6:21:53 > 6:21:56MUSIC: I Got This by Amphibious Zoo DJ Crew
6:22:01 > 6:22:04Did you hear the one about the Renewable Heat Incentive?
6:22:04 > 6:22:07It was a government scheme which went hugely over budget.
6:22:07 > 6:22:12Supposedly a green scheme, reducing our reliance on fossil fuels.
6:22:12 > 6:22:16But believe it or not, as well as being economically a disaster,
6:22:16 > 6:22:20it actually turned out to be damaging to the environment.
6:22:20 > 6:22:24There was a series of extraordinary, extraordinary blunders,
6:22:24 > 6:22:27and now, because of those blunders, we're likely to spend
6:22:27 > 6:22:32the next 20 years picking up a tab of hundreds of millions of pounds.
6:22:34 > 6:22:38Tonight on Spotlight, we hear about the missed alarmed bells
6:22:38 > 6:22:42and we reveal a previously unseen e-mail from a whistle-blower,
6:22:42 > 6:22:45which was ignored by Arlene Foster's department.
6:23:08 > 6:23:10The scheme will support generators of renewable heat
6:23:10 > 6:23:12through long-term incentive payments.
6:23:12 > 6:23:14It seems to have gone wrong.
6:23:14 > 6:23:17You wonder, in fact, did anything go right with it?
6:23:25 > 6:23:27We realised we had a big, big problem.
6:23:33 > 6:23:37It's running into hundreds of millions of pounds of public money.
6:23:37 > 6:23:39It's almost like burning the money.
6:23:49 > 6:23:53Possibly, this is the biggest financial penalty imposed
6:23:53 > 6:23:57on taxpayers in Northern Ireland that has occurred in my lifetime.
6:24:00 > 6:24:04This is the story of how a team of civil servants
6:24:04 > 6:24:09came up with a renewable energy scheme that was so flawed,
6:24:09 > 6:24:14insiders are calling it "the biggest shambles since DeLorean".
6:24:14 > 6:24:20Some even believe it could be one of the biggest financial blunders
6:24:20 > 6:24:22in the history of the Northern Ireland state.
6:24:28 > 6:24:31OK, members, we're ready for the witnesses.
6:24:34 > 6:24:37The Public Accounts Committee at Stormont
6:24:37 > 6:24:39is investigating what went wrong.
6:24:41 > 6:24:43Can I just welcome Dr Andrew McCormick?
6:24:48 > 6:24:50The Non-Domestic Renewable Heat Incentive scheme
6:24:50 > 6:24:54was about helping the environment, about renewables
6:24:54 > 6:24:56and to reduce harmful emissions,
6:24:56 > 6:24:58but from what we've seen from the outworkings of it,
6:24:58 > 6:25:00it's nearly the opposite of it.
6:25:00 > 6:25:03The scheme has not only been bad for the environment,
6:25:03 > 6:25:05but a waste of public money.
6:25:05 > 6:25:07The man who now has to explain
6:25:07 > 6:25:11is the Permanent Secretary at the Department for the Economy -
6:25:11 > 6:25:14its most senior civil servant Andrew McCormick.
6:25:14 > 6:25:16I think we do owe an apology to the committee.
6:25:16 > 6:25:18The intention was good.
6:25:18 > 6:25:22The execution and design have been very seriously wrong.
6:25:24 > 6:25:27So wrong, in fact, that businesses burning fuel
6:25:27 > 6:25:31simply to earn government money was effectively encouraged.
6:25:33 > 6:25:37These images from a thermal camera give you a real sense
6:25:37 > 6:25:40of the amount of heat being generated quite legitimately
6:25:40 > 6:25:44but at enormous cost through the scheme.
6:25:44 > 6:25:47But exactly how that happened, according to the department,
6:25:47 > 6:25:49is still not clear.
6:25:49 > 6:25:55The failure to comprehend what was going on lay with us.
6:25:55 > 6:25:57There is no good answer to that.
6:25:57 > 6:25:59There is no good explanation.
6:25:59 > 6:26:02As I've said a number of times already this afternoon,
6:26:02 > 6:26:04there is no good explanation.
6:26:04 > 6:26:07'To understand how this green scheme was supposed to work,
6:26:07 > 6:26:08'I met Michael Doran,
6:26:08 > 6:26:12'who helps businesses move from fossil fuels to renewables.'
6:26:12 > 6:26:16OK, what we're talking about is heat.
6:26:16 > 6:26:20So businesses, until this scheme, almost all used oil and gas?
