RHI abuse 'found in 80% of boilers': watchdog report
Fresh evidence of possible abuse of the Renewable Heating Incentive (RHI) scheme has emerged.
A report published today by Auditor General Kieran Donnelly reveals that 80% of boilers inspected since July last year may have breached the rules "mainly in relation to past over-production of heat".
Mr Donnelly said that while costs were reduced last year due to the revised tariffs, significant challenges remained.
He identified ongoing weaknesses in controls in the non-domestic RHI scheme and expenditure incurred without the necessary approvals being in place.
"I was still unable to obtain sufficient evidence that the controls over the spending on the non-domestic RHI scheme were adequate to prevent or detect abuse of the scheme as issues are still being identified as part of the ongoing inspection process," he said.
Mr Donnelly reported on the change in behaviour of RHI participants following the reduction in the subsidy rate on April 1, 2017. Since then the amount of renewable heat generated has fallen by around 44%.
"The significant reduction provides evidence that in some cases, heat produced before April 2017 was not actually required for business purposes but rather some of it may have been produced only with a view to increasing RHI payments," he said.
The 2017 tariff changes have meant that the amount paid by the Department for the Economy to applicants has plummeted from £42m in 2016-17 to half that figure - £21.1m - in 2018-19.
On the 80% of 231 RHI boiler inspections where potentially serious compliance issues had been identified, Mr Donnelly said: "The Department expects that it will be able to resolve most cases through discussion and other actions short of revocation although it estimates that around 10% will enter the Department's revocation process with potential clawback of grant already paid.
"Only three have so far been revoked from the scheme as a result of the last inspection process but the Department has told me that it expects this to increase over coming months."
Mr Donnelly said the Department hoped to complete its programme of inspections by June 2021. "I am pleased that progress is now being made... but would point out that the key measure of success will not be in simply carrying out the reviews, but in the ability to take action where problems are identified," he added.
Meanwhile, Mr Donnelly's audit of the Department for Communities in 2018-19 found estimated overpayments to welfare claimants of £92.3m (1.5% of all benefit expenditure) and underpayments of £30.5m (0.5% of all benefit expenditure).
This related to social security and housing benefit, and the majority of the over-payments - £56.2m - have been attributed to customer fraud.
Mr Donnelly said: "I believe that the overall value of fraud and error in benefit expenditure during 2018-19 remains unacceptably high, and the qualification of my audit opinion reflects that.
"I acknowledge that the Department has put considerable effort and resources into reducing the fraud and customer error, through additional training and funding into error reduction. I would urge the Department to continue its efforts to prevent, detect and reduce the levels of over and underpayments within each benefit."
Estimated total underpayments due to official error by the Department for Communities rose from £16.9m in 2017-18 to £30.5m in the last financial year. This was largely due to an increase in underpayments of social security benefit, which doubled from £13.2m in 2017-18 to £27.7m last year.
In contrast, underpayments of housing benefit by the NI Housing Executive decreased by 50% (£1.2m). Of the 80 accounts of government departments and public sector certified by Mr Donnelly, 75 received an unqualified opinion - essentially a clean bill of health.
The accounts of the Legal Services Agency - previously the Northern Ireland Legal Services Commission - received a qualified audit opinion, meaning there are unanswered questions about finances.
The accounts have been qualified for the last 15 years due to a lack of effective counter-fraud arrangements and weaknesses in the financial estimates of provisions for ongoing legal aid cases.
Mr Donnelly said: "Progress has been made by the Agency and the Department in developing an effective counter fraud strategy. However, further work is needed to produce an estimate of fraud and error by legal aid claimants and legal practitioners.
"A more robust estimation of the Agency's legal aid liabilities is also required. This should improve in future years with the implementation of a new case management system."
Audit qualifications were made on the accounts of two central government departments, one arm's length body and one departmental agency.
Mr Donnelly said: "Timely completion of financial accounts is fundamental to maintaining sustainable and transparent use of public money.
"I would like to commend the work of central government bodies and public bodies which has resulted in such a high proportion of 2018-19 accounts being certified this summer without qualification."