by Sam McBride
The inquiry heard illuminating evidence from two Ofgem figures who worked closely with DETI officials in the design of the scheme. Both of them separately said that they believed the civil servants were under pressure from someone higher up in Foster’s department to get the scheme opened quickly even though they knew it was flawed. Both Catherine McArthur, a former senior policy adviser to the Energy Minister in New South Wales, and Keith Avis were clear that the urgency did not originate with the officials they dealt with. When asked for her sense of where the time pressure was coming from, McArthur said:
My sense, having worked with [DETI officials] Peter and Joanne, is that there was somebody – a layer removed perhaps from them; I don’t know how many layers removed – who was putting on the time pressure and was making the decisions. It seemed that they were unable to give guidance or a steer of any kind which to me suggested that they didn’t have a great deal of control necessarily and that it was in somebody else’s hands.
Avis had a similar sense:
My overall view is that it [the time pressure] was coming from high, high up in the organisation – that it really was something that they were very much committed to and if, throughout this process, you mentioned about timing or any sort of delay it was very much ‘we hear what you’re saying; however we have got a commitment to push forwards’. I think there were stages where there was direction right at the top, at ministerial level, where there was a need to move forward quickly.
That impression is clear from a contemporaneous email from Ofgem’s Matthew Harnack to colleagues in August 2012. Relaying a phone conversation with Hepper, he said: ‘They noted that the minister is adamant that the scheme must go live in October, and I had to give them an assurance that there is no risk to this happening …’ Foster told the inquiry that if officials took her desire for haste to mean that they should press ahead with a defective scheme, they were wrong and they did so without ever properly informing her.
The final point at which it is alleged there was still a chance for DETI to pull back from the brink towards which it was rushing came just days after the June 2012 teleconference call with Ofgem. Hepper, who said that those on the call had fed the Ofgem warning through to her, insists that she spoke to her superior, David Thomson, and then to Foster herself. Thomson said that he recalled Hepper having brought the issue to him and that at that point she was going to bring the issue to Foster for a decision. But that critical conversation is now disputed – and with no written record of what actually transpired, it is Hepper’s word against Foster’s. Hepper told the inquiry that she had a ‘clear recollection of the conversation with the minister’ about the warning and that ‘I don’t believe that this was downplayed in any way’.
When asked if the minister was told specifically that Ofgem’s recommendation was not to proceed without cost controls, she said: ‘Yes, and I did not downplay that; I said that’s the advice from their lawyers.’ Hepper admitted that there had been no formal written ministerial submission on the issue, and accepted that with hindsight that ought to have happened but blamed time pressure for not having done so.
The DUP is a party which is exceptionally precise in its use of language – even when lawyers are not involved. For that reason, Foster’s evidence to the inquiry on this point was striking for what it did not say. In her written evidence to the inquiry – evidence which would have been carefully put together – Foster, who by then was DUP leader, said: ‘I have no recollection of being clearly informed about the risks of proceeding without cost controls.’ Because of what it does not say, the comment leaves open the possibility that Foster was informed clearly but has forgotten it, or even if that was not the case that she was informed in some way of Ofgem’s warning – but not in explicit terms. Whatever happened in that conversation – if, as seems to be the case, it took place – nothing was done to halt the launch of a scheme which many, if not all, of those launching it had been told was seriously flawed.
***********
The die had now been cast and only the formalities – and at Stormont they often tended to be formalities – of passing the legislation through the Assembly chamber stood between the hapless scheme being opened to those who would enrich themselves from it. On 18 October the scheme was brought before the Enterprise, Trade and Investment Committee – the cross-party Assembly committee which scrutinised Foster’s department – and sailed through without its fundamental flaws being spotted. The minutes of that meeting indicate little of what transpired, but it would later be claimed that, as with the minister, the committee was not given the full picture by officials.
