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Investigation into alleged misuse of major eco-friendly heating scheme

Published 15/06/2016

An alleged racket exploiting an eco-friendly heating scheme is being probed by auditors
An alleged racket exploiting an eco-friendly heating scheme is being probed by auditors

Auditors are investigating an alleged "burning ash to make cash" racket that exploited a renewable heat scheme to leave Stormont facing a potential £20 million overspend.

Whistleblower claims on the alleged misuse of the Renewable Heat Incentive (RHI) scheme have led to the Audit Office probe.

The RHI was axed by former economy minister Jonathan Bell in February.

The scheme incentivised businesses to install costly eco-friendly heating systems by paying them a tariff for the heat they burned over a 20 year period. Thousands signed up to the scheme, which was started in 2012 and extended to domestic customers in 2014.

However, unlike in the rest of the UK, in Northern Ireland no cap was placed on the money that could be claimed in proportion to the size of boiler.

In effect, that provided a loophole that could enable a business to burn a lot more heat than it required, just to make money.

The scheme was tightened up in November with the introduction of a cap, but ahead of the change there was a surge in applications to sign up to the RHI on the pre-existing no-cap tariff system.

The surge left the then Department of Enterprise, Trade and Investment (DETI) exposed to a huge overspend if it was to continue to run the scheme.

The announcement of the closure of the RHI to new applicants came only three months later.

The NI Audit Office is currently finalising a specific report on allegations surrounding the RHI as part of its overall review of DETI's 2015/16 accounts.

A £20 million overspend pressure has been earmarked within the Stormont Executive's central budget in relation to RHI.

It will all have to be paid out if auditors deliver a clean bill of health, but if misuse is identified then a proportion is set to be retained.

An NI Audit Office spokesman said: "The Audit Office can confirm that it will be issuing a report on the Renewable Heating Incentive as part of its audit of the DETI Accounts 2015-16.

"It is anticipated that this will be laid before the NI Assembly pre-Summer recess."

The Department for the Economy - DETI's successor - has not yet commented on the audit investigation.

However, when axing the scheme in February, Mr Bell said he has asked his officials to examine whether the scheme had been operating "to the letter and also to the spirit of the law".

The RHI probe has been undertaken as part of the Audit Office's annual review of the department's accounts and later a spokeswoman for the Department for the Economy (DfE) stressed auditors had not been "called in" to conduct a separate fraud investigation.

"Allegations of possible abuses of the scheme were received earlier in the year, and these are currently being investigated by the department, and should this identify possible fraud, this will be followed up immediately," she said.

The spokeswoman said a "financial pressure" relating to RHI had been outlined to the Assembly by Finance Minister Mairtin O Muilleoir on Tuesday.

"DfE will be taking all possible steps to minimise the additional costs, and the position, when finalised, will be managed centrally within the Northern Ireland block," she added.

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