Renewable Heat Incentive scandal

Arlene Foster MLA, who set up the scheme in her role as Department of Enterprise, Trade and Investment minister

The Renewable Heat Incentive scandal (RHI scandal), also referred to as the Cash for Ash scandal, [1] is a political scandal in Northern Ireland that centres on a failed renewable energy incentive scheme that is set to cost the public purse almost £500 million. [2] The plan was overseen by Arlene Foster of the Democratic Unionist Party (DUP), the then-Minister for Enterprise, Trade and Investment, who failed to introduce proper cost controls, allowing the plan to spiral out of control. [2] The scheme worked by paying applicants to use renewable energy. The rate paid was more than the cost of heating, however, meaning applicants were making profits simply by heating their properties. [2]

The political scandal first came to light in November 2016, by which point Foster had become Northern Ireland's First Minister. Foster refused to resign or "stand aside" during any inquiry, saying that to do so would be seen as admitting to some culpability in the matter. [3]

The affair ultimately caused Sinn Féin leader Martin McGuinness to resign in protest as deputy First Minister of Northern Ireland in January 2017 after ten years in office, citing Foster's refusal to stand aside from her role while an investigation took place, among other matters. [4] In the power-sharing government, McGuinness' resignation also meant that Foster was removed from her role as First Minister, which in turn caused the Executive Office of Northern Ireland to fall.

On 16 January 2017, Sinn Féin refused to re-nominate a deputy First Minister in protest at the "arrogance and disrespect of the DUP". [5] The Northern Ireland Executive collapsed and the Northern Ireland Assembly was dissolved on 26 January 2017. The Northern Ireland Assembly election, 2017 was held on 2 March.

Background

Politics of Northern Ireland

Since 1998, Northern Ireland has had a devolved government within the United Kingdom. The Northern Ireland Assembly and the Northern Ireland Executive together make up the legislative and executive branches of the Northern Ireland government. Members of the legislative assembly (MLAs), of whom there were 108 until 2017 (now 90), all self-identify as a particular designation: unionist, nationalist, or other. Under the terms of the Belfast Agreement, 30 members may submit a "Petition of Concern" on a motion to the speaker of the assembly making it subject to a cross-community vote. Motions subject to a cross-community vote, either by standing orders or by a petition of concern, require support from a majority of unionists and a majority of nationalists.

The Northern Ireland Executive is jointly led by a First Minister and deputy First Minister who are nominated by the largest parties of each of the two designations. In 2016, these parties were the Democratic Unionist Party (DUP) and Sinn Féin. Because the First Minister and deputy First Minister is a joint office under Northern Irish law, the resignation of one vacates the whole office. If the office cannot be filled after a seven day period, the entire assembly is dissolved and a new assembly elected.

History

The RHI scheme in Northern Ireland was managed and set up by the then Department of Enterprise, Trade and Investment [a] (DETI) in 2012 and was overseen by Arlene Foster, the DETI Minister at the time. The intention of the scheme was for businesses and non-domestic properties to begin using renewable heating sources such as wood pellets by offering them generous subsidies.

In the Northern Ireland Programme for Government (PfG), the Executive set out targets for renewable energy. It hoped that 4% of heat would come from renewable resources in 2015 with a further target of 10% in 2020. [6] The RHI scheme offered incentives so that businesses and non-domestic users would change to renewable energy, which includes biomass boilers, solar pumps and heat pumps. [6]

The scheme was approved by Executive ministers to meet the Programme for Government target. The scheme was budgeted £25 million for 2011-2015. [6] The scheme offered to pay £1.60 for every £1 spent on heating. With this, and with the lack of cost controls, the scheme effectively paid people to heat properties, so long as they used renewable energy in the process. The lack of cost controls enabled applicants to use as much energy as they wished, thus applicants made a monetary profit for using more energy. [6]

In the period 2014-2015, there was an underspend of £15 million as there was a lack of uptake. [6] From April 2015 however, applications increased "significantly". [6] After officials announced changes to the scheme, 984 applications were received from September 2015 to November 2015, which was before the changes announced were due to take place. The scheme was eventually closed in February 2016 by Jonathan Bell, successor to Foster as Minister of DETI. He said that it was closed "in view of the significant financial risk to the Northern Ireland block grant for the next 20 years". [6]

Fraud

Concerns of fraud were raised initially in 2013 and again in 2014, when a whistleblower contacted Foster to raise concerns about the scheme. The whistleblower stated that the scheme was "flawed" and the concerns of civil servants "were ignored" after she reported abuse of the scheme, as property owners were taking advantage of the scheme by heating properties that were previously unheated. [7] It is claimed that the team, which comprised ten officials, investigated the whistleblower's claims and "did not believe the informant" and did not report back to Foster. [7]

Another whistleblower wrote a letter in January 2016 to tell Foster, who had by then become First Minister, about an "empty" farm shed that was "being heated for the subsidy". [7] The scheme did not take into account that properties that were not previously heated could now be heated for a profit.

The overgenerous offer led to the Northern Ireland Executive committing £490m to the scheme over 20 years. HM Treasury contacted the Executive in light of the huge bill and said that the Executive would have to find the funds for it. [8] [9] The £490m spend would be spread over 20 years, as the participants of the scheme signed contracts with DETI and their payments were to last for 20 years. When news first broke of the botched scheme, it was originally thought that the total cost to the budget would be £400m, but this was later revised up to £490m. [9] Northern Ireland receives a block payment each year from HM Treasury, and the block payment will need to be adjusted as a result of the money committed to the scheme.

Arlene Foster left DETI and became Minister for Finance, leaving Jonathan Bell to succeed her as DETI Minister. After news of the affair broke, Bell gave an exclusive interview to the BBC Radio Ulster programme The Nolan Show, where he said that DUP special advisers and Foster "intervened" to prevent the closure of the scheme. He also claimed that Foster tried to "cleanse the records" by hiding her involvement in delaying the scheme's closure. [10] In the period that he says he tried to close the scheme and the scheme's actual closure, there was a spike in applications which caused more money to be allocated to the scheme. After the interview, Bell was suspended from the DUP.

Investigation

A total of 1,946 applications had been received by DETI for the scheme. 98% of applicants received by DETI were approved. After civil servants started to discuss closing the scheme, an additional 948 applications were made between September and November 2015. This enabled the applications to be judged before any changes to the scheme took place. [11]

Stormont's Public Accounts Committee (PAC) opened an investigation into the scheme because the scheme ran over its budget and because of the spike in applications. An independent audit inspected 300 sites which benefitted from the scheme, and the audit revealed that there were issues at half of those. The audit also indicated that there were serious fraud issues at 14 of the sites and payments to those sites were subsequently suspended. [12]

The Northern Ireland Assembly was recalled on 19 December 2016 to discuss the issue at the request of Foster and Martin McGuinness, the deputy First Minister. [13]

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