Value of Carillion’s flagship Green Deal job falls by £600m

The value of Carillion’s £1.6bn flagship Birmingham Green Deal scheme has plummeted by £600m as negotiations with prospective partner authorities have ground to a halt.

Carillion was appointed to run the Birmingham Energy Savers (BES) housing retrofit scheme in October 2012. Under the scheme it acts as a partner to Birmingham council to offer £600m of housing retrofits across the city between 2012 and 2020 funded through the Green Deal, ECO and other government schemes.

The original tender for the scheme also contained the prospect of rolling it out to other neighbouring areas, boosting the scheme’s value to £1.5bn. It was later revised up to £1.6bn.

Now it has emerged that at least 11 of the prospective partners to the scheme, most of which are local authorities, are no longer involved.

Several partners have withdrawn from negotiations with Carillion, while in some areas Carillion has walked away itself.

A further four councils, which were slated to have up to £120m of work in their areas, told Building they were still considering whether to take up the scheme.

In its annual report for 2013, Carillion confirms it has seen the value of revenue for its Green Deal and ECO pipeline fall £600m but does not say how much of this is due to the Birmingham scheme. This week, a spokesperson for Carillion said all of this decline was caused by shrinkage of the value of BES.

The news comes as small business leaders in Birmingham have met with the council cabinet member who oversees the BES to discuss the prospect of setting up a rival scheme because they are unhappy with the amount of work the Carillion scheme is generating for local businesses.

Local small business leaders met James Mckay, Birmingham council’s cabinet member for a green, safe and smart city, to discuss options for boosting the benefit of BES to local construction firms.

Building understands small businesses in the energy efficiency sector in Birmingham are in the early stages of forming an alternative delivery model. One source close to the meeting said local businesses found working with BES “bureaucratic” and “frustrating”.

Mckay told Building: “We are continually discussing the whole of the retrofit agenda in Birmingham”, but that the “BES partnership with Carillion is, and will remain, fundamental to that agenda”.

A spokesperson for Carillion said “delays and uncertainty … meant that volumes have fallen … and the growth we predicted has not materialised”.