Carillion has set aside £10m for redundancy payments after putting all 4,500 staff at its energy services division on notice.

The notice comes after Carrillion announced it would restructure its business in response to the government's decision to cut the feed-in tariff rate from 43p to 21p from 12 December.

Carillion confirmed in a statement yesterday that restructuring costs would be £40 million in a bid to save up to £25 million per year by the end of 2013.

The firm said: "We now propose to downsize our solar photovoltaic operations, following the government's proposed changes to Feed-in-Tariffs, and to extend the restructuring of CES to deliver a substantial further improvement in overall operational efficiency.

"Carillion is continuing to scale back on its UK construction business with a turnover reduction target of one third by 2013 to £1.2bn. It plans to double business in the Middle East and in Canada in the next three to five years."