6:26:20 > 6:26:24In Northern Ireland, yes. Oil and gas are fossil fuels
6:26:24 > 6:26:27and what we're trying to do is to move towards renewables.
6:26:27 > 6:26:29So what we're using now is wood.
6:26:29 > 6:26:31We're using the same kind of boiler,
6:26:31 > 6:26:33except it's running on wood pellets.
6:26:37 > 6:26:41'Diana Gass owns several garden centres. Earlier this year,
6:26:41 > 6:26:45'she replaced the oil-fired boilers with wood pellet boilers.
6:26:45 > 6:26:48'She says she was attracted by the environmental benefits.'
6:26:48 > 6:26:52It's very quiet, very clean, there's no fumes anywhere.
6:26:52 > 6:26:55It fits in with our business quite well. The whole idea of being green,
6:26:55 > 6:26:58gardening, getting out in the fresh air, you know,
6:26:58 > 6:27:00it goes with the whole thing, growing your own food.
6:27:00 > 6:27:03- Well, the thing itself is even green.- Yeah, it is indeed!
6:27:03 > 6:27:04SHE LAUGHS
6:27:06 > 6:27:10Diana Gass' business had to invest tens of thousands of pounds
6:27:10 > 6:27:13to move from oil boilers to wood pellet boilers.
6:27:13 > 6:27:15The Renewable Heat Incentive scheme
6:27:15 > 6:27:18helped businesses with the cost of making that leap.
6:27:20 > 6:27:23Say I'm a businessman, and I want to move to renewables,
6:27:23 > 6:27:25but I have an oil boiler -
6:27:25 > 6:27:27how much is it going to cost me to move across?
6:27:27 > 6:27:32For boilers that are in this scheme, typically, it's about £25-£30,000.
6:27:32 > 6:27:35So how does the government then encourage people to do that?
6:27:35 > 6:27:38What they are trying to do is to incentivise change
6:27:38 > 6:27:40and they have to give you money to do that,
6:27:40 > 6:27:44because you've got to incentivise people to pay for the boiler.
6:27:44 > 6:27:48The civil servants in Arlene Foster's department responsible
6:27:48 > 6:27:51for setting up the incentive scheme were the energy team.
6:27:52 > 6:27:56The team was headed up by this woman - Fiona Hepper.
6:27:56 > 6:27:58The Spending Review has seen
6:27:58 > 6:28:01Treasury commit to a renewable heat incentive for GB.
6:28:01 > 6:28:06A former senior civil servant in the department has told Spotlight
6:28:06 > 6:28:09that Ms Hepper often dealt directly with Arlene Foster.
6:28:13 > 6:28:16'The first mistake Mrs Foster's energy team made
6:28:16 > 6:28:19'was setting the rate of payment too high.'
6:28:19 > 6:28:23What they do is they pay an amount for the heat that you generate -
6:28:23 > 6:28:27but what's actually happened here is that they've set a rate
6:28:27 > 6:28:31which is higher than the cost of the fuel in the boiler.
6:28:31 > 6:28:34Therefore, you're actually incentivised
6:28:34 > 6:28:38to run the boiler for as many hours as possible.
6:28:38 > 6:28:40So, in other words, what they are paying you is more
6:28:40 > 6:28:43- than it costs you to run it? - That's exactly the problem.
6:28:43 > 6:28:47In other words, in this scheme, the more you burn, the more you earn?
6:28:47 > 6:28:50- Basically, yes.- That sounds like a really fundamental cock-up.
6:28:50 > 6:28:52Yes, it is.
6:28:52 > 6:28:55The system means that, for the next 20 years,
6:28:55 > 6:29:00the payment is very likely to be higher than the cost of the wood.
6:29:00 > 6:29:04So how did Arlene Foster's energy team get the rate so badly wrong?
6:29:06 > 6:29:08Back in 2011, a rate was proposed,
6:29:08 > 6:29:11which was less than the cost of the wood.
6:29:11 > 6:29:14At the time of the original arithmetic for the scheme,
6:29:14 > 6:29:19the cost of the wood to burn in the boilers was higher than
6:29:19 > 6:29:20the subsidy that would've been paid.
6:29:20 > 6:29:23By the time the scheme came into operation,
6:29:23 > 6:29:26that relationship had reversed, and that was fatal.
6:29:27 > 6:29:31'The change came about after a public consultation,
6:29:31 > 6:29:33'where pressure was applied by businesses
6:29:33 > 6:29:35'to raise the rate or tariff.'
6:29:36 > 6:29:40There are many voices in the context of the consultation
6:29:40 > 6:29:42saying that the tariff was too low.
