UK government says energy certificates need ‘fundamental reform’ in latest green shift

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Rishi Sunak’s government is planning to overhaul energy efficiency targets for landlords to relieve pressure on the housing market, as ministers soften green policies ahead of the next general election.

A Whitehall official said the system of energy performance certificates (EPC), which measure buildings’ energy efficiency, needed “fundamental reform”.

They told the Financial Times that the government supported delaying a deadline for landlords in England and Wales to meet mandatory efficiency standards beyond the proposed date of April 2025.

The official said that the EPC system, which critics argue does not provide an accurate picture of a property’s energy performance, had been “designed as an informational tool to meet the requirement of EU membership” and therefore was ripe for reform.

The plan to alter the EPC regime is likely to win support among Tory MPs — from both Brexiters keen on cutting EU-derived red tape and net zero sceptics who are pushing for a scaling back of environmental initiatives that impose costs on Britons struggling with the cost of living crisis. 

On Monday, the prime minister indicated that he was ready to soften the government’s green policies, saying he did not wish to “hassle” voters or “add to” household bills at a time of high inflation by adding costs linked to the environmental agenda. The UK is committed to hitting a net zero carbon emissions target by 2050.

Sunak’s intervention followed the Tories’ surprise victory last week in the Uxbridge parliamentary by-election, which all sides put down to the party’s opposition to expansion of a Labour-led clean air initiative that imposes a £12.50 daily charge on high-polluting vehicles.

On Tuesday, ministers announced that they were delaying a new £1.7bn-a-year UK recycling scheme until after the next general election following warnings from companies that it would increase already high food and drink prices.

Earlier, Michael Gove, housing secretary, revealed that the government plans to offer landlords “a greater degree of breathing space” on energy requirements. 

He told the BBC that ministers were “moving away from the strict deadline that we have at the moment”, which proposes that all newly-let private rental accommodation must achieve a minimum “C” grade in its energy performance certificate, whose ratings range from A to G, from April 2025. The proposals would apply to all rental homes from April 2028.

Gove acknowledged that one of the key methods for improving energy efficiency — installing a heat pump in place of a gas boiler — “does impose costs” at present.

While the EPC system is credited in some quarters with driving up energy performance, it has also been charged with leading to perverse outcomes.

Concerns have arisen in Whitehall about the cost to landlords of retrofitting their properties to meet the proposed energy efficiency standard deadlines, and how this challenge could affect the supply of private rental homes amid an already tight market. 

Official statistics published this month showed that less than half of private rental homes had an energy efficiency rating of A to C in England last year, while the average cost of improving a private rental dwelling to reach a minimum of C grade was £7,430.

“We remain committed to our environmental objectives but we cannot overburden landlords facing cost of living pressures,” said the Whitehall official. Ministers are expected to set out more details after the summer.

Meanwhile, the Department for Environment, Food and Rural Affairs said that the extended producer responsibility (EPR) for packaging scheme would be deferred “for one year” from 2024 to 2025.

It would make companies responsible for the costs of collection, sorting, recycling and disposal of packaging waste.

The delay to the EPR, which the FT last week reported was imminent, is the latest government environmental policy to be sidelined. Others include a long-awaited biomass strategy, a relaxation of the planning system for onshore wind farms and the introduction of a deposit return scheme for bottles.

Environmental groups had expressed concern at the prospect of a delay, which retailers, manufacturers and food producers had urged.

The companies said the EPR scheme risked increasing household bills amid the cost of living crisis, and welcomed confirmation of the delay.

The environment department said work was “ongoing to deliver” the EPR, adding: “We’re continuing to engage closely with manufacturers, retailers, and packaging companies on its design and timelines.”