06/12/2016 Spotlight


06/12/2016

Conor Spackman investigates a multi-million pound blunder over a green energy scheme, that insiders are calling the biggest financial shambles in the history of the NI state.


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Transcript


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MUSIC: I Got This by Amphibious Zoo DJ Crew

6:21:536:21:56

Did you hear the one about the Renewable Heat Incentive?

6:22:016:22:04

It was a government scheme which went hugely over budget.

6:22:046:22:07

Supposedly a green scheme, reducing our reliance on fossil fuels.

6:22:076:22:12

But believe it or not, as well as being economically a disaster,

6:22:126:22:16

it actually turned out to be damaging to the environment.

6:22:166:22:20

There was a series of extraordinary, extraordinary blunders,

6:22:206:22:24

and now, because of those blunders, we're likely to spend

6:22:246:22:27

the next 20 years picking up a tab of hundreds of millions of pounds.

6:22:276:22:32

Tonight on Spotlight, we hear about the missed alarmed bells

6:22:346:22:38

and we reveal a previously unseen e-mail from a whistle-blower,

6:22:386:22:42

which was ignored by Arlene Foster's department.

6:22:426:22:45

The scheme will support generators of renewable heat

6:23:086:23:10

through long-term incentive payments.

6:23:106:23:12

It seems to have gone wrong.

6:23:126:23:14

You wonder, in fact, did anything go right with it?

6:23:146:23:17

We realised we had a big, big problem.

6:23:256:23:27

It's running into hundreds of millions of pounds of public money.

6:23:336:23:37

It's almost like burning the money.

6:23:376:23:39

Possibly, this is the biggest financial penalty imposed

6:23:496:23:53

on taxpayers in Northern Ireland that has occurred in my lifetime.

6:23:536:23:57

This is the story of how a team of civil servants

6:24:006:24:04

came up with a renewable energy scheme that was so flawed,

6:24:046:24:09

insiders are calling it "the biggest shambles since DeLorean".

6:24:096:24:14

Some even believe it could be one of the biggest financial blunders

6:24:146:24:20

in the history of the Northern Ireland state.

6:24:206:24:22

OK, members, we're ready for the witnesses.

6:24:286:24:31

The Public Accounts Committee at Stormont

6:24:346:24:37

is investigating what went wrong.

6:24:376:24:39

Can I just welcome Dr Andrew McCormick?

6:24:416:24:43

The Non-Domestic Renewable Heat Incentive scheme

6:24:486:24:50

was about helping the environment, about renewables

6:24:506:24:54

and to reduce harmful emissions,

6:24:546:24:56

but from what we've seen from the outworkings of it,

6:24:566:24:58

it's nearly the opposite of it.

6:24:586:25:00

The scheme has not only been bad for the environment,

6:25:006:25:03

but a waste of public money.

6:25:036:25:05

The man who now has to explain

6:25:056:25:07

is the Permanent Secretary at the Department for the Economy -

6:25:076:25:11

its most senior civil servant Andrew McCormick.

6:25:116:25:14

I think we do owe an apology to the committee.

6:25:146:25:16

The intention was good.

6:25:166:25:18

The execution and design have been very seriously wrong.

6:25:186:25:22

So wrong, in fact, that businesses burning fuel

6:25:246:25:27

simply to earn government money was effectively encouraged.

6:25:276:25:31

These images from a thermal camera give you a real sense

6:25:336:25:37

of the amount of heat being generated quite legitimately

6:25:376:25:40

but at enormous cost through the scheme.

6:25:406:25:44

But exactly how that happened, according to the department,

6:25:446:25:47

is still not clear.

6:25:476:25:49

The failure to comprehend what was going on lay with us.

6:25:496:25:55

There is no good answer to that.

6:25:556:25:57

There is no good explanation.

6:25:576:25:59

As I've said a number of times already this afternoon,

6:25:596:26:02

there is no good explanation.

6:26:026:26:04

'To understand how this green scheme was supposed to work,

6:26:046:26:07

'I met Michael Doran,

6:26:076:26:08

'who helps businesses move from fossil fuels to renewables.'

6:26:086:26:12

OK, what we're talking about is heat.