6:29:42 > 6:29:44Andrew McCormick took over
6:29:44 > 6:29:47as the boss of the Department of Enterprise -
6:29:47 > 6:29:51now the Department for the Economy - in 2014.
6:29:51 > 6:29:55There'd been strong pressure during consultation to have higher tariffs.
6:29:55 > 6:29:59And so, the rate - the tariff - was increased.
6:29:59 > 6:30:02But the energy team in the department didn't realise
6:30:02 > 6:30:06that the rate was now more than the cost of the wood.
6:30:06 > 6:30:09The subsidy on the fuel was greater than the cost of buying the fuel.
6:30:09 > 6:30:14This was a "heads, you win, tails, you can't lose" type situation,
6:30:14 > 6:30:17where simply, the owner of the boiler was going to make money,
6:30:17 > 6:30:19so long as he ran the boiler for more hours.
6:30:20 > 6:30:23Despite supposedly being a green scheme,
6:30:23 > 6:30:27the higher rate discouraged energy efficiency.
6:30:27 > 6:30:31This is the paradox of it - burn more wood and you get more money.
6:30:31 > 6:30:32It's not an incentive
6:30:32 > 6:30:35to improve or enhance the environment.
6:30:35 > 6:30:37It's an incentive to put more smoke up into it.
6:30:41 > 6:30:45The scheme was set up here in November 2012.
6:30:45 > 6:30:49A similar scheme had been introduced in Great Britain the year before.
6:30:49 > 6:30:53The GB scheme has a vital in-built cost control,
6:30:53 > 6:30:56which was not copied across to our model.
6:30:56 > 6:31:00Another crucial mistake by Mrs Foster's energy team.
6:31:02 > 6:31:04But at the heart of the scheme was a fatal flaw -
6:31:04 > 6:31:08the lack of anything like sufficient control.
6:31:08 > 6:31:11It meant the department ended up with a scheme where,
6:31:11 > 6:31:14the more you burn, the more you earn.
6:31:14 > 6:31:16Cash for ash.
6:31:17 > 6:31:20With hindsight, you know, deep regrets.
6:31:20 > 6:31:23Had we stayed closer to the GB scheme,
6:31:23 > 6:31:26maybe even been a subset of it or a variant on it,
6:31:26 > 6:31:29rather than a separate scheme, that might have been better.
6:31:29 > 6:31:34Not copying the GB model meant the absence of a key safety valve,
6:31:34 > 6:31:36called tiering.
6:31:36 > 6:31:39Michael Doran explained to me how an ideal heat incentive scheme
6:31:39 > 6:31:44should work - paying a high rate initially that drops off.
6:31:44 > 6:31:48So we're drawing here a little graph of the amount of money
6:31:48 > 6:31:50that you're getting over the year.
6:31:50 > 6:31:51OK.
6:31:51 > 6:31:55So, in an ideal world, you set a rate
6:31:55 > 6:31:57that's relatively high
6:31:57 > 6:31:59for the first number of hours over the year,
6:31:59 > 6:32:01then you drop that rate
6:32:01 > 6:32:04and you pay a lower rate for the rest of the year.
6:32:04 > 6:32:06- And why do you start off with a higher rate?- Two reasons.
6:32:06 > 6:32:11First of all, you're trying to cover the cost of the boiler upfront.
6:32:11 > 6:32:13So, the boiler's quite expensive and we know that the government
6:32:13 > 6:32:16doesn't just send cheques to people and say, "Here, buy a boiler."
6:32:16 > 6:32:20What they're doing is they're giving them a higher rate in each year,
6:32:20 > 6:32:22- in order to cover the cost of the boiler?- Yeah.
6:32:22 > 6:32:27And you're also trying to encourage people to be energy efficient.
6:32:27 > 6:32:29- So that's why you drop the rate down?- Yes.
6:32:29 > 6:32:32Because you don't want people generating heat just to get money.
6:32:32 > 6:32:34- Yeah.- OK, so that's an ideal scheme?
6:32:34 > 6:32:36- Yeah, that's one way of doing it. - Yeah.
6:32:36 > 6:32:39That's not the way that the scheme was introduced in Northern Ireland.
6:32:39 > 6:32:42- Just explain to me, then, what we did here.- OK.
6:32:42 > 6:32:44- We've got the same graph.- Yes.
6:32:44 > 6:32:48So we've got the payment.
6:32:48 > 6:32:50- Payments start off high.- Yes.
6:32:50 > 6:32:55But the payment continued on at that rate for the entire year.
