RHI scandal: ‘Axing heat subsidies could cause more problems’

Mike Nesbitt has voiced caution over the idea of ending the scheme outright
Mike Nesbitt has voiced caution over the idea of ending the scheme outright

Any hurried attempt to shut down the botched Renewable Heat Incentive (RHI) scheme could risk costing Northern Irish taxpayers more money than it saves them.

That was the message from the Ulster Unionists on Wednesday, as it was suggested that the Executive could be mulling over the idea of axing the whole botched scheme, which had offered subsidies to people for generating heat via renewable energy for up to 20 years.

First Minister Arlene Foster was enterprise minister from 2008 to 2015

First Minister Arlene Foster was enterprise minister from 2008 to 2015

There were no definite details available on how such an axing of the programme may work, although BBC NI economics editor John Campbell has reported that it would involve a bid to “buy out” the contracts of those who are currently getting subsidies.

It had been hoped that Arlene Foster would unveil solutions on Monday about how the Province will try and mitigate the estimated £400m-or-so bill which Northern Ireland’s public finances could be left with as a result of problems with how the scheme was designed and run.

However, she said instead that it will be the new year before a plan will be presented.

According to a detailed analysis by the BBC’s Mr Campbell, Westminster was initially expected to cover around £660m-worth of spending on the RHI scheme in Northern Ireland over 20 years – but that with the cost of the scheme now estimated to be more than £1bn, the Province may have to find more than £400m from its own budget.

The scheme was shut to new applications from both businesses and householders in February this year, after a huge surge in demand.

UUP party leader Mike Nesbitt said in a statement the idea of an outright closure “raises far too many unanswered questions to warrant support without significant detail”.

He said: “The prime concern is that HM Treasury have allocated £660 million for Northern Ireland to promote renewable heating.

“If the scheme closes, logic says this will be lost...

“We are seeking urgent clarification from Treasury on the status of the £660m.

“Beyond that, we need to know how closure would work, at what cost, saving how much, and how the Executive would avoid being sued for breach of contract.”

He warned of a “real danger” that in “rushing to close a botched scheme that currently stands to cost the people of Northern Ireland £400m, the Executive could cut the people off from access to £660m”.

He said he would not support any suggested remedy which was a “political fix”, designed to “spare the blushes” of Arlene Foster – who has come under huge pressure because she was the minister in charge of the Department of Enterprise, Trade and Investment in 2012 when the RHI scheme was first opened.

The scheme offered subsidies to people for installing boilers and burning renewable fuel (largely wood pellets).

However, it was set up so that the value of the subsidy was more than the value of the fuel – meaning the more people burn, the more they earn.

It was also designed without any of the safeguards present in a similar programme on the UK mainland, such as a “tiering” system which saw payments drop off sharply if the boilers were kept running longer than a set number of hours.

Asked if it is considering closing the whole scheme down, the Department for the Economy said it was “exploring a number of cost control options to address the unacceptable levels of potential overspend”.

It added: “All options will need further consideration and expert advice with a view to introduction in 2017.

“Officials are in discussion with legal advisors (from both the Departmental Solicitors Office and the Attorney General’s Office).”

Meanwhile, Finance Minister Mairtin O Muilleoir said: “No preferred option has been put before me and there is still much work to be done.

“Value for money and protecting the public purse will be my criteria in assessing any solution. In the interim, it would be inappropriate to speculate on the viability or cost of any solution.”