6:26:126:26:16

So businesses, until this scheme, almost all used oil and gas?

6:26:166:26:20

In Northern Ireland, yes. Oil and gas are fossil fuels

6:26:206:26:24

and what we're trying to do is to move towards renewables.

6:26:246:26:27

So what we're using now is wood.

6:26:276:26:29

We're using the same kind of boiler,

6:26:296:26:31

except it's running on wood pellets.

6:26:316:26:33

'Diana Gass owns several garden centres. Earlier this year,

6:26:376:26:41

'she replaced the oil-fired boilers with wood pellet boilers.

6:26:416:26:45

'She says she was attracted by the environmental benefits.'

6:26:456:26:48

It's very quiet, very clean, there's no fumes anywhere.

6:26:486:26:52

It fits in with our business quite well. The whole idea of being green,

6:26:526:26:55

gardening, getting out in the fresh air, you know,

6:26:556:26:58

it goes with the whole thing, growing your own food.

6:26:586:27:00

-Well, the thing itself is even green.

-Yeah, it is indeed!

6:27:006:27:03

SHE LAUGHS

6:27:036:27:04

Diana Gass' business had to invest tens of thousands of pounds

6:27:066:27:10

to move from oil boilers to wood pellet boilers.

6:27:106:27:13

The Renewable Heat Incentive scheme

6:27:136:27:15

helped businesses with the cost of making that leap.

6:27:156:27:18

Say I'm a businessman, and I want to move to renewables,

6:27:206:27:23

but I have an oil boiler -

6:27:236:27:25

how much is it going to cost me to move across?

6:27:256:27:27

For boilers that are in this scheme, typically, it's about £25-£30,000.

6:27:276:27:32

So how does the government then encourage people to do that?

6:27:326:27:35

What they are trying to do is to incentivise change

6:27:356:27:38

and they have to give you money to do that,

6:27:386:27:40

because you've got to incentivise people to pay for the boiler.

6:27:406:27:44

The civil servants in Arlene Foster's department responsible

6:27:446:27:48

for setting up the incentive scheme were the energy team.

6:27:486:27:51

The team was headed up by this woman - Fiona Hepper.

6:27:526:27:56

The Spending Review has seen

6:27:566:27:58

Treasury commit to a renewable heat incentive for GB.

6:27:586:28:01

A former senior civil servant in the department has told Spotlight

6:28:016:28:06

that Ms Hepper often dealt directly with Arlene Foster.

6:28:066:28:09

'The first mistake Mrs Foster's energy team made

6:28:136:28:16

'was setting the rate of payment too high.'

6:28:166:28:19

What they do is they pay an amount for the heat that you generate -

6:28:196:28:23

but what's actually happened here is that they've set a rate

6:28:236:28:27

which is higher than the cost of the fuel in the boiler.

6:28:276:28:31

Therefore, you're actually incentivised

6:28:316:28:34

to run the boiler for as many hours as possible.

6:28:346:28:38

So, in other words, what they are paying you is more

6:28:386:28:40

-than it costs you to run it?

-That's exactly the problem.

6:28:406:28:43

In other words, in this scheme, the more you burn, the more you earn?

6:28:436:28:47

-Basically, yes.

-That sounds like a really fundamental cock-up.

6:28:476:28:50

Yes, it is.

6:28:506:28:52

The system means that, for the next 20 years,

6:28:526:28:55

the payment is very likely to be higher than the cost of the wood.

6:28:556:29:00

So how did Arlene Foster's energy team get the rate so badly wrong?

6:29:006:29:04

Back in 2011, a rate was proposed,

6:29:066:29:08

which was less than the cost of the wood.

6:29:086:29:11

At the time of the original arithmetic for the scheme,

6:29:116:29:14

the cost of the wood to burn in the boilers was higher than

6:29:146:29:19

the subsidy that would've been paid.

6:29:196:29:20

By the time the scheme came into operation,

6:29:206:29:23

that relationship had reversed, and that was fatal.

6:29:236:29:26

'The change came about after a public consultation,

6:29:276:29:31

'where pressure was applied by businesses

6:29:316:29:33

'to raise the rate or tariff.'

6:29:336:29:35

There are many voices in the context of the consultation

6:29:366:29:40

saying that the tariff was too low.