6:32:55 > 6:32:59- There was no drop.- OK, and this scheme lasts for 20 years,
6:32:59 > 6:33:02- so is it like that for the whole 20 years?- You're getting that rate
6:33:02 > 6:33:04for the whole 20 years and that's where the scheme went wrong.
6:33:06 > 6:33:11'The lack of a key cost control - tiering, dropping the rate down -
6:33:11 > 6:33:15'is acknowledged by the department as a fatal blunder.'
6:33:15 > 6:33:20The hard fact is that there was not a proper assessment of the risk.
6:33:20 > 6:33:21That the big...
6:33:21 > 6:33:25Especially the risk arising from the absence of a tiered tariff.
6:33:25 > 6:33:29The failure to copy the GB model meant the department
6:33:29 > 6:33:33ended up with a scheme which was fundamentally flawed.
6:33:33 > 6:33:38And it missed a crucial opportunity to right that wrong.
6:33:38 > 6:33:42Less than a year after the scheme started, a whistle-blower
6:33:42 > 6:33:46approached the minister Arlene Foster with concerns.
6:33:46 > 6:33:49The minister referred the whistle-blower to her department.
6:33:49 > 6:33:53The whistle-blower met Fiona Hepper and other officials,
6:33:53 > 6:33:56a meeting she later noted in an e-mail.
6:33:56 > 6:33:59Spotlight has exclusively obtained a copy of that e-mail
6:33:59 > 6:34:01from the whistle-blower to the department
6:34:01 > 6:34:04and, in it, the whistle-blower is remarkably clear
6:34:04 > 6:34:06in setting out her concerns.
6:34:06 > 6:34:08For example, she tells the department,
6:34:08 > 6:34:12"It's now in the interests of businesses here to waste energy."
6:34:13 > 6:34:18And it shows she says she warned the department, in autumn 2013,
6:34:18 > 6:34:20about the serious flaws in the scheme.
6:34:20 > 6:34:24The whistle-blower's apparently very clear advice was ignored.
6:34:24 > 6:34:27It wouldn't be the last time.
6:34:27 > 6:34:29Shortly after the scheme was introduced,
6:34:29 > 6:34:33the department missed yet another chance to control the costs.
6:34:33 > 6:34:38In 2013, London introduced a cost control to the GB scheme
6:34:38 > 6:34:44called degression. To understand it, think of the budget like a cake.
6:34:46 > 6:34:49In Great Britain, there was only one cake to go round,
6:34:49 > 6:34:53and the more applicants there were, the less cake they each got.
6:34:53 > 6:34:55No matter how many applicants there were,
6:34:55 > 6:34:58the overall funding never got any bigger.
6:34:58 > 6:35:00There was only one pot of cash
6:35:00 > 6:35:04and, the more applicants there were, the less they each got.
6:35:04 > 6:35:07This is degression.
6:35:07 > 6:35:12Do your records show if the department had been advised
6:35:12 > 6:35:16- that the English scheme had decided to introduce degression?- Oh, that...
6:35:16 > 6:35:18- Sorry, yes, we were well aware of that.- You were? All right.
6:35:18 > 6:35:21Through informal contact and indeed ministerial correspondence,
6:35:21 > 6:35:26so that was there, and... but wasn't acted on.
6:35:26 > 6:35:30So, despite information from London to the minister Arlene Foster,
6:35:30 > 6:35:33Northern Ireland didn't have the same control.
6:35:33 > 6:35:37Here, there wasn't just one cake, there was cake all round!
6:35:40 > 6:35:43Arlene Foster turned down our request for an interview,
6:35:43 > 6:35:46but in a statement, she said that at no stage
6:35:46 > 6:35:51was any proposal for cost controls, like tiering or digression,
6:35:51 > 6:35:54made to her by departmental officials.
6:35:55 > 6:35:59With such a high rate, and without key cost controls,
6:35:59 > 6:36:02the Northern Ireland scheme was lucrative.
6:36:02 > 6:36:07- # I'm living well! - I'm living good, babe! #
6:36:07 > 6:36:10The Audit Office, which has investigated,
6:36:10 > 6:36:14said one industry in particular could benefit massively.
6:36:14 > 6:36:15The poultry business.
6:36:15 > 6:36:19Well, this example, on the poultry industry in Northern Ireland
6:36:19 > 6:36:21compared to Great Britain, shows the enormous difference
6:36:21 > 6:36:24that this enhanced subsidy was making in Northern Ireland.
6:36:24 > 6:36:28The profit would be £737,000.
6:36:28 > 6:36:33In Great Britain, the comparable profit would be £66,000.
6:36:35 > 6:36:37This is chicken country.
