RHI scheme plunged farmer deep into debt and left him with ‘unviable business’

An award-winning poultry farmer challenging huge cuts to Northern Ireland’s Renewable Heat Incentive scheme has been plunged deep into debt and left with a potentially “unviable” business because he trusted government pledges on subsidies, the High Court heard on Thursday.

Thursday, 10th June 2021, 5:10 pm
Updated Thursday, 10th June 2021, 6:01 pm
Tom Forgrave farmer challenging the cuts to RHI subsidies, pictured outside Belfast High Court. Picture By: Arthur Allison Pacemaker.

Counsel for Thomas Forgrave claimed he is suffering while no-one at Stormont pays the consequences for blatant errors in the failed green energy initiative.

The north Antrim man is taking legal action over legislation introduced in 2019 which saw annual payments to boiler owners slashed from £13,000 to £2,000.

He insists those who originally signed up to the RHI scheme have a right to tariff rates guaranteed for 20 years.

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On day two of the case against the Department for the Economy, the court was told how Mr Forgrave borrowed more than £500,000 to pay for and install biomass boilers at his farm.

But amid concerns over reduced income rates, the bank loan was later restructured. He is now faced with repaying borrowings of £307,000 over ten years.

Representing Mr Forgrave, Gerald Simpson QC said: “This has left the business in a potentially unviable position.”

Set up to encourage businesses and other non-domestic users to switch to environmentally friendly wood pellet burning systems, the RHI scheme was plunged into controversy after the potential cost to taxpayers emerged.

Because subsidies were higher than fuel costs it became known as “cash for ash” and was closed to new entrants in 2016.

Amid fears at one stage of a potential £700m overspend, the debacle led to the fall of Stormont’s power-sharing administration in 2017.

A public inquiry identified a series of failings but found no evidence of illegal activity.

However, Mr Forgrave is seeking to judicially review the decision to cut payments in the Northern Ireland (Regional Rates and Energy) Act 2019. He contends that the Department has breached his right to property protected under European law.

“The possession and issue in this case is the guaranteed right to a tariff level, subject only to adjustment for inflation, for a period of 20 years,” Mr Simpson submitted.

“The interference amounts to deprivation because, in fact, the right has been extinguished and been replaced by something completely different on which no sensible businessman would borrow money and no sensible bank would lend money.

“There’s no ministerial letter going out now encouraging the banks to lend money on these tariff levels”.

Mr Justice Humphreys was told no-one in government will suffer for the “continuing mistakes and blatant errors”.

“They are immune from the consequences,” the barrister said. “On the other hand the applicant, who was and is a successful businessman up until the 2019 tariffs came into existence, and whose only error was to believe the representations of government, and who trusted those representations... he is far from immune from the consequences.

“His business has become effectively unviable with all the consequences for him: financially; his business; in his life; and in his family’s lives.”

Part of the justification for cutting subsidies centres on a claim that providing more than a 12% rate of return on investments would breach EU state aid law.

But according to Mr Simpson that figure is a “red herring”.

He maintained: “This problem with the 12% is a recurring one, and one keeps disappearing down the rabbit hole of saying ‘well, 12% of what?’.”

The barrister also argued that the lesser tariff cuts introduced in 2017 had resulted in a budgetary underspend.

“Therefore the further reduction to the 2019 levels was unnecessary... in the general public interest and does not strike a fair balance,” he added.

Proceedings were adjourned to June 22, when lawyers for the Department will respond.