Andrew Trimble chairs RHANI.org, a group of businesses adversely affected by the Department’s mismanagement of the sole programme to decarbonise heating – 30% of all emissions in Northern Ireland. Here he provides an alternative narrative as to what went wrong and continues to plague the commercial Renewable Heating Incentive scheme (RHI).
Some still believe that the collapse of Stormont in 2017 was about RHI. Some believe that the actual overspend was a telephone number-like sum of hundreds of millions of pounds. Some still believe that DfE-run RHI was a scam perpetuated by insiders within Stormont to or, that it was a sectarian plot – a “protestant scheme for protestant people.” Some still believe that the politicians at Stormont run the civil service, that Conor Spackman burned real money or that “monopsony” is a board game.
If you are such a believer, please read no further.
RHI became shorthand for a monumental civil service screw-up. The follow-up has been worse, others have been much worse. It is as if civil servants had convinced politicians that if they terminated RHI, good government and an uplift in Civil Service performance would result. The shambolic system at Stormont cost the NI economy £33.8 m – check the DfE website. Stormont’s shambolic response has cost a further £130 millions loss. Ring-fenced monies -provided solely to decarbonise commercial and domestic heating – have been unspent; returned to HM Treasury every year since 2018. In July 2017, the Auditor General said so. No-one listened.
In 2020/21, the first year for Project STRATOS, the rural broadband project, the overspend was £30 million. The same NI Assembly Committee responsible for oversight of RHI, had oversight of STRATUM. No-one blinked an eye. A further £160 million was the price tag for the £100 shopping voucher scheme – again approved by the same Assembly Committee.
The NI Executive needed to have 29,000 low carbon systems in operation to achieve the 2010 Energy Strategy and Climate Change objectives, by 2021. The problem? The NI government ran out of money at 1,500 systems. To solve their overspend problem, Stormont promptly added a further 300 systems (of a different size), on a further twenty-year contract – creating a multi-million-pound liability.
For some journalists (especially the lazy ones), trotting out memes unconnected with fact, is a stock in trade. Yes, the usage was uncapped. Yes, a significant number of boilers were operating at more than the Department’s assumption of about 3 hours per day. And yes, small numbers were actually being run almost constantly but, paradoxically, these same systems were still operating at the same rate after the most stringent of audits. Why, and did it matter? The answers are: because they are needed to support heat-critical operations and checked out on audit and did it matter? No. Facts and relevance are two different concepts. Our politicians struggle with the former.
Fact: in 2015/26, the Auditor General was informed (presumably by DfE), that fuel was £150/tonne and the ratio between fuel and rebate was 1 : 1.6 – hence for every £1 of fuel, the rebate was £1.60. Just what the relevance was to a care home owner who shelled out £95,000 for a fail-safe bio-energy system and paid a further £4,000 per year in servicing, no-one asked. What the current ratio is for fuel at £400/tonne, no-body knows.
Legitimate high energy usage supported 24 hour operations, like the manufacture of chemicals to control water pollution. Many were in care homes or hospitals or kept council swimming pools at an acceptable temperature. Under half of the installed systems are in agriculture: dairy parlour hygiene, drying of grain and livestock care. Other high energy users include farming of day-old chicks to maturity. Day old chicks cannot sustain their body temperature. In adverse conditions, they die. It takes a huge amount of energy to heat a chicken shed, the size of a football pitch to an air temperature of thirty three degrees Centigrade. A protracted period of heating is needed for the concrete floor to reach thirty degrees. Failure to do so and thousands of chicks will die by day two. With the previous rebate, maintenance of optimal growing conditions was achievable and affordable. After the rebates were cut, optimal conditions were unaffordable. Notifiable animal diseases rocketed by 400% year on year.
That won’t stop some journalists (and in one case the Auditor General), from stating that running a system 24/7/365 could potentially generate a lot of money. Under high usage, the boiler would quickly burn out and become useless. But, supposedly, over 20 years and four or five replacement boilers, an operator had the potential to receive a rebate that was huge.