6:36:37 > 6:36:40As you drive around this part of County Tyrone, you can't help
6:36:40 > 6:36:45but notice these big poultry houses dotted across the countryside.
6:36:45 > 6:36:49And hundreds of poultry farms in Northern Ireland
6:36:49 > 6:36:53are now getting their heat from these wood pellet boilers.
6:36:53 > 6:36:56Because of the flaws in the RHI scheme,
6:36:56 > 6:37:00some of those poultry farmers are making serious money.
6:37:00 > 6:37:0224/7 usage, in some contexts,
6:37:02 > 6:37:06entirely legitimate and reasonable, the business' need for it,
6:37:06 > 6:37:09and, in poultry or whatever, it's absolutely fine.
6:37:09 > 6:37:13The Renewable Heat Incentive was so generous that some people thought
6:37:13 > 6:37:16it was too good to be true. But it wasn't -
6:37:16 > 6:37:20and, in the early part of 2015, applications did start to go up.
6:37:28 > 6:37:32The number of applications was rising rapidly.
6:37:32 > 6:37:37At that stage, the department didn't really understand the root cause.
6:37:37 > 6:37:40But what it did know was that it was burning through cash.
6:37:40 > 6:37:43There was a belief, though, within the department,
6:37:43 > 6:37:46that the Treasury was covering the money.
6:37:46 > 6:37:48The department would soon find out
6:37:48 > 6:37:52that that was another critical mistake.
6:37:52 > 6:37:56- # Daydream!- Daydream - I fell asleep amid the flowers... #
6:37:56 > 6:37:59They believed that Northern Ireland's day-to-day funding,
6:37:59 > 6:38:02the block grant, was safe.
6:38:02 > 6:38:04It seems that the department, Andrew,
6:38:04 > 6:38:07would've operated from 2012 to 2015
6:38:07 > 6:38:10on the basis that there was no risk to the block grant...
6:38:11 > 6:38:14..and that everything was going to be covered by the Treasury.
6:38:14 > 6:38:15In practice, yes.
6:38:17 > 6:38:18That was a mistaken belief.
6:38:18 > 6:38:21The Treasury was only prepared to pay 3%
6:38:21 > 6:38:25of the overall cost of the scheme across the UK.
6:38:25 > 6:38:29When the bills came in, and they were going well above 3%,
6:38:29 > 6:38:33the Treasury was perfectly entitled to say, "Stop! What's going wrong?"
6:38:34 > 6:38:38The Treasury e-mailed the department in 2011
6:38:38 > 6:38:39to warn there would be a limit.
6:38:41 > 6:38:45The Treasury itself did give clear indications in the early days...
6:38:45 > 6:38:50But this is... I'm now talking about the spring of 2011.
6:38:50 > 6:38:53..that there would be budgetary limits.
6:38:53 > 6:38:56It was known and understood within the department.
6:38:56 > 6:39:00Somehow or other, that got forgotten about.
6:39:03 > 6:39:06Another loud alarm bell had been ignored.
6:39:06 > 6:39:09London had said all along there would be a limit.
6:39:13 > 6:39:15The department was in the middle of a crisis.
6:39:15 > 6:39:19It faced a massive bill, which London wouldn't pay for.
6:39:19 > 6:39:22An attempt was made to persuade
6:39:22 > 6:39:24the Department for Energy and Climate Change,
6:39:24 > 6:39:27or DECC, in Whitehall, to come up with the money.
6:39:27 > 6:39:29But the high point of that drama
6:39:29 > 6:39:33didn't happen in a grand room in Stormont.
6:39:33 > 6:39:35You said earlier on, you know,
6:39:35 > 6:39:37it was passed to you in the back of a taxi
6:39:37 > 6:39:41on the way to a meeting in DECC, you were told to ask for more money.
6:39:41 > 6:39:44- I wouldn't quite say it like that, yes.- You did or you...?
6:39:44 > 6:39:46- Well... - A touch of that, yes, OK.- Yeah.
6:39:46 > 6:39:47That too is astounding.
6:39:47 > 6:39:50You know, on your way to a meeting with senior people
6:39:50 > 6:39:53over in London, like, what impression does that give to them?
6:39:53 > 6:39:54They're bound to be saying,
6:39:54 > 6:39:57"What kind of an outfit am I dealing with here?"
6:39:58 > 6:40:03The department failed to persuade London to come up with the cash.
6:40:03 > 6:40:05The record shows that that was a blind alley.
6:40:05 > 6:40:08That we went up a blind alley.
6:40:08 > 6:40:11The department had mistakenly believed that the Treasury
6:40:11 > 6:40:13was paying come what may.