6:29:406:29:42

Andrew McCormick took over

6:29:426:29:44

as the boss of the Department of Enterprise -

6:29:446:29:47

now the Department for the Economy - in 2014.

6:29:476:29:51

There'd been strong pressure during consultation to have higher tariffs.

6:29:516:29:55

And so, the rate - the tariff - was increased.

6:29:556:29:59

But the energy team in the department didn't realise

6:29:596:30:02

that the rate was now more than the cost of the wood.

6:30:026:30:06

The subsidy on the fuel was greater than the cost of buying the fuel.

6:30:066:30:09

This was a "heads, you win, tails, you can't lose" type situation,

6:30:096:30:14

where simply, the owner of the boiler was going to make money,

6:30:146:30:17

so long as he ran the boiler for more hours.

6:30:176:30:19

Despite supposedly being a green scheme,

6:30:206:30:23

the higher rate discouraged energy efficiency.

6:30:236:30:27

This is the paradox of it - burn more wood and you get more money.

6:30:276:30:31

It's not an incentive

6:30:316:30:32

to improve or enhance the environment.

6:30:326:30:35

It's an incentive to put more smoke up into it.

6:30:356:30:37

The scheme was set up here in November 2012.

6:30:416:30:45

A similar scheme had been introduced in Great Britain the year before.

6:30:456:30:49

The GB scheme has a vital in-built cost control,

6:30:496:30:53

which was not copied across to our model.

6:30:536:30:56

Another crucial mistake by Mrs Foster's energy team.

6:30:566:31:00

But at the heart of the scheme was a fatal flaw -

6:31:026:31:04

the lack of anything like sufficient control.

6:31:046:31:08

It meant the department ended up with a scheme where,

6:31:086:31:11

the more you burn, the more you earn.

6:31:116:31:14

Cash for ash.

6:31:146:31:16

With hindsight, you know, deep regrets.

6:31:176:31:20

Had we stayed closer to the GB scheme,

6:31:206:31:23

maybe even been a subset of it or a variant on it,

6:31:236:31:26

rather than a separate scheme, that might have been better.

6:31:266:31:29

Not copying the GB model meant the absence of a key safety valve,

6:31:296:31:34

called tiering.

6:31:346:31:36

Michael Doran explained to me how an ideal heat incentive scheme

6:31:366:31:39

should work - paying a high rate initially that drops off.

6:31:396:31:44

So we're drawing here a little graph of the amount of money

6:31:446:31:48

that you're getting over the year.

6:31:486:31:50

OK.

6:31:506:31:51

So, in an ideal world, you set a rate

6:31:516:31:55

that's relatively high

6:31:556:31:57

for the first number of hours over the year,

6:31:576:31:59

then you drop that rate

6:31:596:32:01

and you pay a lower rate for the rest of the year.

6:32:016:32:04

-And why do you start off with a higher rate?

-Two reasons.

6:32:046:32:06

First of all, you're trying to cover the cost of the boiler upfront.

6:32:066:32:11

So, the boiler's quite expensive and we know that the government

6:32:116:32:13

doesn't just send cheques to people and say, "Here, buy a boiler."

6:32:136:32:16

What they're doing is they're giving them a higher rate in each year,

6:32:166:32:20

-in order to cover the cost of the boiler?

-Yeah.

6:32:206:32:22

And you're also trying to encourage people to be energy efficient.

6:32:226:32:27

-So that's why you drop the rate down?

-Yes.

6:32:276:32:29

Because you don't want people generating heat just to get money.

6:32:296:32:32

-Yeah.

-OK, so that's an ideal scheme?

6:32:326:32:34

-Yeah, that's one way of doing it.

-Yeah.

6:32:346:32:36

That's not the way that the scheme was introduced in Northern Ireland.

6:32:366:32:39

-Just explain to me, then, what we did here.

-OK.

6:32:396:32:42

-We've got the same graph.

-Yes.

6:32:426:32:44

So we've got the payment.

6:32:446:32:48

-Payments start off high.

-Yes.

6:32:486:32:50

But the payment continued on at that rate for the entire year.

6:32:506:32:55

-There was no drop.

