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RHI report findings shine spotlight on failings in scheme

Officials and special advisers to ministers were covered by Sir Patrick Coghlin’s report.

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Pellets burning inside a biomass boiler which was purchased with the aid of the Northern Irish version of the Renewable Heat Incentive (Liam McBurney/PA)

Pellets burning inside a biomass boiler which was purchased with the aid of the Northern Irish version of the Renewable Heat Incentive (Liam McBurney/PA)

Pellets burning inside a biomass boiler which was purchased with the aid of the Northern Irish version of the Renewable Heat Incentive (Liam McBurney/PA)

Here are some of the key findings from the RHI report:

The overseeing Department of Enterprise, Trade and Investment had previous experience of running a grant support scheme for renewable energy and was not starting completely from scratch.

– The inquiry did not believe it would have been impossible to agree wording which allowed Northern Ireland to be included in the Great Britain scheme or UK-wide version.

The difference was that in Northern Ireland a price cap was not imposed and this allowed costs to rise.

Renewable Heat Incentive inquiry
The Renewable Heat Incentive inquiry was led by Sir Patrick Coghlin (RHI Inquiry/PA)

– A “tension” existed between whether to adopt a Northern Ireland-specific approach or be part of initiatives in Great Britain.

“It would have been very difficult for officials to decide which of two differing directions to follow.”

– The Treasury ought to have clearly informed the Stormont department which designed the scheme, Deti, of the basic structure of the method of funding employed, an annual allocation designed to be more flexible and reflect the unpredictable nature of the scheme.

That should have included the element of “risk sharing” with the devolved administration’s budget whereby overspending would fall to Stormont’s coffers to cover.

– The design of the RHI scheme should have included proper consideration of the controls needed to reflect the position of heightened financial risk.

– Resources to develop this “novel and complicated” scheme were “inadequate”.

“The small team was simply not provided with the necessary knowledge or experience to carry out the necessary activities, to analyse the information it received, to make the necessary judgments nor was there any adequate effort to access expertise in other parts of the Northern Ireland Government.”

– Failings around project management and the RHI scheme were more “unacceptable” since throughout its life Deti was actively considering failings from previous projects.

Renewable Heat Incentive inquiry
DUP leader Arlene Foster was energy minister at the time (Jonathan Brady/PA)

– It is unlikely that official Fiona Hepper, former head of the renewable energy team, “adequately and effectively” explained to former energy minister Arlene Foster the potential risk to Stormont’s budget caused by overspending.

“Not ensuring that the minister clearly understood about the restricted comparison provided continuing misleading confidence about the value for money of the Northern Ireland RHI scheme.

“Not ensuring that the minister clearly understood the risk to the departmental expenditure limit budget is likely to have significantly reduced the appreciation of the necessity for budget control mechanisms.”

– Mrs Foster’s then special adviser, Dr Andrew Crawford, should have sought summaries of a report which warned of the potential for overspend.

– Regulator Ofgem did not undertake a promised independent risk assessment which it had said would be carried out and failed to develop a fraud prevention strategy specific to Northern Ireland.

– Despite a submission to the minister assuring her that payments would only be made for “useful heat”, such a condition was not laid down in 2012 regulations underpinning the scheme.

– The “false economy” of the decision to prioritise the potential saving of a few million pounds in administrative costs over the potential saving of £200 million to £300 million in subsidy spend with a special Challenge Fund was not drawn to the minister’s attention and should have been.

– The minister should have asked more questions and sought further reassurance in relation to some matters surrounding a ministerial submission in 2012.

– Mrs Foster’s department should not have described a business case to Stormont’s finance department as “standard”; “contentious” would have been more appropriate.

“Important information was obscured by the sheer volume of data and a series of errors went unrecognised and important messages missed.”

– Cost control warnings given by regulator Ofgem were not highlighted to Mrs Foster by an official.

“The need for expediency and early delivery of a novel and volatile scheme cannot be used retrospectively to justify or explain the absence of a record of a conversation in which the minister was said to have been referred to the emphatic warning from Ofgem.”

– The extent of staff turnover in 2013/14 at the division overseeing the scheme robbed it of skills and knowledge already acquired and should have been escalated to top management – suggesting lack of leadership.

– The “very clear” emerging picture within government jobs creation body Invest NI of a potential loophole allowing people to install multiple boilers to maximise the amount of subsidy was not communicated to the department overseeing the scheme.

– Sinn Fein leader Michelle O’Neill’s agriculture department should have made Deti aware of “excessively generous” rewards for participants.

RHI whistleblower
Sinn Fein deputy leader Michelle O’Neill addressed the media over allegations made during the RHI Inquiry about Martin McGuinness, after Arlene Foster insisted he knew about RHI whistleblower concerns (Rebecca Black/PA)

– Officials seemed to believe that people would not abuse the scheme.

“A culture which allows such blinkered belief in the correctness of their approach is of significant concern to the Inquiry and must not be allowed to continue, if such a situation is to be avoided in the future.”