6:40:13 > 6:40:16Some have questioned whether that false belief led to mistakes.
6:40:19 > 6:40:23Would you accept that that type of complacency
6:40:23 > 6:40:27led directly to the failed regulation by the department?
6:40:29 > 6:40:31It's definitely connected. There's no question about that.
6:40:31 > 6:40:35And one does get the feel that there isn't the scrutiny of that,
6:40:35 > 6:40:37because it's not coming out of the block grant.
6:40:37 > 6:40:39Now, if it's not coming out of the block grant,
6:40:39 > 6:40:42there seems to be a mentality "What does it matter?"
6:40:42 > 6:40:45Well, it does matter. It's all public money.
6:40:45 > 6:40:49'Without London covering, the department tried to take action.
6:40:49 > 6:40:52'They indicated they would change the scheme.
6:40:52 > 6:40:55'But that led to hundreds of applications
6:40:55 > 6:40:57'while the scheme was still lucrative.
6:40:57 > 6:41:00'It made a bad situation even worse.'
6:41:02 > 6:41:04They basically had to go back to the drawing board
6:41:04 > 6:41:07- and redesign the scheme. - So the department suggested
6:41:07 > 6:41:10they were going to move to this less lucrative scheme
6:41:10 > 6:41:13- and what happens then - people rush through the door.- Yeah.
6:41:13 > 6:41:15In that period,
6:41:15 > 6:41:18the market understood that there was going to be
6:41:18 > 6:41:21a reduction in the monies that were coming out of it,
6:41:21 > 6:41:22so there was a big spike,
6:41:22 > 6:41:25- so the number of applications went up substantially.- I see!
6:41:25 > 6:41:29- Of course.- They inadvertently create this spike.
6:41:29 > 6:41:31'In just two months,
6:41:31 > 6:41:35'this spike accounted for nearly half a billion pounds of the cost.'
6:41:37 > 6:41:39The story was obviously out.
6:41:39 > 6:41:42Gossip was going from one person to another "This is so profitable,
6:41:42 > 6:41:45"it won't last much longer, get in quickly."
6:41:45 > 6:41:50'The scheme was changed and was now how it should've been at the start
6:41:50 > 6:41:53'and still financially attractive enough for Diana Gass,
6:41:53 > 6:41:57'who applied after the change - proof that people would
6:41:57 > 6:42:00'still have applied for a less lucrative scheme.'
6:42:00 > 6:42:03It'll take us about ten years before we start to make any saving.
6:42:03 > 6:42:05But even if there isn't, we're getting a better product
6:42:05 > 6:42:08for our money. We would get a better, consistent heat.
6:42:08 > 6:42:14The change to the scheme came too late. The damage had been done.
6:42:14 > 6:42:16RHI was closed in February.
6:42:17 > 6:42:20The financial consequences are dramatic.
6:42:22 > 6:42:26The total comes to over 1 billion. 1.18 billion, if I recall correctly.
6:42:26 > 6:42:30- 1.18 billion, just to...?- The total value of the total scheme, yes.
6:42:30 > 6:42:34The Treasury will fund just over half of that,
6:42:34 > 6:42:37leaving Northern Ireland with a huge cost.
6:42:37 > 6:42:38We're footing an extra bill,
6:42:38 > 6:42:43which seems as if it's between £400 and £500 million, over 20 years.
6:42:43 > 6:42:47The department has already had to start finding money
6:42:47 > 6:42:48that could've gone elsewhere.
6:42:48 > 6:42:54People come in and tell me about the impossible delays imposed on them
6:42:54 > 6:42:57for a hip replacement, or a knee joint,
6:42:57 > 6:43:01or schools are scraping to make ends meet -
6:43:01 > 6:43:05and yet, we've maybe up to £500 million
6:43:05 > 6:43:09that's going to be pared off those services
6:43:09 > 6:43:11in order to pay for this squander.
6:43:11 > 6:43:13Even though the scheme was closed,
6:43:13 > 6:43:17the department still didn't know where it had all gone wrong.
6:43:17 > 6:43:20To the astonishment of some, it took the department to effectively
6:43:20 > 6:43:25impersonate a business and carry out a secret shopper exercise
6:43:25 > 6:43:27before it finally worked it out.
6:43:27 > 6:43:30The tariff had been too high all along.
6:43:31 > 6:43:34What Internal Audit did was ring a supplier
6:43:34 > 6:43:37as a secret shopper-type of approach.
6:43:37 > 6:43:40They phoned up and said, "What would it cost to install a boiler
6:43:40 > 6:43:42"and what would be the cost of fuel?"
