Pressure grows on minister over heat incentive scandal

Northern Ireland First Minister Arlene Foster is continuing to resist pressure to step down from her position despite presiding over a flawed scheme to stimulate biomass heating systems set to cost the province’s taxpayers à‚£400m.

The renewable heat incentive scheme (RHI) set up in 2012 failed to include controls present in the overall British version and although Democratic Unionist Party leader Foster has promised that every beneficiary of the scheme will be inspected for abuse of public money, her actions throughout the affair are now being subjected to intense scrutiny.
Arlene Foster
The scheme run by the Department of Enterprise, Trade and Investment (DETI) in Stormont was set up to encourage businesses and domestic users to switch to biomass heating systems, mostly burning wood pellets.

A whistleblower brought to attention ‘serious systematic failings” in the scheme, which has left a big hole in the country’s finances.

Foster is under pressure to resign as the scheme was initiated during her period as minister for enterprise and when concerns were raised, no action was taken.

The whistleblower claims she warned the minister of the faulty nature of the scheme in 2013 and when it wasn’t addressed sent a follow up email the following year. In the next three years applications for the scheme increased as the initial flaws remained.

In early 2016 then Industry Minister Jonathan Bell announced his intention to close the scheme to new applications and an investigation was launched.

The scandal deepened when senior sources told the BBC in December that Foster personally fought a decision by an executive colleague to close the scheme. To compound her difficulties her successor, Bell, told the media that advisers to Arlene Foster attempted to remove her name from documents linked to RHI.

Mr Bell, who succeeded Mrs Foster as the minister of the department that set up the scheme, claims two top DUP advisers “were not allowing this scheme to be closed” at the point when costs were spiralling out of control in autumn 2015.

BBC reports that à‚£140m could be taken from the region’s block grant from the Treasury to plug the deficit caused by abuse of the scheme.

The regional scheme failed to include a number of key controls that were built into the scheme for Great Britain, including tiering of payments – so that a reduced rate applied after the equipment had been operated for 15% of hours in a year – and degression, so that the tariff changed in response to changes in demand.

In Northern Ireland no cap or payment tier system was placed on the money that could be claimed in proportion to the size of boiler. In effect, that enabled a business to produce unnecessary heat just to make money.

One of the claims was that a farmer was aiming to collect about à‚£1m over 20 years from the scheme for heating an empty shed. It was also claimed that large factories that had previously not been heated were using the scheme to install boilers with the intention of running them throughout the year to collect about à‚£1.5m over 20 years.

In July Kieran Donnelly, the auditor general, said there was “no upper limit on the amount of energy that would be paid for”. “The more heat that is generated, the more is paid,” he said.

In another example cited by the report, a business taking part in the same scheme in Great Britain could collect about à‚£192,000 over 20 years by using a boiler all year round, but a Northern Ireland firm doing the same could earn à‚£860,000.

There were 923 non-domestic applications under the RHI scheme in its first 34 months, before an announcement in September 2015 that the scheme would be tightened up with the introduction of tiered payments.

It took two months for the change to come into effect, and in that time 881 applications were made to sign up to it on the pre-existing no-cap tariff system. DETI has since been renamed as the Department of the Economy, and Economy Minister Simon Hamilton said ongoing costs of the scheme to taxpayers were “incredible”.

“Opportunities were missed to remedy the situation” by those “directly responsible for administering the scheme”, Donnelly said. “External consultants are already being appointed to conduct on-the-spot and thorough inspections of installations to ensure they meet the spirit and letter of the scheme.”

It is likely that an estimated à‚£19.4 million of expenditure will continue to be incurred every year on these 788 applications for the next 20 years – also considered irregular, unless the Department is able to get retrospective approval from DFP.

Coalition partner Sinn Féin’s finance minister Màƒ¡irtàƒ­n àƒ“ Muilleoir and DUP economy minister Simon Hamilton are to hold a “clear the air” meeting on Thursday afternoon to try to address what is being referred to as the “cash for ash” renewable heat system fiasco.

The talks have as their focus plans to introduce emergency legislation that would reduce the projected overspend of more than à‚£400 million in the scheme to “effectively zero”.

Sinn Féin is calling on Foster to stand aside pending an investigation into the scheme.

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