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Renewable Heating Incentive Scheme (Cash for Ash)

The UK and Northern Ireland agreed to meet a EU target (15%) for obtaining energy from renewable sources by 2020.

Eligible homeowners and businesses were persuaded to install biomass boilers which create energy from woodchips or pellets, rotted trees, manure and sewage.

First Minister Arlene Foster, launched the scheme in 2012 and wrote to the banks of Northern Ireland actively promoting it so that they would provide loans to those installing RHI boilers.

Her letters stressed the long term security of the tariffs guaranteeing they would be exempt from any decreasing measures confirming ministerial approval endorsing claims of significant profits to be acrued by biomass boilers from taxpayers money. Subsidies which were “set in stone” for 20 years.

But the scheme was flawed since unlike legislation applicable to similar ventures in Scotland, England and Wales, a tarrif-tiering financial cap was removed before implentation leaving it vulnerable to abuse.

The media had a great time, publishing stories of wealthy homeowners milking profits by turning ‘green’ heating to maximum and opening windows and farmers heating barns night and day so as to burn as many wood pellets as they and other business owners could taking advantage of a subsidy that gave them £1.60 for every £1 spent, resulting in hundreds of millions of taxpayers money going up in smoke.

The final figure is not yet known, but at 2017 it was around £1.7 billion.

Subsequently reduced by £1 Billion meeting the terms of the propping up agreement keeping the Tory Government in power at Westminster.

But the bulk of the overspend was avoidable since, in 2013, “Cambridge Economic Policy Associates” gave warning to the offices of the First Minister that tiered tariffs should be introduced.

Their warning was ignored. But in 2014, Ofgem again, (without success) warned that tiered tariffs needed to be put into the scheme.

 

 

 

Scheme Review

At the time of adoption the letter of approval indicated it had to be reapproved in March 2015.

Responsibility for ensuring this happened rested with the “Department for the Economy” (DETI).

They failed in their duty and another opportunity for applying corrective measures (tariff tiering) was missed.

When the DETI finally realised in 2015 that the scheme needed to be formally reapproved, it was referred to the Department of Finance (DFP).

In October 2015 the Minister heading the Department that reapproved the scheme was Arlene Foster.

 

 

 

 

Public Outrage.

When the scam was finally exposed the public in Northern Ireland were outraged to be informed that so much money had gone up in smoke and allegations soon surfaced in the press and social media that the scheme had been kept open illegally in order for selected persons to avail themselves of its benefits.

Questioned by the media if anyone in the Party was connected to the scheme the Democratic Unonist Party (DUP) refused to answer.

But the press and the public were shocked at the scale of the overspend, attributed to the DUP and Party leader, Arlene Foster faced calls to resign from her role as Northern Ireland’s first minister. She refused and the Government collapsed.

Proposals for an early General Election sparked alarm within the DUP and an inquiry was speedily set up, under the Chairmanship of Sir Patrick Coghlin, to report its findings after the election.

It is expected this will not be published before the end of 2018

The DUP also undertook to retrospectively introduce tarrif-tiering and attempt to recover any inappropriately claimed finance but it is unlikely any money could be recovered since contracts entered into might be impossible to set aside.

This site provides an explanation of the debacle: (https://rhani.org)

 

 

 

They Can Run But They Cannot Hide

Investigation of the scheme participants and identification of unauthorised political involvement is proving to be complex and time consuming as events contributing to the scandal unfold.

The undernoted list is indicitive of what might be be revealed in the final report.

1. Arlene Foster told the “cash for ash” scandal inquiry she had not read the legislation which she brought to the Assembly in her name in order to set up the RHI scheme.

The revelation that she had not read the legislation emerged during exchanges about one of several deficiencies in the regulations whereby they did not adequately define ‘useful heat’ which would be eligible for subsidies, making it more difficult to crack down on potentially fraudulent claims.

Her admission of failure to read the regulations contrasts sharply with how she presented them to the Assembly at the time.

In October 2012, as she asked MLAs to vote for the regulations, she took personal credit for the work, saying: “This demonstrates my commitment to the sector and my desire to see levels of renewable heating increase.”

She also told the Assembly – which subsequently passed the legislation unanimously after only a few minutes of debate – that the regulations “are set in a very clear framework for the scheme, including how payments will be calculated and made, as well as its conditions and eligibility standards”.

In her evidence to the inquiry the significance of the absence of records of key meetings or decisions about the RHI scheme became starkly apparent as she repeatedly used phrases such as “I don’t remember”, “I can’t recall” and “I don’t think I have any clear recollection” about key meetings.

But she insisted that she always believed minutes were being taken but that they never came to her for ratification.

The evidence to the inquiry of civil servants contradicted Foster.

Many had been clear there was a culture of not minuting meetings, particularly those of Arlene Foster and her Special Advisor.