No-one thought to check what the future cost of the fuel, electricity and servicing, would be. No-one spotted the critical error in the assumption that the rules ever allowed for a system burned-out in year four, from ever being replaced again and again. It was a false assumption. The potential could never be realised. The scheme rules didn’t allow for such replacements. Just who started the meme that was repeated by the Auditor General?
In the febrile politics of Northern Ireland in 2017, it would have been more socially acceptable to be a drug dealer, than to be identified as an RHI Scheme participant. High profile professionals sought anonymity orders in the High Court in an attempt to protect their reputation. Scheme participants became pariahs overnight.
Only bad news (or potential bad news) hits the headlines. A (potential) £490 million mistake by Civil Servants brought out all of the “blame-throwers.” The RHI Public Inquiry was like a veritable circular firing squad – involving civil servants (who didn’t keep notes), politicians in the scrutiny committee, either asleep on watch or denied accurate information, with issues driven by hapless Ministers with their shadowy SPADs, keen to advance the narrow political agenda of their party. All vied to blame someone else. The flogging of the innocent and promotion of the guilty was the result. The innocent are the business that believed in the government.
Monopsony was coined as an explanation of the economic vulnerability of the “independent” producers of poultry for a global meat processing conglomerate in which, to be considered as a contractor, they must first borrow hundreds of thousands of pounds to erect modern housing and then, to meet green-credentials required, must invest in a green heating system. This situation was created by the government. The multi-million pound Public Inquiry decided that running such a complex scheme over the planned 20 years, was “too far” for Stormont. It was, and it remains so.
Within the general public, if it were their business or their home that will be lost through no fault of their own – save trust in Government, they might pay more attention. This is the position that many of the businesses, churches, care homes and charities now face. The rebate in payment is inadequate, a cash buy-out won’t pay-down the balance of the loans and, after tax, the remainder would be pitifully inadequate. The 1,200 small businesses had invested over £130 million in the systems – much borrowed from local banks and finance houses.
To salve this wound, what was needed was truth, justice and accountability.
The RHI Public Inquiry gave the truth. The national Courts have ruled that parliament (Westminster and Stormont) is sovereign and can decide what is best. There has been no accountability. Senior officials responsible for the Departments have been recycled as TV pundits on good governance and the politicians accountable (but not responsible), have left the field.
In the summer of 2017, the Auditor General was informed that the cuts imposed that April would result in an underspend every year from 2018. His evidence to the Public Inquiry was the projected overspend had assumed that every one of the 2,128 systems supported by RHI would continue in service until 2036. That was an unrealistic assumption. The same statement concluded that, from 2018, spending would be less than the guaranteed income of £29 million per annum. No further cuts were required.
By the time of the October Judicial Review, the facts had changed. DfE estimated almost £700 million at risk. Or, perhaps £160 million – or less, if the 2 power plants are never built. Fast forward to 2022 and, in face of extreme weather, Climate Change and a pressing need to decarbonise heat – which causes over a third of all carbon emissions in NI the forecast £700 million overspend had become a potential underspend of equal or greater value – a £1.2 billion variance in the Department’s forecast.
In 2019, the 2017 cuts to the rebate were followed by a further catastrophic 90% slash in rebate. Running climate change-promoting oil and gas systems is so very much cheaper: more than 800 systems were effectively out of use last year. In the rest of the UK, the rebate is more than 600% greater than in NI.
Neither of the subsequent revisions to the rebate proposed in 2020 or 2021 have been approved by the Executive. One was a proposed uplift by more than 40% and the second proposed more than doubling the rebate. The Department of Finance went so far as to borrow £91 million to plan to terminate the Scheme and pay compensation to those who had trusted in the “guarantees”- only to be informed by an independent review that their per system estimate was out by about £90,000, per boiler. Their estimate of a £65 million bill in compensation, was no longer valid. The bill would be at least four times greater: the 7% reduction in emissions that had been achieved by the conversion to bio-energy would be reversed or more – participants would be expected to buy a replacement fossil-fuel system with their compensation, or what was left of it after tax.
