Scottish Firms Impact Assessment

Will it have an impact on the competitiveness of Scottish companies within the UK, or elsewhere in Europe or the rest of the world?

The impacts of the proposals will not affect the competitiveness of Scottish businesses compared to others from the rest of the UK, Europe or the world. Any business carrying out construction activities in Scotland will have to comply with the legislation irrespective of where they are based. Similar legislation is being introduced by the UK Government requiring the provision of charge points and EU countries are obliged to adhere to EU Directive 2018/244.

How many businesses and what sectors is it likely to impact on?

The principal impact will be in the construction sector, including property development companies. All businesses involved in the construction of new or renovation of old buildings are potentially going to be affected. In practice, the smallest businesses do not carry out construction work to the scale that the legislation is implemented and these businesses will be unaffected. Scottish Enterprise estimates there are approximately 21,000 construction businesses in Scotland.

There may be an impact on the provision of petrol filling stations. As the provision of EV charge points increases, this may lead to an uptake of EVs with a consequential reduction in demand for petrol and diesel. It is anticipated that the majority, and potentially all, of the petrol filling stations in the country could be affected. Those in areas of the country seeing the most extensive building rates are likely to be affected most and first.

What is the likely cost or benefit to business?

Businesses will incur the cost of providing and installing the charge points. In all cases it is expected that this cost can be passed to the customer, meaning that there will be no cost to the business itself. Demonstrating compliance with regulations is considered to be a negligible additional cost as businesses have to demonstrate compliance with Building Standards at present and the additional requirements are minor. During consultation businesses did not raise any concerns in respect to the additional costs incurred.

Businesses are likely to derive benefits from the provision of a charge point which is likely to make a building, particularly a home, more marketable and may be able to sell more competitively or for a higher price.

The legislation may also lead to an increase in business in the supply chain for EV charge points and their subsequent support following installation as the market may grow to accommodate the additional demand. This could include electricians, electricity network companies, EV charge point manufacturers, EV installers, IT companies and others.

Petrol filling stations are likely to see a loss of business and may also experience a reduction in corresponding convenience retail from a reduction in demand for petrol and diesel. However, with increased EV ownership happening already, this is a growing concern currently for those business owners and would continue even without this legislation.

Competition Assessment

From the stakeholder engagement it is considered that these proposals will not present a significant impact on small businesses in the construction sector as these businesses largely do not operate in construction activity to the scale that the legislation will be applied. No significant issues of competition, restriction or imbalance have been identified.

All businesses involved in the construction of new buildings or major renovation of existing buildings will be equally affected through the requirement to provide a vehicle charge point. There are additional costs associated with the implementation of the legislation however these can be passed onto the final customer.

Consumer Assessment

The provision of an EV charge point in car parks of buildings, particularly domestic buildings, will greatly increase the availability of EV charging. The provision of charge points in a home increase the convenience of charging a vehicle, as well as making charging more affordable for those with a charger at home (given charging at home is generally cheaper). The combination of these factors is anticipated to increase the likelihood that consumers will purchase an EV affecting the market for such vehicles. The legislation is also designed to help the market transition from its early stage to a more competitive environment, this being one from which consumers should benefit from more choice and better value.

The additional cost in EV charge point installation is relatively small in comparison to the overall cost of construction of a house and, with the presence of the cost cap, it is unlikely that there will be any impact on Scottish government housing targets or on the affordability of social housing.

There will be an increase in demand for electricity as a result of this, potentially increasing domestic electricity bills, but with the consequential impact of removing petrol or diesel bills. As a result this may lead to a decrease in the number of petrol filling stations in the country with a consequential impact on access to convenience retail for consumers, though it is possible that some petrol filling stations will convert to providing EV charging provision or retain the convenience store element. The increased demand for electricity, particularly the electrification of residential homes (increased installation of heat pumps, EV chargers etc), may require electrical infrastructure to be installed and/or upgraded than would otherwise have been required. This will be accommodated by the developer at the time of preparing the development, and the necessary infrastructure will be provided to safeguard supply.

There will be an increased demand for EV charge points as a result of the proposal, which may have an impact on supply, price and availability. However this is an expanding industry and is likely to be able to accommodate the additional demand. From the consultation exercise the increased demand may exacerbate a shortage of trained technicians able to install the charge points, particularly in remote mainland and island communities. The additional work to install the charge points may impact other electrical work technicians carry out.

The additional accessibility and convenience of charge points may lead to an increase in demand for EVs, which may result in shortages in supply of vehicles. It is likely however that while the proposals will increase demand for EVs, uptake will occur over a period of time.