Four days later, the regulations came before the entire Assembly where any one of the 108 MLAs had the chance to question what was happening. In a brief 460-word speech, Foster gave little of the key detail about how the scheme would operate. But she did talk about ‘my department’, ‘my commitment to the sector’ and ‘my desire to see levels of renewable heating increase’. Her comments were typical of how many Stormont ministers – but particularly Foster – liked to operate. The minister was eager to be associated with a scheme, which she thought would be politically popular, rather than modestly pointing out – as she would later claim – that most of the significant work was done by her officials.
Speaking on behalf of the scrutiny committee, Patsy McGlone, its Social Democratic and Labour Party (SDLP) chairman, welcomed the scheme but said that ‘some concerns have been expressed that the tariffs for the renewable heat incentive are lower than those in Britain’. He claimed that the committee’s scrutiny of the proposal had been ‘considerable and reflects the importance and long-term nature of the proposals’. And he went on to pledge that the committee ‘will pay particular attention to the reviews, and it will scrutinise the implementation of the scheme’, something it would fail to do.
However, although those comments turned out to be an embarrassing overstatement of the committee’s largely acquiescent role in the process, McGlone did raise the fact that the green energy charity Action Renewables had expressed concerns that the ‘rates and bands for biomass could create a distortion in the market and lead to applicants installing boilers with a smaller than required capacity’. McGlone’s support for Foster’s scheme was surpassed by one of the DUP members of his committee, who was positively gushing about RHI. Robin Newton, who would go on to become a highly controversial Speaker of the Assembly, told the chamber that it was ‘a good news story’ in ‘an area where, I believe, we are often maligned, and I do not believe that that maligning is justified’. In remarks which are now excruciating to read, Newton said: ‘This project is leading us down a road, and I believe that, when we reach the final stage, the economy of Northern Ireland will have benefited significantly from the steps that the minister has taken.’
Sandra Overend for the Ulster Unionist Party referred to CEPA’s report – sections of which were dangerous garbage and with tables where the numbers did not add up – and enthused that it had ‘undoubtedly been invaluable in informing decision-makers on the best way forward’. The only other speakers in what could not accurately be described as a debate were Alliance MLA Chris Lyttle, Green MLA Steven Agnew and Sinn Féin’s Phil Flanagan, each of whom also welcomed the scheme. Without a single dissenting voice, The Renewable Heat Incentive Scheme Regulations (Northern Ireland) 2012 passed their final legislative hurdle and became law. But there was a remarkable fact which went unrealised by everyone in the Assembly chamber that day: Foster had not even read the legislation which she was asking MLAs to vote into law. The minister made the admission almost six years later when being grilled by the public inquiry. In a revelation which left some of her DUP colleagues slack-jawed in disbelief, Foster casually said that she had ‘definitely not’ read the regulations.
Under questioning about a deficiency in the regulations whereby they did not adequately define ‘useful heat’ eligible for subsidy, making it more difficult to crack down on potentially fraudulent claims,
Foster said that she ‘imagined it would have been defined in the legislation’. When asked if she had at any stage read the regulations, Mrs Foster said: ‘No. No, I didn’t. So there’s … absolutely not. I didn’t read the regulations.’ David Scoffield QC for the inquiry asked Foster if she would have read the regulations when she brought them to the Assembly for approval. She said: ‘No, I don’t believe I would have read them at that stage. I probably would have only read the explanatory note, but not the regulations involved.’
The clarity of Foster’s recollection about not reading the legislation was striking because that day at the inquiry she had repeatedly used phrases such as ‘I don’t remember’, ‘I can’t recall’ and ‘I don’t think I have any clear recollection’ about key meetings from 2012 which went unrecorded. The tone with which she spoke and her body language conveyed no embarrassment at the admission that as a government minister she had not read a piece of legislation tabled in her name and which she was asking MLAs to endorse.
***********
Given the centrality of Crawford to this story, there is an intriguing footnote about this period. Before joining the DUP staff team in 2004, Crawford had worked for two years as a policy officer for the Ulster Farmers’ Union (UFU).