6:43:42 > 6:43:47That was in March of this year. That's after the event.
6:43:47 > 6:43:49It doesn't change anything.
6:43:49 > 6:43:52But between internal audit and external audit,
6:43:52 > 6:43:55they are the people who have finally, finally realised
6:43:55 > 6:43:58there's a root cause issue, which is too high a tariff.
6:44:00 > 6:44:03The department now understood why the scheme had provided
6:44:03 > 6:44:05an unacceptably high rate of return.
6:44:07 > 6:44:11It only finally worked this out after the scheme had closed.
6:44:12 > 6:44:15You only set out then to find out the cost of the boiler
6:44:15 > 6:44:18and fuel in 2016, when the man on the street found out,
6:44:18 > 6:44:21"Here, I can get my henhouse all heated up,
6:44:21 > 6:44:25"and even my own house," yet you, the people sitting in here -
6:44:25 > 6:44:30and maybe earning £80,000, £90,000 £100,000 a year - did not know that?
6:44:30 > 6:44:32And now, we're paying the consequences
6:44:32 > 6:44:34out of the block grant for it.
6:44:35 > 6:44:37Heads should roll!
6:44:40 > 6:44:45So, who were Arlene Foster's civil servants, earning those big numbers?
6:44:48 > 6:44:49The senior officers involved
6:44:49 > 6:44:52would've been Fiona Hepper as the grade 5,
6:44:52 > 6:44:55um, David Thomson, who's now retired, as the grade 3,
6:44:55 > 6:44:58and David Stirling is the permanent secretary.
6:44:58 > 6:45:01As we know, Fiona Hepper was the head of the energy team
6:45:01 > 6:45:04and often dealt directly with Arlene Foster.
6:45:04 > 6:45:07Patsy McGlone chaired the Stormont committee,
6:45:07 > 6:45:10which scrutinised the energy team.
6:45:10 > 6:45:12They were supposed to report to us twice a year.
6:45:12 > 6:45:14It was upwards on a year and a half
6:45:14 > 6:45:16before they came before the committee.
6:45:16 > 6:45:19The more questions we asked, the less clarity there was.
6:45:19 > 6:45:23Whenever you leave a committee room more confused,
6:45:23 > 6:45:27with less clarity than what you went into it on an issue,
6:45:27 > 6:45:29you realise there's a problem.
6:45:29 > 6:45:34Before the scheme's flaws became apparent, Fiona Hepper was promoted.
6:45:34 > 6:45:37David Thomson retired in June 2014.
6:45:37 > 6:45:41We asked him for an interview, but he declined.
6:45:41 > 6:45:43David Stirling was their boss,
6:45:43 > 6:45:46the most senior civil servant in the Department of Enterprise,
6:45:46 > 6:45:49and ultimately accountable when the scheme was set up.
6:45:49 > 6:45:51I will accept full responsibility
6:45:51 > 6:45:55for any failings which occurred during my time.
6:45:55 > 6:45:59He moved to the same role in the Department of Finance
6:45:59 > 6:46:01before the flaws in RHI were known about.
6:46:03 > 6:46:07Much of the coverage of the scheme has focused on claims of fraud.
6:46:07 > 6:46:10- NEWSREADER:- A whistle-blower claimed some companies put in
6:46:10 > 6:46:14boilers they didn't need, that a farmer was heating an empty shed.
6:46:14 > 6:46:18Each was hoping to rack up £1 million of profit over 20 years.
6:46:21 > 6:46:23Spotlight has seen some of the findings
6:46:23 > 6:46:27of a confidential investigation ordered by the department.
6:46:28 > 6:46:30Nearly half of almost 300 sites inspected
6:46:30 > 6:46:34are doing something the department didn't intend -
6:46:34 > 6:46:37for example, not being energy efficient -
6:46:37 > 6:46:40but not in a way that breaches the regulations.
6:46:40 > 6:46:43Things went fundamentally wrong in the design,
6:46:43 > 6:46:49which led to opportunities for, um, abuse and overuse,
6:46:49 > 6:46:52which is eligible within the terms of the scheme,
6:46:52 > 6:46:54but not the intention of the scheme.
6:46:54 > 6:46:57In other words, most of the costs of the scheme,
6:46:57 > 6:46:59most of the massive overspend,
6:46:59 > 6:47:02comes from the department's blunders and not from fraud.
6:47:04 > 6:47:07But it's the treatment of the whistle-blower
6:47:07 > 6:47:11who approached Arlene Foster in 2013 which is at the heart of the story.