-OK, and this scheme lasts for 20 years,

6:32:556:32:59

-so is it like that for the whole 20 years?

-You're getting that rate

6:32:596:33:02

for the whole 20 years and that's where the scheme went wrong.

6:33:026:33:04

'The lack of a key cost control - tiering, dropping the rate down -

6:33:066:33:11

'is acknowledged by the department as a fatal blunder.'

6:33:116:33:15

The hard fact is that there was not a proper assessment of the risk.

6:33:156:33:20

That the big...

6:33:206:33:21

Especially the risk arising from the absence of a tiered tariff.

6:33:216:33:25

The failure to copy the GB model meant the department

6:33:256:33:29

ended up with a scheme which was fundamentally flawed.

6:33:296:33:33

And it missed a crucial opportunity to right that wrong.

6:33:336:33:38

Less than a year after the scheme started, a whistle-blower

6:33:386:33:42

approached the minister Arlene Foster with concerns.

6:33:426:33:46

The minister referred the whistle-blower to her department.

6:33:466:33:49

The whistle-blower met Fiona Hepper and other officials,

6:33:496:33:53

a meeting she later noted in an e-mail.

6:33:536:33:56

Spotlight has exclusively obtained a copy of that e-mail

6:33:566:33:59

from the whistle-blower to the department

6:33:596:34:01

and, in it, the whistle-blower is remarkably clear

6:34:016:34:04

in setting out her concerns.

6:34:046:34:06

For example, she tells the department,

6:34:066:34:08

"It's now in the interests of businesses here to waste energy."

6:34:086:34:12

And it shows she says she warned the department, in autumn 2013,

6:34:136:34:18

about the serious flaws in the scheme.

6:34:186:34:20

The whistle-blower's apparently very clear advice was ignored.

6:34:206:34:24

It wouldn't be the last time.

6:34:246:34:27

Shortly after the scheme was introduced,

6:34:276:34:29

the department missed yet another chance to control the costs.

6:34:296:34:33

In 2013, London introduced a cost control to the GB scheme

6:34:336:34:38

called degression. To understand it, think of the budget like a cake.

6:34:386:34:44

In Great Britain, there was only one cake to go round,

6:34:466:34:49

and the more applicants there were, the less cake they each got.

6:34:496:34:53

No matter how many applicants there were,

6:34:536:34:55

the overall funding never got any bigger.

6:34:556:34:58

There was only one pot of cash

6:34:586:35:00

and, the more applicants there were, the less they each got.

6:35:006:35:04

This is degression.

6:35:046:35:07

Do your records show if the department had been advised

6:35:076:35:12

-that the English scheme had decided to introduce degression?

-Oh, that...

6:35:126:35:16

-Sorry, yes, we were well aware of that.

-You were? All right.

6:35:166:35:18

Through informal contact and indeed ministerial correspondence,

6:35:186:35:21

so that was there, and... but wasn't acted on.

6:35:216:35:26

So, despite information from London to the minister Arlene Foster,

6:35:266:35:30

Northern Ireland didn't have the same control.

6:35:306:35:33

Here, there wasn't just one cake, there was cake all round!

6:35:336:35:37

Arlene Foster turned down our request for an interview,

6:35:406:35:43

but in a statement, she said that at no stage

6:35:436:35:46

was any proposal for cost controls, like tiering or digression,

6:35:466:35:51

made to her by departmental officials.

6:35:516:35:54

With such a high rate, and without key cost controls,

6:35:556:35:59

the Northern Ireland scheme was lucrative.

6:35:596:36:02

-# I'm living well!

-I'm living good, babe! #

6:36:026:36:07

The Audit Office, which has investigated,

6:36:076:36:10

said one industry in particular could benefit massively.

6:36:106:36:14

The poultry business.

6:36:146:36:15

Well, this example, on the poultry industry in Northern Ireland

6:36:156:36:19

compared to Great Britain, shows the enormous difference

6:36:196:36:21

that this enhanced subsidy was making in Northern Ireland.

6:36:216:36:24

The profit would be £737,000.

6:36:246:36:28

In Great Britain, the comparable profit would be £66,000.

6:36:286:36:33

This is chicken country.