As EV uptake continues there is likely to be increased demand and expectations on home owners and occupants of buildings to have access to a charge point, thus creating a competitive market in the property development sector.

Test Run of Business Forms

At this point no new forms have been prepared.

Digital Impact Test

The EV charging market is emerging, growing and developing at present. It is likely that increasing uptake of EVs will lead to further advancement in technology and widespread use of that technology. In the near future this is likely to include the use of SMART meters. The proposals as set out would not preclude the use of charge points that benefit from new or emerging technology in the future, and would be accommodating to the use of SMART charge points. UK Government has recently enacted legislation that requires all EV charge points to be SMART charge points. Neither legislation impacts the deliverability of the other.

As the proposals are centred around the charging of vehicles there is not considered to be an online usability issue associated with this. Publicly accessible charge points often incur a financial charge for their use, and increasingly this transaction is enacted through use of mobile phone apps and contactless card payment. The proposals would not remove the ability of this to continue and embrace further advances in the future.

Legal Aid Impact Test

There are not considered to be any legal implications, or increased use of the Legal Aid budget resulting from this proposal.

Enforcement, Sanctions and Monitoring

The proposals will require the introduction of new legislation and the modification and addition to standards and supporting guidance given within the Technical Handbooks issued by the Building Standards Division of the Scottish Government that support the regulations. The Technical Handbooks list the mandatory functional standards and give guidance on ways of complying with the mandatory functional standards.

All matters relating to enforcement, sanctions and monitoring will be carried out under the existing processes which form the building standards system in Scotland, as set out under the Building (Scotland) Act 2003. Parties responsible for the operation of this system are currently the 32 Scottish local authorities, appointed as verifiers under the Act, and the Building Standards Division, on behalf of Scottish Ministers. In addition any other organisation accredited to undertake the enforcement of Building Standards regulations will be affected.

Work subject to the Building (Scotland) Regulations 2004 generally require that a building warrant must be obtained before work commences and to have a completion certificate accepted once works are finished. Whether or not such work requires a building warrant is set out under Regulation 5 of the Regulations, the person responsible for the building or works, the ‘relevant person’ as defined in Section 17 of the Building (Scotland) Act 2003, is required to ensure compliance with building regulations.

Where a building warrant is required, proposals are subject to the scrutiny of verifiers prior to approval of the building warrant or acceptance of a Completion Certificate. Local Authorities have enforcement powers under the Act to ensure compliance with approvals and the Regulations. Cases on non-compliance can be referred to the Procurator Fiscal and person found guilty of offences in terms of the Act are liable on summary conviction to a fine not exceeding level 5 on the standard scale.

The objective of this exercise is to further the achievement of sustainable development by embedding in the Building Standards system the requirement that new buildings and those undergoing major renovation provide EV charge points. Building regulations are applied within a legislative framework.

The policy would be reviewed within 5 years.

Implementation and Delivery Plan

The proposed changes will be taken forward by means of a new standard and supporting guidance within the Technical Handbooks which support compliance with the Building (Scotland) Regulations 2004. The standard and the supporting guidance will be introduced as The Building (Scotland) Amendment (No.2) Regulations 2022 on 24 November 2022 using existing processes which form the building standard system in Scotland as set out by the Building (Scotland) Act 2003.

The Technical Handbooks are the primary reference source for compliance with building standards and, as such, are used by designers and others involved in the building process to ensure compliance with the Scottish Building Regulations. A new Section 7 of the Technical Handbooks will be published in advance of the implementation date to enable those affected to assess the impact of the changes.

The guidance to the standards will illustrate the most common way of meeting the requirements of the Building Standards and therefore complying with the Building (Scotland) Regulations 2004 (as amended). When carrying out work that is subject to the building standards, it is the duty of the relevant person (normally the owner of the building) to comply with the requirements of the Regulations.

Publication in this form is the established method of introducing changes to the building standards system and ensures that information on changes reaches those involved in works that are subject to Building Standards. This information is made available free of charge as an electronic download from the Building Standards Division website.

The proposed changes to the guidance within the Technical Handbooks are relevant to any party responsible for a building who intends to carry out building work that is subject to building regulations. Proposed changes will be published online. The new standard and supporting guidance will come into effect on 3 April 2023 and be applicable to all building warrant applications made on or after that date. Further, it is intended that a programme of dissemination events for stakeholders will be held around the period of introduction.

Post Implementation Review

As part of the delivery plan a formal post-implementation review will take place within 5 years of these regulations coming into force.