6:47:12 > 6:47:15Correspondence that the committee has received
6:47:15 > 6:47:18from a whistle-blower, a member of the concerned public,
6:47:18 > 6:47:21shows that there were clear warnings to the departments
6:47:21 > 6:47:25in relation to the wasteful use of heat as far back as October 2013.
6:47:25 > 6:47:28The whistle-blower had expressed her concerns
6:47:28 > 6:47:31to the minister Arlene Foster.
6:47:31 > 6:47:34The whistle-blower then met the head of the energy team, Fiona Hepper,
6:47:34 > 6:47:38and other officials in autumn 2013.
6:47:38 > 6:47:41The point was made that, um,
6:47:41 > 6:47:44the scheme was not operating as intended.
6:47:44 > 6:47:48It seems, on the face of it, from that,
6:47:48 > 6:47:51a very, very clear signal to act
6:47:51 > 6:47:55and to at least ask the question "What does she mean?"
6:47:59 > 6:48:02The whistle-blower's concerns were not addressed.
6:48:03 > 6:48:09In her e-mail sent in May 2014, she put her fears in writing.
6:48:09 > 6:48:11By then, Fiona Hepper had left the department.
6:48:12 > 6:48:15The whistle-blower's e-mail says,
6:48:15 > 6:48:19"What we're seeing on the ground in Northern Ireland is that buildings
6:48:19 > 6:48:23"are using more energy than before, because it pays them to do so.
6:48:23 > 6:48:27"The flat rate means there's no incentive at all to be efficient.
6:48:27 > 6:48:30"So the heat in buildings is on all year round,
6:48:30 > 6:48:34"with the windows open everywhere." It then says,
6:48:34 > 6:48:38"When we had spoken, you did not believe that people would do this,
6:48:38 > 6:48:40"but believe me, it's happening."
6:48:42 > 6:48:45The whistle-blower added, "It's got to a stage
6:48:45 > 6:48:48"where it cannot be ignored any longer."
6:48:50 > 6:48:54The problem of "the more you burn, the more you earn"
6:48:54 > 6:48:55had been identified.
6:48:55 > 6:48:58The whistle-blower warned the department
6:48:58 > 6:49:01and was effectively ignored.
6:49:01 > 6:49:07This e-mail was literally, literally worth hundreds of millions of pounds
6:49:07 > 6:49:11to the Northern Ireland taxpayer, and nothing was done about it.
6:49:12 > 6:49:16To me, that was the first, er, clear opportunity
6:49:16 > 6:49:19for the point that the tariff was too generous
6:49:19 > 6:49:22to be identified and understood.
6:49:22 > 6:49:24As a matter of fact, it wasn't.
6:49:24 > 6:49:27The whistle-blower's e-mail was by far the loudest
6:49:27 > 6:49:31of a series of alarm bells which were ignored.
6:49:31 > 6:49:34Would you agree that, in terms of public money,
6:49:34 > 6:49:37this is the biggest financial scandal in living memory?
6:49:38 > 6:49:41- In Northern Ireland?- Yeah.
6:49:41 > 6:49:45I can't recall anything that was on the scale.
6:49:45 > 6:49:50We asked David Stirling and Fiona Hepper a series of questions
6:49:50 > 6:49:53about their roles in the failure of the RHI scheme.
6:49:53 > 6:49:57Both said they couldn't answer because of the ongoing PAC enquiry.
6:49:58 > 6:50:01Arlene Foster said she couldn't be interviewed
6:50:01 > 6:50:05because of time pressures, including a trip to China.
6:50:05 > 6:50:06In a statement, she said,
6:50:06 > 6:50:09"Investigations into the whistle-blower's claims..."
6:50:15 > 6:50:19But the whistle-blower had first approached Mrs Foster
6:50:19 > 6:50:22and she referred her to the department to investigate.
6:50:22 > 6:50:25We asked Mrs Foster if she made any other attempt
6:50:25 > 6:50:28to follow up on the woman's claims.
6:50:28 > 6:50:31She did not respond directly to this question.
6:50:31 > 6:50:35She pointed out that the Permanent Secretary had told the PAC
6:50:35 > 6:50:38that her handling of the whistle-blower
6:50:38 > 6:50:40had been "entirely appropriate".
6:50:40 > 6:50:42She said...
6:50:53 > 6:50:58Those ongoing costs are likely to be at least £400 million.
6:50:58 > 6:51:00That could have paid for the new Omagh Hospital,
6:51:00 > 6:51:04the York Street Interchange, Belfast's rapid transit system,
6:51:04 > 6:51:08and converting the A26 at Frosses to dual carriageway,
6:51:08 > 6:51:10with £15 million left over.