The Department for the Economy (DfE) has published the names of individual recipients of RHI tariffs. They will not publish any detail about the costs incurred by the recipients, their borrowings, the cost of the fuel, bank charges or any comment about shattering the viability of the business. No one will mention that private investment of individuals’ worth £140M is at risk or, the family firms that are now insolvent, the bankruptcies and the repossessions of homes that will take place from this month – far less the wholesale welching on supposedly irrevocable promises and government-backed guarantees.
What is this all about?
The Renewable Heat Incentive was conceived in 2010 and born in 2012. It was a programme designed to change our behaviours and reduce our use of fossil fuels. We could, it was thought, grow our own fuel – wood and other forestry products would replace the millions of barrels of oil we import. Using biomass energy would remove the impact that dirty fossil fuels have on our environment. If we could change our behaviours and embrace biomass, we would no longer suffer the fumes and pollution from fossil fuels. Jobs would be created in forestry, farming and engineering. Our economy would no longer be tied to expensive oil prices. The scheme carried inflation-proof guarantees to cover additional costs and a guaranteed pay-back. The banks were enthusiastic, the participants excited and engaged. What was there not to like?
The public have been told that it all went wrong. Did it? If so, when?
Last week, the Court heard that DfE acted unlawfully and that they did not have the authority to change the Regulations in the way that it did at the start of the year. It also heard how the process should be done. The Court heard that the Government Department in England & Wales had lost a series of court cases in near identical circumstances to those that apply here to our RHI scheme and the (unlawful) retrospective cuts. The legal principles are the same. The judgements date to 2012. DETI, now DfE, must have known about the rulings when they rolled out our scheme. Critically, civil servants must have known about them when they drafted the (unlawful) Regulations in January, of this year.
The most egregious and unlawful aspect about the mess our RHI is now in, is the introduction of retrospective regulations. Last year, energy was used to produce goods which were sold. In the case of farmers, mushrooms were grown and chickens were raised and both were sold. The price at point of sale was fair and in these instances, had been agreed months before. But the forecast and agreed price factored in the assumption that an RHI rebate would be paid, quarterly in arrears to the producer. That rebate will not, in many cases, now be paid and in these circumstances, the sale represents a loss.
The Court heard that the poultry and the mushroom farmers were “clean” and were in no way implicated in abuse or misuse of the RHI scheme. They will still have made a financial loss. In sectors where margins are small and cash-flow critical, this is the difference between solvency and insolvency. Businesses will fail because of the retrospective impact of the 2017 emergency amendments.
There are about 2,000 boilers in the Northern Ireland RHI scheme. Each installation costs about £70,000. Small businesses took loans from banks at 5.25% or, from finance houses at 9% to 16%. What could go wrong? This is a government backed scheme. It was a safe thing to do to stand personal guarantee or place the business premises, farm, and family home as loan collateral. It is not as if the Government would welch on the 20-year guarantee. But they did. The (unlawful) backdating of the cap – often by several months, wiped out profitability of small firms in the closed financial year. Now, with no rebate cheque expected for months – if ever, these businesses cannot afford to make their monthly loan repayments. The total expenditure by boiler recipients exceeds £140M. The debt now owed is much greater. About 160 small businesses may go to the wall, soon. Other businesses have halved their workforce.
In Northern Ireland, we have 12 percent of the UK total number of boilers by number and 7 percent of the heat generating capacity. HM Treasury limits its contribution to Northern Ireland for what is a nation-wide initiative, to 3% – our share of regional expenses under the Barnett formula, based on our headcount as a percentage of the UK population. Twenty-five miles away in Scotland, the RHI rebates are much more lucrative and are not limited to per head of population. Their civil servants can do sums. Their civil servants can adjust cost predictions and can secure long term funding. Their scheme has grown and it continues to grow. Their equivalent of the DfE has not crashed their economy.
We need to sort out this shambles as otherwise, people will suffer, loans will be defaulted upon and banks will seize and foreclose on property at a rate not seen since NAMA and, to top it all, we will return to burning millions of barrels of oil. Hardest hit are the farmers but, all innocent participants have lost out. Post BREXIT, where will our food be imported from?
This is not a political issue and the people who are involved are not political footballs. It is about good governance and achieving better government.
It will be claimed that real progress has been made, the names of the scheme participants are published. Few will ask “but why?” It will have done absolutely nothing towards fixing the problem.
Keep using the blame-thrower. Blame the innocent!