Leicestershire-based insulation business Mark Group is axing 670 jobs, blaming a drop in demand for household insulation on government policy.

The redundancies make up roughly a quarter of its UK workforce.

Mark Group pointed to changes to the Energy Companies Obligation (ECO) scheme and the Green Deal Home Improvement Fund (GDHIF).

The costs of ECO were taken off household bills under Prime Minister David Cameron’s promise to “roll back” green levies, while the GDHIF loans were closed early after it was so popular the budget ran dry in weeks.

The firm’s chief commercial officer Bill Rumble said it was a “very sad day for the business” and the staff who may be affected.

He said: “We had geared our workforce up to meet the expected demand for insulation and other energy efficiency installation work as a result of the ECO scheme but changes to its structure have had knock on effects that we can no longer avoid.”

Mark Group’s businesses in the US and Australia are unaffected.

Chief Executive of the Sustainable Energy Association Dave Sowden described the policy changes as “driven by hasty politics”.

He warned: “As we head towards the election, it is crucial that energy efficiency is no longer used as a political football and that party politics are removed from the equation.”