6:36:356:36:37

As you drive around this part of County Tyrone, you can't help

6:36:376:36:40

but notice these big poultry houses dotted across the countryside.

6:36:406:36:45

And hundreds of poultry farms in Northern Ireland

6:36:456:36:49

are now getting their heat from these wood pellet boilers.

6:36:496:36:53

Because of the flaws in the RHI scheme,

6:36:536:36:56

some of those poultry farmers are making serious money.

6:36:566:37:00

24/7 usage, in some contexts,

6:37:006:37:02

entirely legitimate and reasonable, the business' need for it,

6:37:026:37:06

and, in poultry or whatever, it's absolutely fine.

6:37:066:37:09

The Renewable Heat Incentive was so generous that some people thought

6:37:096:37:13

it was too good to be true. But it wasn't -

6:37:136:37:16

and, in the early part of 2015, applications did start to go up.

6:37:166:37:20

The number of applications was rising rapidly.

6:37:286:37:32

At that stage, the department didn't really understand the root cause.

6:37:326:37:37

But what it did know was that it was burning through cash.

6:37:376:37:40

There was a belief, though, within the department,

6:37:406:37:43

that the Treasury was covering the money.

6:37:436:37:46

The department would soon find out

6:37:466:37:48

that that was another critical mistake.

6:37:486:37:52

-# Daydream!

-Daydream

-I fell asleep amid the flowers... #

6:37:526:37:56

They believed that Northern Ireland's day-to-day funding,

6:37:566:37:59

the block grant, was safe.

6:37:596:38:02

It seems that the department, Andrew,

6:38:026:38:04

would've operated from 2012 to 2015

6:38:046:38:07

on the basis that there was no risk to the block grant...

6:38:076:38:10

..and that everything was going to be covered by the Treasury.

6:38:116:38:14

In practice, yes.

6:38:146:38:15

That was a mistaken belief.

6:38:176:38:18

The Treasury was only prepared to pay 3%

6:38:186:38:21

of the overall cost of the scheme across the UK.

6:38:216:38:25

When the bills came in, and they were going well above 3%,

6:38:256:38:29

the Treasury was perfectly entitled to say, "Stop! What's going wrong?"

6:38:296:38:33

The Treasury e-mailed the department in 2011

6:38:346:38:38

to warn there would be a limit.

6:38:386:38:39

The Treasury itself did give clear indications in the early days...

6:38:416:38:45

But this is... I'm now talking about the spring of 2011.

6:38:456:38:50

..that there would be budgetary limits.

6:38:506:38:53

It was known and understood within the department.

6:38:536:38:56

Somehow or other, that got forgotten about.

6:38:566:39:00

Another loud alarm bell had been ignored.

6:39:036:39:06

London had said all along there would be a limit.

6:39:066:39:09

The department was in the middle of a crisis.

6:39:136:39:15

It faced a massive bill, which London wouldn't pay for.

6:39:156:39:19

An attempt was made to persuade

6:39:196:39:22

the Department for Energy and Climate Change,

6:39:226:39:24

or DECC, in Whitehall, to come up with the money.

6:39:246:39:27

But the high point of that drama

6:39:276:39:29

didn't happen in a grand room in Stormont.

6:39:296:39:33

You said earlier on, you know,

6:39:336:39:35

it was passed to you in the back of a taxi

6:39:356:39:37

on the way to a meeting in DECC, you were told to ask for more money.

6:39:376:39:41

-I wouldn't quite say it like that, yes.

-You did or you...?

6:39:416:39:44

-Well...

-A touch of that, yes, OK.

-Yeah.

6:39:446:39:46

That too is astounding.

6:39:466:39:47

You know, on your way to a meeting with senior people

6:39:476:39:50

over in London, like, what impression does that give to them?

6:39:506:39:53

They're bound to be saying,

6:39:536:39:54

"What kind of an outfit am I dealing with here?"

6:39:546:39:57

The department failed to persuade London to come up with the cash.

6:39:586:40:03

The record shows that that was a blind alley.

6:40:036:40:05

That we went up a blind alley.

6:40:056:40:08

The department had mistakenly believed that the Treasury

6:40:086:40:11

was paying come what may.

6:40:116:40:13

Some have questioned whether that false belief led to mistakes.