– When Jonathan Bell became energy minister he felt he had no choice but to accept the appointment of his special adviser, Tim Cairns, a situation that “fundamentally undermined” the personal nature of the appointment and the high degree of trust required.

– The inquiry found no objective evidence to support Mr Bell’s allegation that Mr Cairns intervened to keep RHI matters off the agenda at meetings.

– A proposal made by Mrs Foster’s special adviser would have ensured the scheme remained over-generous to participants and poultry farmers in particular. His suggested amendment was not discussed with Mrs Foster.

– Dr Crawford’s suggestion was aimed at benefiting poultry farmers, an industry in which his family was “clearly involved”.

– Ultimately Dr Crawford did not deliberately delay the introduction of cost controls.

– The extent of information passed on to some market participants by officials was “wholly inappropriate”.

– Officials appear to have had no commercial awareness about the potential impact of the information (about changes to the scheme) they were providing.

– The “selective nature” of officials’ contacts was capable of producing significant market distortion by providing commercially sensitive information to some parties but not others.

“The inquiry finds it totally unacceptable that Dr Crawford provided confidential information to external parties, including his family.”

Renewable Heat Incentive inquiry
Poultry farmer Ronnie Wells’s biomass boilerwas purchased with the aid of the Northern Irish version of the Renewable Heat Incentive (Liam McBurney/PA)

– Submissions to close the scheme early in 2016 were discussed between energy minister Mr Bell and his special adviser. Collective lack of clear leadership led to “unnecessary delay” in clearing submissions.

– The decision to grant a two-week reprieve on closing the scheme to new applicants in 2016 was “reasonable” due to the risk of legal challenge. A spike in applications was recorded during that period.

New reduced tariff proposals were put forward in 2017.

“The inquiry finds that the heightened degree of suspicion, lack of co-operation and lack of trust between the political parties with respective responsibility for the Economy Department and Finance Department during the period from late 2016 to early 2017 did not facilitate the particular and pressing need for the achievement of a timely solution of the RHI problem in the public interest.”

– It was a “major failing” that Ofgem did not provide Deti with copies of audit reports from inspections of Northern Ireland’s RHI scheme.

– In June 2012 Ofgem warned Deti officials about the need for cost controls but the inquiry said it should have communicated with the department again once the risks had clearly materialised.

– It did not require any particular expertise on the part of departmental officials to see that the cost of fuel was less than the subsidy and to question this.

– Market participants required less than a few weeks to discover an “unintentional and damaging” flaw behind the failure to apply tiering to the small and medium biomass tariffs, “resulting in the risk of overcompensation and or exploitation”.

“The failure of Deti to carry out any review of what was a novel and volatile scheme represented one of the major failings that allowed expenditure to race out of control.”

It added: “This failing once again demonstrates the dangers of inadequate project management, the lack of recognised processes to manage staff turnover and the handover of important information to assure business continuity and maintain institutional memory.”

– Personal relationships between civil servants and ministers had the potential to become “over-familiar”.

– The DUP and Sinn Fein “breached” the spirit and/or provisions of law passed by the Assembly in 2013 and mandatory codes issued by the finance department.

“The practices adopted by the DUP and Sinn Fein in centralising the appointment, control and management of special advisers (Spads) effectively frustrated that purpose of the democratically enacted legislation.

“As a consequence, some Spads wielded very significant power and were encouraged to see themselves as more directly responsible to the central authority or Office of the First Minister and Deputy First Minister and their political parties than to their individual ministers.”

– Neither Dr Crawford nor another DUP Spad, Stephen Brimstone, formally recorded potential conflicts of interest in 2015/16 when they ought to have. They took part in meetings in RHI which they should not have.

“The realpolitik observed by some ministers in these circumstances appears to have produced a number of advisers with wide powers and influence who were appointed and operated in practice outside the code of conduct for special advisers.”

– Deti’s internal governance systems failed over four years as a conduit to deliver important information to senior management about the “flaws and mounting risks” of the RHI scheme.

“The systems were not fit for purpose where RHI was concerned.

“Responsibility for this must rest with Deti/Economy Department’s successive permanent secretaries/ accounting officers, Mr (David) Sterling and Dr (Andrew) McCormick.”

Renewable Heat Incentive inquiry
Copies of the published report from Sir Patrick Coghlin’s Renewable Heat Incentive (RHI) public inquiry outside Stormont in Belfast (Liam McBurney/PA)

– Opportunities to scrutinise the scheme as part of an audit of external delivery organisations did not materialise but the responsibility for decisions about the audit plan that led to these shortcomings must be shared with the permanent secretary.

– Lack of technical expertise, imprecise drafting, pressure of time and resources, and failure effectively to retain or pass on corporate knowledge resulted in “numerous mistakes and omissions” being made in policy advice provided by officials.

These were significant importance and were often repeated in later submissions or other documents used to transmit or explain decisions, thus compounding errors.

– When, in 2015, problems with the scheme became apparent, the quality of advice to the then minister was sub-optimal and aspects of it were unclear and inaccurate.

The system for ensuring the quality of such advice was not adequate.

PA