The Blame Game

First: Cover Your Ass.

First: Cover Your Ass.

Having been focused on travelling and/or working in the later half of 2016 the RHI story was in the background, though hard to miss the heat and noise around the issue.

At the start of 2017 it seemed that despite the heat and noise, there wasn’t much light on the subject. Nolan was on repeat. While plenty of titbits were being bandied about as if Moses had just revealed them himself, nothing seemed to be moving the story forward. The story of RHI had become left behind by the political story unraveling before us.

Worthwhile at this point to rewind. Helpfully, early last July the Northern Ireland Audit Office produced a report on the Renewable Heat Incentive Scheme. You can read the report here along with the summary contained in the accompanying press release.

If you want to know about the Renewable Heat Incentive Scheme then you really should read the NIAO report. It provides a timeline of events, the likely immediate impact on budget finances and a series of actions that had been agreed within the Department of Enterprise Trade and Investment in particular.

And it is worth listening to the short two minute item here from UTV(ITV) on the scheme, closing with the Minister, Simon Hamilton, confirming a pathway forward in respect of addressing the failures of the scheme. The NIAO summary of what was launched into the public arena back in July 2016, is easy to recognise:

The RHI scheme encouraged the installation of costly eco-friendly heating systems by paying a tariff per kilowatt of heat burned over a 20-year period. It was administered on behalf of Department of Enterprise, Trade and Investment (DETI) by the Office of Gas and Electricity Markets (OFGEM).

Key issues in the report include:

  • The excess funding will now have to be met from the Northern Ireland block grant. Over the next five years, this additional cost to the NI block is estimated to be £140 million and significant costs will continue to be incurred until 2036.
  • The Department failed to obtain required approvals from the Department of Finance and Personnel for £11.9 million of expenditure during a seven month period during 2015-16.
  • The design of the scheme crucially did not introduce ‘tiering’ of payments as operated in Great Britain where a reduced rate was applied after the equipment had been operated for 15 per cent of hours in a year. This tiering would have helped prevent potential abuse of the scheme by operating the equipment simply to increase the grant received.
  • The scheme in Great Britain also used ‘degression’ which allowed the amount of subsidy paid to change quarterly in response to changes in demand. From 2012 to 2016 the rates paid in Great Britain fell by 50% while the rates in Northern Ireland increased.
  • Returns available to claimants under the scheme in Northern Ireland appear to be excessive and are committed to for the next twenty years.

It outlines claims of abuse of the system, provided by an anonymous whistleblower in a letter (NIAO Report, page 114):

  • the scheme is not being monitored and it is left to the installer to vet whether suitable businesses can avail of the scheme;
  • there is no comparison made between the cost of the current heating system and the heating generated by the new system;
  • large factories with no previous heating have installed three biomass boilers with the intention to run them all year round in order to collect approximately £1.5 million over the next 20 years; and
  • a farmer who has no need for a biomass boiler is aiming to collect approximately £1 million over the next 20 years for heating an empty shed.

“The fact that the Department decided not to mirror the spending controls in Great Britain has led to a very serious ongoing impact on the NI budget and the lack of controls over the funding has meant that value for money has not been achieved and facilitated spending which was potentially vulnerable to abuse.”  

Kieran Donnelly, Head of the Northern Ireland Audit Office.

The conclusion of his report, Kieran Donnelly also suggested that this would not be the last consideration of the NIAO on the RHI scheme (in paragraph 60):

“I am very concerned about the operation of this scheme and it is an area which I expect to return to in the very near future.”

In a statement, the Economy Minister Simon Hamilton said:

“The Audit Office’s findings in respect of the Renewable Heat Incentive scheme (RHI) are deeply shocking and catalogue multiple failings in the design and administration of this scheme. The potential ongoing costs of this scheme to Northern Ireland taxpayers are incredible and the accusations of fraud will be rigorously investigated.”

Indeed, as the Report outlines, further investigations in two phases, anticipated to be complete towards the end of September, were already set in motion by the Economy Minister at the time of the NIAO reporting:

  • Phase 1 – an assessment of OFGEM’s processes and controls to administer the Northern Ireland RHI scheme in accordance with the Regulations, to assess whether the scheme is operating in compliance with the legislation and highlight any areas of concern warranting further investigation; and
  • Phase 2 – site inspections of a sample of (a) current applicants awaiting award; (b) scheme participants with multiple installations; and (c) scheme participants. (We now know that this process was outsourced to PWC.)

This is of course looking back. Reports, inquiries, investigations by their nature look back at what has happened, how it happened, and what are the lessons to make sure it doesn’t happen again. However, whatever any sort of review, under whatever framework, or however the scope is defined, it would not in anyway bring back the money that the scheme is literally burning out of Stormont’s overall budget.