6:40:136:40:16

Would you accept that that type of complacency

6:40:196:40:23

led directly to the failed regulation by the department?

6:40:236:40:27

It's definitely connected. There's no question about that.

6:40:296:40:31

And one does get the feel that there isn't the scrutiny of that,

6:40:316:40:35

because it's not coming out of the block grant.

6:40:356:40:37

Now, if it's not coming out of the block grant,

6:40:376:40:39

there seems to be a mentality "What does it matter?"

6:40:396:40:42

Well, it does matter. It's all public money.

6:40:426:40:45

'Without London covering, the department tried to take action.

6:40:456:40:49

'They indicated they would change the scheme.

6:40:496:40:52

'But that led to hundreds of applications

6:40:526:40:55

'while the scheme was still lucrative.

6:40:556:40:57

'It made a bad situation even worse.'

6:40:576:41:00

They basically had to go back to the drawing board

6:41:026:41:04

-and redesign the scheme.

-So the department suggested

6:41:046:41:07

they were going to move to this less lucrative scheme

6:41:076:41:10

-and what happens then - people rush through the door.

-Yeah.

6:41:106:41:13

In that period,

6:41:136:41:15

the market understood that there was going to be

6:41:156:41:18

a reduction in the monies that were coming out of it,

6:41:186:41:21

so there was a big spike,

6:41:216:41:22

-so the number of applications went up substantially.

-I see!

6:41:226:41:25

-Of course.

-They inadvertently create this spike.

6:41:256:41:29

'In just two months,

6:41:296:41:31

'this spike accounted for nearly half a billion pounds of the cost.'

6:41:316:41:35

The story was obviously out.

6:41:376:41:39

Gossip was going from one person to another "This is so profitable,

6:41:396:41:42

"it won't last much longer, get in quickly."

6:41:426:41:45

'The scheme was changed and was now how it should've been at the start

6:41:456:41:50

'and still financially attractive enough for Diana Gass,

6:41:506:41:53

'who applied after the change - proof that people would

6:41:536:41:57

'still have applied for a less lucrative scheme.'

6:41:576:42:00

It'll take us about ten years before we start to make any saving.

6:42:006:42:03

But even if there isn't, we're getting a better product

6:42:036:42:05

for our money. We would get a better, consistent heat.

6:42:056:42:08

The change to the scheme came too late. The damage had been done.

6:42:086:42:14

RHI was closed in February.

6:42:146:42:16

The financial consequences are dramatic.

6:42:176:42:20

The total comes to over 1 billion. 1.18 billion, if I recall correctly.

6:42:226:42:26

-1.18 billion, just to...?

-The total value of the total scheme, yes.

6:42:266:42:30

The Treasury will fund just over half of that,

6:42:306:42:34

leaving Northern Ireland with a huge cost.

6:42:346:42:37

We're footing an extra bill,

6:42:376:42:38

which seems as if it's between £400 and £500 million, over 20 years.

6:42:386:42:43

The department has already had to start finding money

6:42:436:42:47

that could've gone elsewhere.

6:42:476:42:48

People come in and tell me about the impossible delays imposed on them

6:42:486:42:54

for a hip replacement, or a knee joint,

6:42:546:42:57

or schools are scraping to make ends meet -

6:42:576:43:01

and yet, we've maybe up to £500 million

6:43:016:43:05

that's going to be pared off those services

6:43:056:43:09

in order to pay for this squander.

6:43:096:43:11

Even though the scheme was closed,

6:43:116:43:13

the department still didn't know where it had all gone wrong.

6:43:136:43:17

To the astonishment of some, it took the department to effectively

6:43:176:43:20

impersonate a business and carry out a secret shopper exercise

6:43:206:43:25

before it finally worked it out.

6:43:256:43:27

The tariff had been too high all along.

6:43:276:43:30

What Internal Audit did was ring a supplier

6:43:316:43:34

as a secret shopper-type of approach.

6:43:346:43:37

They phoned up and said, "What would it cost to install a boiler

6:43:376:43:40

"and what would be the cost of fuel?"

6:43:406:43:42

That was in March of this year. That's after the event.

6:43:426:43:47

It doesn't change anything.