His time at the UFU – a body with major political clout in Northern Ireland – coincided with the two-year tenure of a Londonderry farmer, John Gilliland, who had been elected as the union’s youngest-ever president at the age of 36. Gilliland was a green energy pioneer who specialised in biomass, running boilers on his farm long before RHI and growing willow, which was turned into wood chip to be burned in biomass heating systems. He was no stranger to politicians, having stood as a unique independent candidate in the 2004 European elections with the backing of the Alliance Party, the Workers’ Party and a rainbow coalition of other smaller parties. Foster told the inquiry that she knew that Crawford and Gilliland ‘would have known each other for quite some time’.
In spring 2011, Gilliand wrote to Foster about his ‘favourite bug bear, a Northern Ireland Renewable Heat Incentive’. He relayed how David Dobbin, the chief executive of major Northern Ireland milk processor, Dale Farm, had said that the delay in launching RHI ‘was severely undermining the Northern Ireland dairy industry’s competitiveness against his GB competitors’. The correspondence shows that Foster was being personally contacted about RHI and therefore presumably was asking internal questions about it in order to be able to respond. Gilliland met Foster and Crawford at DETI’s Belfast headquarters in August 2011 to discuss RHI. Without a minute of the meeting, it is unclear what exactly was said. But it is clear that Gilliland was pushing the minister to get the scheme launched.
Although a committed environmentalist, Gilliland had more pressing personal reasons to secure the subsidy. In 1996 he had set up Rural Generation Limited, a research and development company exploring uses for wood chip, and the company had gone on to sell biomass boilers. In 2009, the firm had installed a biomass boiler at Stormont Castle.
But as the long-delayed RHI remained uncertain, the firm struggled to stay afloat and cashflow dried up in late 2012. On 2 November the company was wound up. Gilliland was interviewed by the Irish Farmers Journal and that day the journalist contacted DETI to ask for a comment from Foster. None arrived. However, he was advised to look for a public statement from the minister the next day. On the morning of 3 November, Foster announced that Stormont’s RHI scheme was finally opening. Crawford phoned Gilliland that night and commiserated with him over the demise of Rural Generation Ltd. Gilliland later recalled that the spad had ‘encouraged me to get back up on my feet and said pioneers such as myself would be required to deliver this new policy on renewable heat’. What the public did not know was that even though Foster was inviting applications to her shiny new scheme, there was no one to accept those applications. In DETI’s haste to open RHI, it had done so before finalising terms with Ofgem to administer the scheme. Hepper told the inquiry that the department had a ‘line in the sand’ date for launch and was determined to do so. The small matter of not having anyone to run the scheme was not going to stand in DETI’s way.
DETI was now in a weak position to negotiate Ofgem’s fees. A huge increase in the administration costs left Hepper furious, but there was no one else to run RHI and it had already been opened. Eventually, they settled on a compromise figure. But there were a series of unresolved issues which would lead to disputes down the line. It would later also become clear that Ofgem was planning to inspect only a tiny handful of RHI installations – something which meant that fraudsters were unlikely to get caught.
But even though the scheme was profoundly defective from the outset, the damage did not have to be fatal. If the tariffs were reviewed regularly and the scheme was monitored, it would quickly become apparent that there was a problem. Even in that optimistic scenario, the first claimants to get into the scheme would benefit from a grossly over-generous subsidy. But the problem would be halted before it became insurmountable. However, what was to follow would make it much harder to believe that what had happened in setting up the scheme so disastrously had been entirely accidental.