Looking back is fine, but fixing the known problem and its immediate consequences should be the first priority of any Government wanting to be seen to be capable of the electorate’s trust. Plenty of time for recriminations later.

For all the arguments, it seems strange that the issue of an Inquiry became something on which the NI Executive would collapse. All the more odd that Sinn Fein would be the instigator of that collapse. There are two reasons in particular why this is odd.

First, knowledge of the RHI Scheme failure did not suddenly come to light when BBC Spotlight largely reported on the earlier NIAO report. Something triggered the NIAO Report. That goes back to January 2016 when an anonymous ‘whistleblower’ sent a letter to the OFMDFM. Yes, the first recorded and known whistleblower went to OFMDFM, the Office of Arlene Foster (DUP) and Martin McGuinness (Sinn Fein).

From the outset both the DUP and Sinn Fein had knowledge and from the office of OFMDFM were, presumably, together with the Department of the Economy, fully supportive of the NIAO review. The point here is that the issues around RHI, at least generally, would have already been known to both the DUP and Sinn Fein going into the May 2016 Assembly elections. With the NIAO report probably already underway, RHI was clearly going to be an issue that would quickly make its presence felt on the agenda for the new Executive.

Post election, the Assembly too was picking up on the issue through the Public Accounts Committee (PAC) with a series of hearings starting in September – the minutes are online, though quite a bit of the hearings on RHI seem to be in closed session. Nevertheless, the PAC has been slowly expanding on what the NIAO had reported.

The politics of the current position, however, rests on the relationships within the Government and between the DUP and Sinn Fein Ministers in particular. On that point, it would certainly seem to be the case that RHI was the subject of discussions within the Executive, certainly between the OFMDFM, the Department of the Economy and the Department of Finance…

…because, secondly, you might have the impression that before the BBC Spotlight airing of the NIAO report (published four months earlier) little or no attention was being given to addressing the outworking of the RHI Scheme within the Executive. Sometimes the impression is given that the DUP had buried the issue of RHI in the Department of the Economy and that no-one else was expending energy on the fallout from RHI, because no-one else knew. That would be wrong.

The OFMDFM knew, because that is where the letter landed from the whistleblower that indicated widespread abuse of the scheme. Obviously, the Economy Department knew because it was chasing through on the PWC investigation that it had initiated.

We know too that in at least one other Department discussion on the consequences of the RHI Scheme were consuming long hours. We know this from a short exchange in the Finance Committee which, although the hearing was on something unrelated, brought the following outburst from the Finance Minister with respect to RHI:

  • That the Finance Minister believed responsibility for the fiasco lay within the period Jonathan Bell’s tenure as DETI Minister.
  • That the Finance Minister, along with many others, was now working on how to address the £20 million (20 year) annual cost that would now impact on the forthcoming budget.

Unsurprisingly, Jonathan Bell immediately made it clear he would be happy to discuss his time as Minister at another stage, and a couple of months later took the opportunity on the Nolan Show (transcript here) to robustly defend his time in office. The entire Committee hearing is online, with the edit from about 1’24” to about 1’36”.

The point, however, given the very clear finger of blame being pointed, is that it seems odd for the issue of the First Minister stepping aside to have become such an issue for Sinn Fein. Indeed, from this exchange, with all that effort in the background, it seems unsurprising that the DUP and Sinn Fein had an agreed way forward on the 14th December 2016, which was planned to be presented to the Assembly in a special session on the 19th December. It also makes sense as promotion of the Scheme was enthusiastically supported by Sinn Fein’s Minister Michelle O’Neill’s DARD in co-operation it would seem with DETI. Both DUP and Sinn Fein seem to have ‘invested’ considerable political capital in the scheme.

That the 14th December agreement on the way forward between the DUP and SF had fallen apart by Monday is an oddity, and one which remains unexplained.

With no instant solutions to the RHI impact on the budget, with the need to be grown up and take time to get something very right that had clearly gone horribly wrong, an agreed way forward would have been a message of a strong government and strong Parties of Government.

Instead, Sinn Fein forced an election because the First Minister would not be standing aside to enable an investigation, even though a Sinn Fein Minister had already made it more than clear where he believed the blame should be laid. Furthermore we now have a Public Inquiry announced by that same Sinn Fein Minister, despite the reason given for the election was that the time for an investigation had passed and it was for the people to decide (though on what could be decided without the facts of a full investigation was never clear).

What changed between the 14th December and the 19th December? Why are we now having an inquiry, and an election, when Sinn Fein said it had to be the latter without the former – yet we now have both?

All we know, though not the reason why, is that something in Sinn Fein’s thinking decided that instead of shouldering the burden of Government as it had agreed on the 14th December, it would instead focus on apportioning blame, entirely, on its partner in Government.

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