During probing questioning, Sir Patrick put to Arlene Foster: “Can we just stand back for a moment and look at the system here?

“You’re head of the department and Fiona Hepper is the Head of Energy and Dr Crawford is your Special Adviser.

And you’re being asked to deal with a completely novel form of incentivised project in a market which nobody knows how it will respond; volatility, unpredictability is written all over it.”

“We know, or we appear to know that Dr Crawford doesn’t read any of the financial appraisal reports of which there are two full reports and an addendum, despite the public having paid money for those reports.

He doesn’t read any of those – and yet he is your trusted special adviser.”

“Fiona Hepper does a submission which at a minimum is a bit difficult to understand and – perhaps understandably again – a meeting is organised.”

“There is clear guidance that where a meeting is to take place that involves additional information …and indeed as a general proposition, meetings about submissions should be recorded and the guidance clearly says that the meeting should be recorded by the department making the presentation to the meeting.”

“Now, there are no notes or records about this. Does that not start to edge towards a dysfunctional department, if these are the two people that you trusted and one of them didn’t read any of the detailed appraisal documentation, the other one comes to you with an explanation that involves additional information but no notes are made of it, no enquiry is made as to whether notes are being made and yet this is a unique project?”

Foster: I was somewhat taken aback that there were no notes of the meeting. I would have expected notes to have been, if not taken at the meeting, at least after the meeting that there would have been some sort of record of what I had said at the meeting, of what she had explained to me.

Sir Patrick: “Absolutely. Neither you, nor Dr Crawford, thought it appropriate to ask Fiona to produce notes.”

Foster: “But that would not have been the normal practice. I would have expected notes to have been taken.”

Sir Patrick: “Yes, you would. And if notes hadn’t been forthcoming, either you or Dr Crawford might have thought as a common sense [reaction] ‘we’ve just been told more information; this submission has now been explained in a very different way. Could you give us the note please of what was said?’”

Foster: “All I can say is that I would have expected notes to be taken. I wouldn’t in the normal course have seen a copy of the note of a meeting; it wouldn’t have come back to me. I would have expected that to have been put…into the file…I didn’t see it as my role to check if a minute was put somewhere of the meeting… it wasn’t my normal practice to do that because I would have assumed…”

Sir Patrick: “Right, let’s accept that it wasn’t your normal practice. What seems to me to be incontrovertible is that your expectations of the two trusted people were completely unfulfilled.”

Foster: “Well, that’s something that you have to…”

Sir Patrick: “Well, if you can correct that, please do so.”

Foster: “Well, in terms of Andrew, he was a Special Advisor and I suppose the question is: What does ‘special’ mean in terms of adviser…I think it was the fact that he was a political appointee, yes, but also in his case because he has a doctorate in agriculture he does have a specialism in that direction.”

Sir Patrick: “I fully understand – you’ve told us you wouldn’t, and I can understand fully with the demands being made on you as head of the department – you wouldn’t have read technical reports.

That is why you expected Dr Crawford to have read them. That is why you would have expected Fiona to produce a note, and indeed there’s guidance for her to look at and read to see she has an obligation to produce a note.

I just wonder about how this department was actually working in practice.”

Foster: “Well…”

Sir Patrick: “One further point…I did pick up from the differences between Ms Hepper and Mrs Foster was Ms Hepper said Mrs Foster would have seen the paperwork and the documents from the business case whereas Ms Foster said she never looked at business cases, so again…

Foster: “Well, they weren’t sent to me, sorry…”

Sir Patrick: “Yes, I understand that. They weren’t sent to you. But she says she would have expected you to pick up on it. So you have these views from different people of considerable importance within the department which don’t seem to touch each other. She has an expectation that you say no, you wouldn’t do.”

Foster: “Well, having read the business case, I certainly would have had more questions if I had seen the business case.”

Full details here: (https://inews.co.uk/news/northern-ireland/rhi-inquiry-arlene-foster-admits-she-didnt-even-read-her-own-cash-for-ash-legislation)

 

 

 

2. Poultry giant Moy Park maintains 1,520 hen houses in Northern Ireland, of which 943 were converted to biomass boiler heating between 2010 and 2018 providing opportunity for the company to expand its business from four million to six million birds each week.

Company executives became aware of allegations of abuse of the scheme around October 2014 prompting senior executive David Mark to comment in an e-mail to colleagues that there was “more money in burning pellets than raising chickens”.

He had also circulated within the company a “heads up” document he said he had received from an unknown “contact in government” about civil servants plans to combat increasing abuse of the scheme.

An examination of his e-mail correspondence indicated his contact was Andrew Crawford, at that time a Special Advisor to First Minister, Arelene Foster.

