Belfast Telegraph

RHI scandal: Many opportunities missed to review flawed scheme behind meltdown of Northern Ireland Assembly

By Edmund Curran

How much did Arlene Foster really know about the Renewal Heating Incentive scheme during her time as minister in charge of energy?

Since the top civil servant in her department, David Sterling, has admitted having little knowledge of how the RHI scheme was administered, it follows that Foster was most likely in the dark.

Time after time, opportunities were missed to review and alter the scheme and probably avoid the scandal which has surfaced.

The very first chance of doing so came when Foster launched the consultants' original report for public consultation and invited responses, including on the issue of tariffs.

A total of 75 responses were received but, mysteriously, only five were shown to the consultants who admit now they made the first mistake of proposing that the tariff for biomass boilers should not be tiered as it was in the scheme in Great Britain.

It seems that no-one, but no-one - including the Stormont all-party energy committee - queried the lack of tiered tariff or the fact that RHI had no cap on the amount boilers could burn in a year.

Foster's RHI scheme was part of a UK-wide renewable energy policy. Her ministerial counterpart in London seems to have been more directly involved in proposing tariff refinements and cost-control changes.

The two schemes operated in parallel. Knowledge of ministerial statements and reviews was shared from London, and presumably reached the desks of energy officials in Foster's department.

The next opportunity to think again about RHI costs came swiftly, with the launch of the non-domestic scheme when incentives were extended to domestic households. Foster wrote forewords for the schemes, accompanied by her photograph, and extolled the virtues of renewal energy as part of a European Union campaign to reduce the burning of fossil fuels.

Unlike the cross-channel scheme, no changes were proposed here, budgetary controls were not in place, nor did any review of the original tariffs occur until too late. Why that didn't happen has still not been properly explained. "I accept that a review did not take place in my time," admitted David Sterling, permanent secretary at the Department of Enterprise, Trade & Investment (DETI) until July 2014. "I accept that the business case quite clearly said a review would take place in early 2014. I cannot satisfactorily explain why it did not take place."

Was Arlene Foster aware that a review should have been arranged? Sterling told the Public Accounts Committee (PAC) that officials sent her a note advising that a review would take place in May 2014, and another note in the autumn saying the review would now occur at the end of the year.

"The purpose of the two submissions was to alert the minister on progress with RHI. It is normal practice to alert the minister on progress on significant initiatives," said Sterling. "I cannot satisfactorily explain why the review did not take place during the time I was there." Had it done, it would have painted a dismal picture of the non-domestic RHI scheme at that time. When Sterling left Foster's department in July 2014, barely 200 applications had been received.

Nobody was ringing any alarm bells. The original business case proposed a monitoring committee which Sterling said had not existed. If Sterling was not kept informed adequately, then Foster probably sat in her ministerial office oblivious to it all.

Sterling told the PAC: "Application of the control system was deficient. I take responsibility for that."

The two critical factors that gave rise to the RHI loss were the initial tariff design and the failure to conduct reviews.

In a nutshell, what went wrong? First, the flawed tariff. Second, no cost or progress reviews. Third, whatever the warning signals from OFGEN, the energy body charged with monitoring applicants and their usage, no concerns were raised at the top level. Sterling says he had no inkling of the trouble looming. That being the case, then presumably he was unable to brief Arlene Foster.

And finally, there was the failure to act on a whistleblower's warnings in 2013. Foster says she referred the whistleblower to her officials, heard nothing further and left it at that.

In mitigation of Foster and Sterling, they faced a number of major energy issues. Fuel prices in Northern Ireland were soaring - nearly 20% in electricity tariffs, 9% for gas in the Belfast area. The absence of the North-South inter-connector was costing consumers £20m a year in tariffs, and piping gas to west Ulster was a priority. RHI was the least of the worries. "I am not trying to absolve myself," said Sterling. "I am saying that at the time I was more actively in issues beyond the RHI scheme."

So what was the chain of command on RHI from Foster's office? She would have relied on her permanent secretary David Sterling, who in turn had two deputies, one of whom was in charge of the policy unit, under which was the energy division, headed by a grade 5 level civil servant.

For new initiatives, Stormont departments deployed a project management process, known as PRINCE. In the case of RHI, it was never in place. Nor was there a "BF" - bring forward - register of concerns which could be examined.

As far back as 2012, the RHI business case committee had identified at least nine risks, including the danger that the incentive tariff could be either too high or too low. Also, the scheme could be open to fraud or have an inadequate budget in the years ahead.

Because there was no PRINCE monitoring or proper risk register, issues of concern did not reach the permanent secretary's notice, according to his evidence.

If Arlene Foster was relying on him to keep her informed on RHI, then she might have learnt little or nothing.

That said, as the minister who championed the renewable energy scheme, she might have been expected to inquire of her officials as to its progress or otherwise.

While Foster's ministerial counterpart at Westminster was introducing changes and restrictions to the RHI scheme in Britain, nothing happened at Stormont. Her department would have been in regular contact with London, from where statements and letters were emerging setting out tariff reviews and cost restrictions to ensure affordability of the British scheme.

No one at Stormont appears to have taken any notice of this advice and activity.

Foster, herself, might have inquired even informally of her officials as to how the scheme was going and if there were any problems. To date there is no record of her having done so, nor has she given any detail of meetings or contacts which she might have had, either with the energy team or with counterparts in London.

Given the importance of RHI in the wider UK energy strategy, and the fact that renewable energy was uncharted territory, it would be surprising if the minister did not take a keen interest in how it was progressing.

Did she note what was happening across the water in the statements of her Whitehall counterpart? Did she inquire of any of the businesses she visited whether her renewable energy scheme was attractive to them or not? Did she wonder and consider asking any questions as to why only £11m out of a budget of £25m had been spent?

The London Treasury sent an email in 2011 saying that the expenditure on RHI was restricted to 3% of the UK budget, in proportion to the size of the population here. Anything spent over that figure would be for Stormont to find from its own coffers, and any under-spend would be returned to London.

The issue of who picked up the tab for RHI was crucial, but again the Treasury advice did not register at Stormont until the bills started to mount in 2015.

In January 2014, RHI was eventually reviewed but ,though there were early indications of misuse from the limited monitoring of OFGEN, these issues were not acted upon. In his defence, David Sterling told the PAC committee he could not be expected to be on top of everything.

He had depended on others to keep him informed but appears to have been let down in so far as he was left unaware of issues of concern.

Sterling refused in his evidence to apportion blame on others in the energy section, who numbered from 29 to 38 between 2010 and 2014. "The voices of the people who were working on this project need to be heard. They have to be able to give their side of the story. I will reserve judgment after that."

When David Sterling left the department in July 2014, RHI had only 219 applicants. Arlene Foster remained as Energy Minister for another 10 months. Not until March 2015 would the danger signals really register in her department.

By then, it was too late. She transferred in May 2015 to become Finance Minister.

By the time, Foster had entered the First Minister's office, a year ago, the blue touch paper was already alight and Stormont was set to implode.

While the senior figures around Foster in her DETI department up to 2015 have given evidence, others below them have yet to be heard. The civil service is conducting its own "fact-finding" exercise, as any company would do in the face of serious allegations of mismanagement and incompetence.

As for the former First Minister, Arlene Foster, she may reflect that when the full facts are known, she may be more at fault for how she reacted when the story broke rather than for what she actually did, or didn't do, as the minister, who handled the poisoned chalice of RHI.

Belfast Telegraph


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