In one of the many ironies about DfE’s handling of this shambles was that the Department – which had previously encouraged banks to lend money on the back of their guarantee, then called the same banks and finance firms into DfE headquarters – to encourage banks to rescue businesses from collapse by restructuring the loans which were no longer affordable on systems that were no longer economically viable. The banks obliged, changed fixed rate loans and mortgages for variable rate loans, demanded land in security and charged £3,000 per client for their help in averting melt down. In many cases, finance agreements could not be restructured so the DfE initiated cuts ensured that the melt-down happened. Businesses went to the wall.
Now, more than 6 years after the crisis, the beleaguered department, the NIO, HM Treasury, and SofS NI, all of whom had a hand in the overspend of £33.8 million which was at the core of the crisis, and the subsequent shambles, remain in denial. During the crisis, the “potential” overspend was huge – almost as big as the potential ability of those reporting it and then those repeating it (often in the Assembly) to get it wrong. MLAs of several parties are on record as claiming that the potential overspend had actually already happened.
The income for the Scheme is an assured share of the national spend and is currently £33.5M per year- ring-fenced, solely to support decarbonisation of heat. The national scheme will pay out until 2042. If the income is greater than the spend, the balance is returned to HM Treasury. To date, more than £130M has been returned, unspent.
Storm BABET was the most recent example of extreme weather patterns which scientists attribute to global warming. The accepted solution is to decarbonise. Decarbonisation is the stated intention of both Westminster and Stormont – indeed, in the dying days of the last Assembly, against the advice of the independent Committee for Climate Change, the NI Assembly introduced statutory targets for the reduction of emissions from burning fossil fuels like oil, gas, coal and turf. Greater than 7% of homes in NI have an open fire as their only source of heating and the gas grid serves the urban centres and heavy industry on the “Gas to the West” pipeline. The national boiler replacement grant Scheme doesn’t apply to NI but, in the rest of the UK, an off-grid property could benefit from a £7,500 grant towards a bio-energy or heat pump system. We are great at re-carbonising our economy; lots of government COVID loans were used to rip out green energy systems and replace them with an oil-fuelled system.
Local politicians are now keen to squabble about something else. Under the Windsor Framework, any new stand-alone bio-energy scheme will require EU Commission approval. The Secretary of State doesn’t grasp that his predecessors’ finger-prints are all over this mess. Their interventions have been in 2018, 2019 and 2020. Both he and Steve Baker state that the resolution of the mess sits within the “competence” of our NI Assembly. They clearly haven’t noted that the RHI Public Inquiry didn’t give Stormont high marks for “competence” or, that of the 44 critical recommendations, only 18 had been delivered by Apr 2022.
EU Commissioners have written to advise that it is not their role to protect Scheme participants from under-compensation; the rationale put to them by DfE for the cuts has been the insistence by NI Civil Servants that the Scheme was too generous and “over-compensated” all participants (apart from the 480 who would have qualified for the £12 million voluntary buy-out), authorised by Westminster – a proposal which DfE proceeded to abandon.
Both the NI RHI and the national RHI are supposedly delivering the same rate of return to participants. The difference? The national Scheme is more than six times as generous. The EU Commission has been advised that they are identical but that the NI Scheme was “more equal” than the other. To believe this, you would either need to be very poor at mathematics, or erroneously believe that there ever was a colossal overspend. You might even believe that terminating RHI would refresh and restore public confidence in NI politicians and in the Civil Service and assure that all parties would return to government at Stormont. If you believe that any of the above apply, there are about 50 sleeps until Santa comes calling on you.
This is a guest slot to give a platform for new writers either as a one off, or a prelude to becoming part of the regular Slugger team.