This provided irefutable evidence that Moy Park (Poultry) and the DUP were communicating in the summer of 2015, well before tariff changes were announced and when there was a recognition by the company of the advantage of getting their farmers accredited to the scheme before lucrative payments were cut.

Responding, David Mark admitted that at the end of July 2015 he had met Crawford at a poultry farm belonging to Crawford’s brother James, but he had no recollection that they discussed RHI. They just exchanged pleasantries.

Afternote: Crawford resigned from his post as Special Advisor admitting he had acted without authority providing information to his poultry farming brother and other persons.

But his departure from government and loss of his £92,000 job was short-lived when Arlene Foster re-hired him in another government financed job.

It was further revealed that Crawford had told a fellow DUP SPAD, Timothy Cairns, that David Mark was the person to talk to in Moy Park (Poultry) about the uptake of the scheme amongst its suppliers.

Comprehensive analysis can be found at: (https://www.bbc.co.uk/news/uk-northern-ireland-44660879)

 

 

 

 

3. The inquiry was told of an attempt to “protect” Arlene Foster during the closure of the scheme.

It was revealed by Deputy Permanent Secretary at the Department for the Economy, Chris Stewart that a former DUP adviser had made reference to protecting the former first minister from blame.

He also said there was a “desire” in the DUP to make it appear that former enterprise minister Jonathan Bell had sole responsibility for what was an unpopular decision to shut down the scheme in 2016.

In a follow up statement he said that civil servants’ attempts to curb the cost of the RHI scheme had been met with “surprising resistance” by a number of DUP figures and he never before been confronted with a similar phenomenon, from government Ministers during his career as a civil servant.

It was then revealed that, DUP Special Advisor, Timothy Cairns had ventured to Stewart that the addition of cost controls should be delayed as their introduction in October could lead to a spike in applications to the scheme.

The suggestion was dismissed by Stewart who countered that there was already an increase in applications and a well-informed industry would keep demand high.

Stewart commented: “I got the impression that the suggestions that were coming back were as a result of DUP considerations and civil servants, advisors and Ministers were not on the same team” as they struggled to rein in spending.

But Cairns would not be denied and discussed his proposals with another DUP adviser Dr Andrew Crawford, who subsequently proposed changes which Stewart would find acceptable.

Senior civil servant, Andrew McCormick told an Assembly committee that he believed Crawford to be the person who influenced the decision to keep the scheme open.

Crawford said he would only have offered “informal advice” on the basis of his experience and insisted that he did not attempt to prevent the scheme’s costs being curbed.

Co Tyrone farmer, Crawford, was also a Special Advisor in the office of the DUP Agriculture Minister, Michelle McIlveen, and had previously worked as a Special Advisor to Arlene Foster, in her roles as both Enterprise and Finance Minister.

His brother is a poultry farmer and a recipient of the financial benefits of the scheme.

More details here: (https://www.bbc.co.uk/news/live/uk-northern-ireland-politics-44641797)

 

 

 

4. Brothers-in-law, Timothy Johnston, Special Advisor to DUP Leader, Arlene Foster and John Robinson, Special Advisor to DUP Economy Minister Simon Hamilton and former Director of Communications for the DUP, were named as being the reason for a block on cost controls surrounding the Renewable Heat Incentive (RHI) scheme. Johnston is married to Robinson’s sister.

Suspended DUP MLA and DUP, Enterprise Minister, Jonathan Bell (former Party Leader, Peter Robinson’s most loyal lieutenant) used assembly privilege to name two Special Advisors and claimed he had been thwarted in his efforts to clamp down on the multi-million pound RHI overspend because the pair “have such extensive interests in the poultry industry”.

Johnston stated he had no personal direct connection to the RHI scheme but admitted his father-in-law and two brothers-in-law were in the poultry industry and his father-in-law had installed two green energy boilers under the scheme.

Robinson said he had no personal interest in the poultry industry but his father and two of his brothers were poultry farmers.

The two Spads are accused of “a conflict of interest given their roles in the DUP and the civil service is investigating.

More information here: (http://www.irishnews.com/news/2017/01/19/news/dup-spads-linked-892398)

 

 

 

5. Loyal servant to the DUP, Stephen Brimstone, the first Special Advisor confirmed to be a beneficiary of the scheme, departed his DUP government funded, £92,000 position in order to pursue “opportunities in the private sector”.

Arlene Foster confirmed that he had been a recipient of payments, but neither the DUP nor Brimstone would disclose how much he had received or when he signed up to the scheme.

Brimstone’s brother, Aaron, who runs a karting business in Co Fermanagh, is also a scheme claimant.

Assembly Member Jim Alister, used Stormont privilege to allege that former DUP Special Advisor, Stephen Brimstone, was “inappropriately claiming” on the non-domestic scheme using a non domestic boiler to heat his home.