CHAPTER 6
CASH FOR ASH BEGINS
From the very first biomass boiler he installed, Neil Elliott knew that RHI facilitated a simple practice: burn to earn. The plain-spoken Fermanagh businessman had hired an installer, who had worked on the GB RHI, to assist his small renewables firm with its first contract for an RHI boiler. Elliott recalled the installer’s question: ‘What’s tier one? And what’s tier two?’ The baffled businessman replied: ‘What’s a tier?’ The installer changed the question: ‘When do you fall off?’ Elliott replied: ‘No, there is none in Northern Ireland. It’s open.’ Bewildered, the installer asked: ‘What? What do you mean it’s open? There’s no cap?’ Elliott later recalled:
We’re [saying to him]: ‘No. It’s just as much as you …’ And suddenly, everyone then realised, you know, ‘I’m paying 4p a kilowatt-hour for fuel here, and I’m getting possibly 6p at that stage or whatever, so I’m making a third here. And that’s it. And I can just use it as much as I want’. So, energy efficiency just went out the window and it was just essentially: ‘Use it as much as you can. You can’t lose.’
Elliott, an adventurer who in 2006 had led a small team of climbers to the top of Mount Everest, had been in the renewables business for a few years when RHI launched. Speaking with candour to the RHI Inquiry in 2018, Elliott recalled: ‘It just grew and grew and grew, to the point [that] we would have had ten times the staff we had initially – just on the RHI alone. It just became so big. It was incredible.’ But even though he could quickly see the fatal flaw at the heart of the scheme, prospective customers were not always easy to convince that it was a sound investment:
People weren’t aware of it, I suppose, initially. They didn’t understand it. And maybe, somewhat, they didn’t believe it either … one of the first ones we would’ve quoted for was a hotelier, and all his mates were in a hotelier association. They kinda laughed at him and said: ‘Ach sure, that — you couldn’t believe that that’s true’. But whenever the money started flowing from the RHI, they [saw] ‘this thing’s real’. And just the word of mouth got out and it just grew and grew from there.
Elliott said that he took no action to alert DETI to the flaws he could see ‘as we thought that DETI would cap the scheme or amend the scheme to the same scheme as the UK mainland … we did not communicate any potential flaws in the scheme to anyone, but it was widespread knowledge within the renewable industry that the incentive was too good to be true.’ Elliott said that he could not see how the department – or anyone else – was unaware of what was going on in open view. And yet that is what the civil servants and politicians would later claim.
When DETI later attempted at the inquiry to explain how it had failed to understand the biomass gold rush, it initially claimed that there had been a ‘conspiracy of silence’ from the industry. Howe
ver, Andrew McCormick, who would go on to become the most senior civil servant in DETI, then contradicted that allegation and said that based on what he had come to see he realised there were warnings, but ‘if people aren’t listening, then it’s not much good people trying to speak to them.’ Elliott said that ‘not unless you were blind and deaf’ could anyone have remained unaware of the problem. ‘Any event you went to, all installers were advertising the same thing: cash for ash, earn as you burn. Everyone knew, in the renewable industry, including the customers. The more energy you used, the more you got paid. I can’t understand how anyone could say they couldn’t see that.’ He went on: ‘I can’t understand how anyone could say they didn’t understand, because I’m not superintelligent, so it wasn’t that I knew something that others didn’t. You know, everybody knew that the RHI was what it was.’
Elliott said that at Department of Agriculture events, to promote green energy to farmers, there were so many renewable installers that the organisers had to erect a marquee to fit them all in. The regular events – at which DETI officials were present and met installers – lasted for a large part of a day. Elliott said that installers were openly flogging their wares based on the ultra-lucrative RHI, with slogans such as ‘cash for ash’ prominently displayed. DETI’s Peter Hutchinson, who gave talks at some of the events, said that he did not recall ever seeing such lurid marketing.
The then Sinn Féin minister at the Department of Agriculture was Michelle O’Neill – who would go on to become deputy leader of her party. O’Neill defended her department’s role in advertising the subsidy, telling the inquiry that it had a responsibility to raise awareness of government initiatives relevant to farmers but ‘it was for the DETI minister and department to ensure the scheme was fit for purpose and value for money. It is not the role of a minister or department to scrutinise the work of another minister or department.’ Despite the widespread take-up of the scheme among farmers in particular, O’Neill said: ‘I did not know of any flaws in the scheme and no concerns were brought to my attention before February 2016 [when it was shut].’