6:43:476:43:49

But between internal audit and external audit,

6:43:496:43:52

they are the people who have finally, finally realised

6:43:526:43:55

there's a root cause issue, which is too high a tariff.

6:43:556:43:58

The department now understood why the scheme had provided

6:44:006:44:03

an unacceptably high rate of return.

6:44:036:44:05

It only finally worked this out after the scheme had closed.

6:44:076:44:11

You only set out then to find out the cost of the boiler

6:44:126:44:15

and fuel in 2016, when the man on the street found out,

6:44:156:44:18

"Here, I can get my henhouse all heated up,

6:44:186:44:21

"and even my own house," yet you, the people sitting in here -

6:44:216:44:25

and maybe earning £80,000, £90,000 £100,000 a year - did not know that?

6:44:256:44:30

And now, we're paying the consequences

6:44:306:44:32

out of the block grant for it.

6:44:326:44:34

Heads should roll!

6:44:356:44:37

So, who were Arlene Foster's civil servants, earning those big numbers?

6:44:406:44:45

The senior officers involved

6:44:486:44:49

would've been Fiona Hepper as the grade 5,

6:44:496:44:52

um, David Thomson, who's now retired, as the grade 3,

6:44:526:44:55

and David Stirling is the permanent secretary.

6:44:556:44:58

As we know, Fiona Hepper was the head of the energy team

6:44:586:45:01

and often dealt directly with Arlene Foster.

6:45:016:45:04

Patsy McGlone chaired the Stormont committee,

6:45:046:45:07

which scrutinised the energy team.

6:45:076:45:10

They were supposed to report to us twice a year.

6:45:106:45:12

It was upwards on a year and a half

6:45:126:45:14

before they came before the committee.

6:45:146:45:16

The more questions we asked, the less clarity there was.

6:45:166:45:19

Whenever you leave a committee room more confused,

6:45:196:45:23

with less clarity than what you went into it on an issue,

6:45:236:45:27

you realise there's a problem.

6:45:276:45:29

Before the scheme's flaws became apparent, Fiona Hepper was promoted.

6:45:296:45:34

David Thomson retired in June 2014.

6:45:346:45:37

We asked him for an interview, but he declined.

6:45:376:45:41

David Stirling was their boss,

6:45:416:45:43

the most senior civil servant in the Department of Enterprise,

6:45:436:45:46

and ultimately accountable when the scheme was set up.

6:45:466:45:49

I will accept full responsibility

6:45:496:45:51

for any failings which occurred during my time.

6:45:516:45:55

He moved to the same role in the Department of Finance

6:45:556:45:59

before the flaws in RHI were known about.

6:45:596:46:01

Much of the coverage of the scheme has focused on claims of fraud.

6:46:036:46:07

-NEWSREADER:

-A whistle-blower claimed some companies put in

6:46:076:46:10

boilers they didn't need, that a farmer was heating an empty shed.

6:46:106:46:14

Each was hoping to rack up £1 million of profit over 20 years.

6:46:146:46:18

Spotlight has seen some of the findings

6:46:216:46:23

of a confidential investigation ordered by the department.

6:46:236:46:27

Nearly half of almost 300 sites inspected

6:46:286:46:30

are doing something the department didn't intend -

6:46:306:46:34

for example, not being energy efficient -

6:46:346:46:37

but not in a way that breaches the regulations.

6:46:376:46:40

Things went fundamentally wrong in the design,

6:46:406:46:43

which led to opportunities for, um, abuse and overuse,

6:46:436:46:49

which is eligible within the terms of the scheme,

6:46:496:46:52

but not the intention of the scheme.

6:46:526:46:54

In other words, most of the costs of the scheme,

6:46:546:46:57

most of the massive overspend,

6:46:576:46:59

comes from the department's blunders and not from fraud.

6:46:596:47:02

But it's the treatment of the whistle-blower

6:47:046:47:07

who approached Arlene Foster in 2013 which is at the heart of the story.

6:47:076:47:11

Correspondence that the committee has received

6:47:126:47:15

from a whistle-blower, a member of the concerned public,

6:47:156:47:18

shows that there were clear warnings to the departments

6:47:186:47:21

in relation to the wasteful use of heat as far back as October 2013.

