Issues

RHI scandal escalates

Former Enterprise Minister Arlene Foster with Warmflow Engineering Co Ltd Managing Director Stuart Cousins during a visit to the company’s premises in 2014.
Former Enterprise Minister Arlene Foster with Warmflow Engineering Co Ltd Managing Director Stuart Cousins during a visit to the company’s premises in 2014.

 

Arlene Foster has come under renewed scrutiny in relation to the Renewable Heat Incentive (RHI), launched during her record seven-year patronage of the former Enterprise portfolio. agendaNi analyses.

Acknowledging serious flaws in the RHI scheme, First Minister Arlene Foster conceded: “As minister, I accept responsibility for the work of the Department during my time at the Department of Enterprise, Trade and Investment.” This record-breaking tenure incorporates an overrun of a projected £1.2 billion (£400 million funded by local tax payers). Rather, the former Department of Enterprise, Trade and Investment (DETI) Minister suggested that “[the scheme] was developed by officials in a way that shouldn’t have been developed by officials”. Incredulous, the former solicitor added: “I hope you’re not suggesting I get to see every single jot and tittle that goes on in every ministerial department.”

The RHI scheme was effectively a replication of a similar initiative in Britain which aimed to incentivise farmers and business owners to switch to renewables from fossil fuels. In return for incurring the costs of installing new biomass boilers, participants were entitled to subsidies. Upon its initial exposure to consultation, the original scheme received feedback from the private sector which suggested that the subsidy was insufficient.

However, by consciously altering the policy, DETI ensured that it would have two crucial differences from London’s model in relation to cost control. Firstly, while the English initiative (which had undergone successful refinement) had a subsidy payment cap, DETI’s imitation actively removed such a cap. Secondly, unlike in Britain, the rate paid to customers as an incentive was not tiered. Rather a single flat rate saw and was subsequently revealed as being too high. Fundamentally, an excessive rate of subsidy was set higher than the cost of each unit of fuel (largely wood pellets) being burnt.

In 2011 risks linked to an absence of a cap were raised during a feasibility study. Then, in 2013, concerns were allegedly raised directly with the then Enterprise Minister through a whistleblower. The following year, after inaction, the whistleblower contacted the Department through email and specifically outlined the RHI’s flaws. The email stressed: “What we are seeing on the ground in Northern Ireland is that buildings are using more energy than before because it pays them to do so. The flat rate means there is no incentive at all to be efficient, so the heat in buildings is on all year round with the windows open everywhere.”

Following subsequent whistleblower allegations made to the Office of the First and Deputy First Minister in January 2016, the Northern Ireland Audit Office initiated an investigation. The widespread abuse of the green energy scheme was made public in July 2016 with the publication of a damning NIAO report. Auditor General Kieran Donnelly described how there was “even greater amounts of grant could be obtained by running the boiler for up to 24 hours a day as there is no upper limit on the amount of energy that would be paid for. The more heat that is generated, the more is paid.” He concluded: “This scheme has had serious systemic weaknesses from the start. The fact that the Department decided not to mirror the spending controls in Great Britain has led to very serious ongoing impact on the Northern Ireland budget.”

In reference to Treasury funding, Donnelly subsequently told the Public Accounts Committee: “There was enough concern raised at an early stage to make it clear that the scheme would not have open-ended funding.”
The RHI was launched in 2012, however, in the final 10 weeks before the scheme was suspended in February 2016, there was a substantial influx of applications. In fact, over half of all non-domestic applications (984) were received in between September and November 2015.

The First Minister has since promised that all non-domestic customers set to benefit from the scheme over the next 20 years will investigated for abuse of public money and it is anticipated that the Executive will seek permission for their names to be entered into the public domain. However, many have entered the scheme in good faith and are legitimately entitled to the receipt of subsidy payments.

The RHI swiftly became the subject of a Spotlight investigation with the BBC’s Conor Spackman concluding: “Actions were not taken and the Northern Ireland taxpayer has been left with a bill for hundreds of millions of pounds. Enough to pay for the new Omagh hospital, converting the A26 at Frosses in County Antrim to dual carriageway, the Belfast Interchange Project [at York Street] and the Belfast Rapid Transit system; with £15 million left over.”

Ironically, what initially materialised as an attempt to incentivise a shift away from fossil fuels has, in fact, achieved the very opposite. The scheme, which effectively rewarded customers with more money for the greater volume of biomass they burnt, has resulted in vacant premises and surplus infrastructure being constantly heated around the clock.

Deputy First Minister Martin McGuinness called upon Arlene Foster to consider standing aside in order for the overgenerous scheme to be independently investigated and expressed concerns that the “credibility of the political institutions is being undermined”. The First Minister dismissed this request and emphatically stated that she “does not take her instructions from Sinn Féin”.

The UUP reiterated their call for Foster to step down while the SDLP tabled a motion to exclude Foster from office for six months.

An exclusive interview secured by the BBC provided a platform for former DUP minister Jonathan Bell to claim two senior DUP special advisers (SpAds), namely Timothy Johnston and Andrew Crawford, hindered his attempts to suspend the RHI scheme in autumn 2015. Bell alleges that the SpAds also attempted to “cleanse” the paper trail of records which made reference to Foster and her then department in relation to the scheme.

Consequently, Bell was suspended without prejudice from the party. Speaking on behalf of the DUP, Jeffrey Donaldson outlined: “If you look at the DUP rules, Jonathan did not seek permission for the interview that he did.” The DUP subsequently confirmed its support for a swift and independent investigation.

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