cent in loft insulation, 57 per cent in cavity wall and 16 per cent in solid wall.

With a team already cut from 50 to 42 in the last year, Ms Lamb believes that, unless something is done to avoid the crisis in the industry, she will have to lose a further 40 per cent at the beginning of next year, effectively cutting her workforce in half in the space of 12 months.

“It’s very worrying,” she said. “Purely and simply, you can’t plan anything.

“I’m fine cash flow-wise until the end of December but I can’t forecast any for January, February, March onwards. It’s a concern.”

Despite these alarming figures, she believes she is more protected from the worst of the problems than other firms.

“My company is slightly different,” she said.

“There are lots of companies out there that only do insulation and they are more at risk than myself. We also do renewable technologies so we can offer some staff some work in that.”

She believes companies like hers may have to cease trading, because the cost of making large numbers of staff redundant could make it impossible to continue.

Despite the impending crisis, or perhaps because of it, Solarwall, like many other companies, is being kept very busy as the end of the current scheme approaches.

The result is confusion: customers who want insulation installed under the current scheme are unable to have the work done before the end of the year, but they aren’t allowed to have it done any later.

“We’re quite busy now because people are jumping on the bandwagon before it stops,” said Ms Lamb.

How schemes will work

The two new schemes will have different roles.

The Energy Company Obligation will be aimed at improving efficiency in hard-to-treat homes, supporting low income communities and forcing energy suppliers to make poorer customers more able to afford to heat their homes.

The Green Deal is aimed at helping individuals and businesses to install energy efficiency measures with no up-front costs. Instead, they will be paid for through energy bills over a period of time.

The potential savings must outweigh the costs if it is to go ahead, and the payments stay with the house, so any new owner would be responsible for them.

The Yorkshire and Humber Microgeneration Partnership has been established to support the renewable energy sector in our region.

Representing more than 50 regional companies involved in renewable energy, the partnership includes installers, community groups, training providers and manufacturers.

Director Rob Samuelson said last month: “The launch of the Yorkshire and Humber Microgeneration Partnership as a Community Interest Company shows that renewable energy companies in the region are a growing power.”