Reform of the Energy Performance Certificate: letter to Minister

To: Cabinet Secretary for Net Zero and Energy
cc/ Minister for Climate Action   

From: Professor Russel Griggs OBE, Chair – Regulatory Review Group

2 May 2025

Dear Gillian,

I am writing as Chair of the Regulatory Review Group (RRG) to provide independent advice on reform of the Energy Performance Certificate (EPC) which aims to provide consumers with enhanced information on the energy efficiency of residential and commercial properties.

This note provides an overview of the RRG’s role and details recommendations on the pace of change, and enforcement and communications considerations.

Regulatory Review Group (RRG)

The independent RRG was re-established by the Scottish Government as part of the New Deal for Business to support Scottish Ministers in improving the regulatory environment for businesses and their involvement in that process. The RRG’s membership is detailed in the Annex. The RRG consider upcoming regulatory developments and as part of its work programme identified the reform of the EPC as a scrutiny priority.

The RRG’s objectives are to:

1. Work constructively with the Scottish Government to ensure that policy officials and relevant Ministers are sighted on implementation challenges with regulations early in development.

2. Deliver purposeful and targeted written and verbal advice to the Scottish Government, drawing upon extensive expert insight from business and regulators across Scotland.

3. Support the delivery of the New Deal for Business by ensuring that the potential barriers to the success of Scottish Government policies are removed through an improved understanding of the practicalities of implementation.

The RRG’s remit is to examine and identify implementation challenges and appropriate mitigations of regulation. The RRG does not provide a view on the appropriateness of substantive policy or decisions to be taken on legislative priorities.

Reform of the Energy Performance Certificate (EPC)

Along with RRG members, I met with your officials on Tuesday 25 March 2025. Your officials provided an insightful presentation on the policy issue and provided detailed responses to our questions. The proposed regulation has the potential to create an environment where consumers receive significantly enhanced information on the energy efficiency of a property prior to purchase. The feedback from stakeholders was explained, and the future Parliamentary process was outlined.

The following recommendations have been made by the RRG for consideration as part of the policy development and legislative process:

1. Further consideration is needed regarding how the proposed changes to the EPC will interact with the home report. While the RRG acknowledges that the Working Group is currently examining how these changes will align with the home report, it highlights this as an area requiring careful and thorough attention. It is essential to ensure that the two documents are complementary, consistent, and do not create confusion for homeowners, buyers, or industry professionals. Any misalignment could undermine the credibility of the new EPC or place unnecessary burdens on property transactions. A clear and detailed approach will be key to supporting and maintaining confidence in both the home report and the EPC.

2. The RRG notes concerns raised about potential unintended consequences for consumers if mortgage providers start using the revised EPC ratings as criteria for lending. We therefore recommend that engagement in the financial sector, especially mortgage providers continues in parallel with the policy’s development, with a view to ensuring that any link between EPC ratings and mortgage eligibility is introduced transparently and with adequate consumer communication. Specifically, the Scottish Government should engage with the Financial Conduct Authority (FCA) and ensure practice across individual lenders in this area meet the FCA Consumer Duty requirements. This proactive dialogue will help avoid sudden shocks for prospective borrowers and maintain fairness and confidence in the housing market.

3. Constructive working relationships with Local Authorities and Scottish Government are critical to the success of implementation. The RRG notes the intention to issue further guidance and to establish a new team within the Scottish Government to lead on this area of work. While these steps are welcome, the RRG emphasises that strong, collaborative relationships with local authorities will be essential to ensure consistent and effective enforcement. This relationship will play a key role in translating policy into practice, supporting compliance, and addressing any practical challenges that arise. The RRG looks forward to further detail on the new team and how they will work effectively with Local Authorities.

4. The management and capacity of on-site inspections presents potential challenges. Whilst the RRG is grateful for the assurance that additional qualified inspectors will be recruited, it is concerned about capacity to effectively oversee, manage and carry out the inspections. Ensuring there are sufficient resources will be critical to implementation. Any gaps in capacity could risk inconsistent enforcement or delays in implementation, undermining the policy’s impact. The RRG encourages continued attention to workforce planning and operational readiness to ensure success.

5. Comprehensive public engagement is essential to ensure consumer understanding and support. The RRG emphasises that clear, transparent, and proactive communication with the public will be vital in building understanding and trust around the proposed changes to the EPC. Consumers need to be informed not only about what the changes entail, but also why they are necessary and how they will impact them in practical terms. Given the complexity of the changes, there is a risk of confusion or resistance if the rationale is not effectively conveyed. The RRG highlights the importance of early and ongoing engagement with consumers and stakeholders to promote awareness, address concerns, and support successful implementation.

The RRG also notes that some of the terminology may need further consideration. For example, the labels ‘clean’ and ‘polluting’ or ‘renewable’ heating may not be industry standards terms in the retrofit marker and there is a risk of further consumer confusion. The RRG encourages the Scottish Government to review the terminology to ensure it is consistent and aligned with wider industry norms and standards.

The RRG invites your policy officials to return once this work has progressed, to provide a further update.

A copy of this letter will be published on the RRG’s webpage and has been sent to your Ministerial colleagues with an interest in this area.

The RRG would be happy to discuss the above recommendations with you and would welcome an update on how the Scottish Government intends to take this forward during the policy development and legislative process.

Yours sincerely,

Professor Russel Griggs OBE
Chair, Regulatory Review Group

Annex - membership of RRG

• Chairman, Professor Russel Griggs OBE
• Fiona Richardson, Convention of Scottish Local Authorities (CoSLA)
• James Fowlie, Convention of Scottish Local Authorities (CoSLA)
• Brian Lawrie, Environmental Health
• David MacKenzie, Trading Standards
• Ewan Macdonald-Russell, Scottish Retail Consortium (SRC)
• Susan Love, Association of Chartered Certified Accountants (ACCA)
• Douglas White, Consumer Scotland

Members are representatives of business, regulators and consumers, however, are acting independently in their RRG involvement.