Ofgem said that the accredited boiler was being used in a non-domestic capacity.

Details have been passed to the counter fraud team and a hold had been put on the payments.

More details here: (https://www.bbc.co.uk/news/uk-northern-ireland-43415487)

 

 

 

6. Long serving DUP member, Timothy Cairns, the discredited DUP Special Advisor to Enterprise Minister, Jonathon Bell gave up his £92,000 government funded post. He is now employed as the director of the Community Transport Association for Northern Ireland and has been appointed by the DUP, to the board of cross-border business body Inter-Trade-Ireland.

7. Ofgem official Teri Clifton helped monitor payments under the flawed green energy scheme.

In November 2015, she took a call from a business seeking accreditation to the scheme.

DUP MP Mr Ian Paisley participated in the call which she said was “very intimidating”.

She said that soon after she took the call, she realised she was on speakerphone and was speaking to the applicants, their representatives Action Renewables, Mr Paisley and someone from Moy Park Poultry.

She had received no prior warning of the phone call and did was not best pleased about the position she had been placed in.

Asserting it had been “very intimidating” she, added: “I don’t think it was intentionally intimidating, I think the intention was to catch me off guard and to make my decision look like I was the wrong one in front of a crowd of people.”

She went on to say that the business had missed the deadline for higher tariffs and, therefore, faced being put on less lucrative rates that had just been introduced.

The business blamed an IT problem at Ofgem for the delay and missed deadline but she advised it had simply not been submitted in time.

All participants on the call were persistent in their efforts to persuade her to accept the application onto the higher tariff because the applicants, otherwise stood to lose a considerable sum of money.

It later emerged that Paisley had written a letter about the case to the Special Advisor of the then DUP, DETI (Department of Enterprise, Trade and Investment) minister Jonathan Bell.

In the letter Paisley had given the impression that Ms Clifton had agreed with the applicant’s concerns about how their case had been handled.

But she said the letter wasn’t a “fair representation” of the discussions they’d had.

She also said the issue had been raised with OFGEM even though the applicant’s had missed the deadline by a matter of weeks.

It was later approved to the scheme, but on the lower tariff.

She said she believed the “lobbying” was due to the risk of reputational damage to “Action Renewables”, which had taken over responsibility for the application and had not submitted it when the applicant thought it had.

More details here: (https://www.bbc.co.uk/news/uk-northern-ireland-43415487)

 

 

 

8. DUP MLA Jim Wells revealed that his ‘brother, two cousins and the brother of a third cousin installed a combined total of eight boilers at three separate farms to heat their sheds.

9. DUP MLA Carla Lockhart said her farmer, brother-in-law is involved in the scheme.

10. DUP MLA William Irwin indicated that his his son-in-law had also benefitted.

 

 

 

Examples of the Scam in Practice

1. A farmer is in line to receive £1 million over the next 20 years for heating an empty shed.

2. A rich landowner heats his large outdoor swimming pool all the year round.

3. Large factories in Northern Ireland are on course to pocket £1.5 million over two decades for running incentivised biomass boilers all year round in premises that were not heated previously.

4. An unspecified number of scheme users were using boilers to dry wood, then burning the same wood in the boilers to dry more wood – creating a perpetual cycle of use just to claim money.

5. The usage policy of the near 2,128 users is “anything goes, you can do what you want because you can’t be expelled from the scheme”. Only 59 people had applications turned down or discontinued for non-compliance.

6. A Free Presbyterian Church in Ballymoney stands to receive £270,000 over a 20-year-period.

One of the church elders is DUP MLA Mervyn Storey, who was a DUP Minister in the last Executive.

He denied any involvement in the application for the scheme.

Asked if his church would consider paying back money over and above what it needs to pay for its heating costs, given that it is now accepted that the scheme was far too generous and is therefore going to be a drain on the public purse he said that he could not comment and it would be a matter for the church as a whole to consider.

The project had come to light because the company which installed the wood pellet boiler, Solmatix Renewables, publicised it on its website as a case study. Solmatix said that the “financial rewards” for the church were £13,500 per year, made up of £1,000 oil savings each year and an annual RHI payment of £12,500.

Church Elder Jonathan McAuley said: “We recognised that Biomass would meet all of our heating requirements for the church and free up around £10,000 a year for us to use in other mission works.

McAuley, who owns an engineering firm will receive £960,000 in grants from the Scheme. So much for being open and honest.

7. Leading Belfast car dealership Charles Hurst Ltd raked in over £250,000 to heat its plush Ferrari showroom,’ cash-for-ash’ figures reveal.

Full  list of applicants benefitting financially from the scheme are here: (https://www.belfasttelegraph.co.uk/news/northern-ireland/backlash-over-naming-of-rhi-green-energy-scheme-claimants-35751982.html)