6:47:216:47:25

The whistle-blower had expressed her concerns

6:47:256:47:28

to the minister Arlene Foster.

6:47:286:47:31

The whistle-blower then met the head of the energy team, Fiona Hepper,

6:47:316:47:34

and other officials in autumn 2013.

6:47:346:47:38

The point was made that, um,

6:47:386:47:41

the scheme was not operating as intended.

6:47:416:47:44

It seems, on the face of it, from that,

6:47:446:47:48

a very, very clear signal to act

6:47:486:47:51

and to at least ask the question "What does she mean?"

6:47:516:47:55

The whistle-blower's concerns were not addressed.

6:47:596:48:02

In her e-mail sent in May 2014, she put her fears in writing.

6:48:036:48:09

By then, Fiona Hepper had left the department.

6:48:096:48:11

The whistle-blower's e-mail says,

6:48:126:48:15

"What we're seeing on the ground in Northern Ireland is that buildings

6:48:156:48:19

"are using more energy than before, because it pays them to do so.

6:48:196:48:23

"The flat rate means there's no incentive at all to be efficient.

6:48:236:48:27

"So the heat in buildings is on all year round,

6:48:276:48:30

"with the windows open everywhere." It then says,

6:48:306:48:34

"When we had spoken, you did not believe that people would do this,

6:48:346:48:38

"but believe me, it's happening."

6:48:386:48:40

The whistle-blower added, "It's got to a stage

6:48:426:48:45

"where it cannot be ignored any longer."

6:48:456:48:48

The problem of "the more you burn, the more you earn"

6:48:506:48:54

had been identified.

6:48:546:48:55

The whistle-blower warned the department

6:48:556:48:58

and was effectively ignored.

6:48:586:49:01

This e-mail was literally, literally worth hundreds of millions of pounds

6:49:016:49:07

to the Northern Ireland taxpayer, and nothing was done about it.

6:49:076:49:11

To me, that was the first, er, clear opportunity

6:49:126:49:16

for the point that the tariff was too generous

6:49:166:49:19

to be identified and understood.

6:49:196:49:22

As a matter of fact, it wasn't.

6:49:226:49:24

The whistle-blower's e-mail was by far the loudest

6:49:246:49:27

of a series of alarm bells which were ignored.

6:49:276:49:31

Would you agree that, in terms of public money,

6:49:316:49:34

this is the biggest financial scandal in living memory?

6:49:346:49:37

-In Northern Ireland?

-Yeah.

6:49:386:49:41

I can't recall anything that was on the scale.

6:49:416:49:45

We asked David Stirling and Fiona Hepper a series of questions

6:49:456:49:50

about their roles in the failure of the RHI scheme.

6:49:506:49:53

Both said they couldn't answer because of the ongoing PAC enquiry.

6:49:536:49:57

Arlene Foster said she couldn't be interviewed

6:49:586:50:01

because of time pressures, including a trip to China.

6:50:016:50:05

In a statement, she said,

6:50:056:50:06

"Investigations into the whistle-blower's claims..."

6:50:066:50:09

But the whistle-blower had first approached Mrs Foster

6:50:156:50:19

and she referred her to the department to investigate.

6:50:196:50:22

We asked Mrs Foster if she made any other attempt

6:50:226:50:25

to follow up on the woman's claims.

6:50:256:50:28

She did not respond directly to this question.

6:50:286:50:31

She pointed out that the Permanent Secretary had told the PAC

6:50:316:50:35

that her handling of the whistle-blower

6:50:356:50:38

had been "entirely appropriate".

6:50:386:50:40

She said...

6:50:406:50:42

Those ongoing costs are likely to be at least £400 million.

6:50:536:50:58

That could have paid for the new Omagh Hospital,

6:50:586:51:00

the York Street Interchange, Belfast's rapid transit system,

6:51:006:51:04

and converting the A26 at Frosses to dual carriageway,

6:51:046:51:08

with £15 million left over.

6:51:086:51:10

Conor Spackman investigates a multi-million pound blunder over a green energy scheme, the Renewable Heat Incentive, that insiders are calling the biggest financial shambles in the history of the NI state.


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