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Summary

  1. Renewable Heat Incentive Inquiry examining botched energy scheme
  2. Former DETI official Seamus Hughes faces questions from inquiry counsel
  3. Inquiry set up after public concern over scheme's huge projected overspend
  4. Retired Court of Appeal judge Sir Patrick Coghlin chairing inquiry at Stormont
  5. Public evidence sessions expected to last until well into 2018

Live Reporting

By Robin Sheeran and Iain McDowell

All times stated are UK

That's all for now...

This was the scene on the slopes of Stormont today, with youngsters sledding through the snow.

Mr Hughes will have to return another time for another question-and-answer session.

people sledding on the slopes at Stormont
Press Eye

Inquiry chair sir Patrick Coghlin says we'll have to get the snow-ploughs tomorrow.

We're off to get the skis on, but we'll be back tomorrow morning for more from the inquiry from 09:45... weather permitting, of course!

What happened today the the RHI Inquiry?

BBC News Northern Ireland

There was no effective monitoring of the RHI scheme as it began to hit serious problems, the inquiry heard.

The RHI Inquiry
Pacemaker

The civil servant who looked after the day-to-day running of the scheme in 2014 "didn't really understand" what was going on.

Seamus Hughes said he had not been told to monitor key things like technology types, boiler run times and sizes.

'Interpretation of rules invites legal debate'

Ofgem's approach was that because the term 'heating system' was not defined in the RHI scheme regulations it was "up to the policy operators to interpret the position", explains Mr Aiken.

Sir Patrick observes that that was inviting "a little legal debate, wouldn't it?"

Seamus Hughes
RHI Inquiry

He asks Mr Hughes why he thought Ofgem's interpretation was wrong.

"My gut reaction was that it was wrong," he replies, adding that he was coming to it cold.

"You obviously didn't have five boilers!" jokes Dr MacLean.

'Absolutely bizarre policy on multiple boilers'

Mr Hughes followed up Mr Hamilton's email with a query to Ofgem, the administrator for the RHI scheme.

It said the policy was that unless systems were hydraulically linked "we consider them separate plants", and it didn't matter that the boilers were heating the same space.

The RHI Inquiry
RHI Inquiry

Mr Hughes tells the inquiry he found this "absolutely bizarre".

Ofgem said that was due to the fact that the term "heating system" was not correctly defined in the regulations for the scheme and could be open to interpretation.

It suggested that DETI might therefore want to amend the regulations.

'Boiler claimant's query was to find out benefits'

Another man, David Hamilton, sent an email to DETI with a "theoretical" question about the RHI scheme.

He said a "large industrial building is in need of being heated" with 500kW thermal of heat, and suggested that the owner might install five small 99kW boilers rather than two large 250kW units.

He asked if the separate boilers would qualify for the higher tariff on offer for the smaller boilers or whether it would be considered a single system, therefore only receiving the lower subsidy.

Wood pellets
Getty Images

Installing five small boilers would mean he could collect four times more money than if he put in two large units, and Mr Hamilton also asked if the potential claimant would be "asked why he installed five small boilers".

Mr Hughes tells the inquiry he viewed the queries as Mr Hamilton trying to tease out "what would be the most beneficial to him".

He replied to the email, saying that the suggested set-up would be considered as a single heating system, therefore falling under the lesser subsidy rate.

'We didn't try to play games with our RHI system'

In September 2014, the Democratic Unionist Party MLA Jim Wells forwarded a letter to DETI from one of his constituents, Harry Baxter.

Mr Baxter called for the subsidy levels in the Northern Ireland RHI scheme to mirror those in the GB initiative.

Burning biomass pellets
BBC

As an "early adopter" of the scheme using a 199kW boiler at Castlewellan Castle in County Down, Mr Baxter felt he had been hard done by compared with those who were splitting their heating systems into 99kW boilers to claim a bigger tariff that was on offer for smaller units.

"We didn't try to play games with our installation and are now being punished for being genuine early adopters," he wrote.

As Mr Aiken points out, a participant with a large boiler would be getting 1.5p for each kWh of heat, while someone with two smaller boilers would get 12p.

'Cost control a safety feature, not a fire hose'

Tiering as a cost control for the RHI scheme was a "safety feature" and not "like a fire-hose you pour on a roaring inferno", says Sir Patrick.

A firefighter using a hose on a fire
Getty

"It's there before the fire starts," he adds.

Mr Hughes accepts that he didn't fully understand the potential for the scheme to run out of control due to a sharp increase in demand.

'Not replying to whistleblower was missed opportunity'

In response to Mr Hughes's email, Ms O'Hagan sent a frank reply, saying that it was "really disappointing" that tiering wasn't being considered for the RHI scheme, even though she had consistently made her concerns clear to DETI.

She said people were were trying to "save energy, money and environment have an uphill struggle against" the initiative that encouraging people to burn biomass " for profit".

An email inbox
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Mr Hughes didn't reply - he says he should've done so and it was a "missed opportunity" to find out more information from Ms O'Hagan.

Sir Patrick suggests that DETI should've met her, like officials had done in October 2013 after she first pointed out the problems.

Mr Aiken asks "how worried should we all be" if officials across the civil service react to concerns raised by the public in the same way DETI staff did to the issues Ms O'Hagan raised.

'Can't be right to wait until overwhelmed'

"The world [was] about to change dramatically" regarding the RHI scheme in March 2015, observes Mr Aiken, as applications were constantly increasing.

Sir Patrick wants to know why DETI wasn't looking at tiered tariffs as a means of containing that rise.

Mr Hughes tells him that the scheme was still operating within its budget at the time.

Sir Patrick Coghlin
RHI Inquiry

"So, as long as the scheme was in budget the fact that it was demand-led and unpredictable and that in Great Britain both tiering... and digression had been brought in was not looked at?" Sir Patrick asks.

Mr Hughes says officials were starting to look at the scheme and "benchmark" it against the GB scheme.

"It can't be right to wait until you were virtually overwhelmed ," Sir Patrick observes.

'Cost control mechanism hadn't been considered'

The so-called whistleblower who tried to draw then then DETI minister Arlene Foster's attention to a key flaw in the RHI scheme kept following up her concerns with the department.

Janette O'Hagan (below), who gave evidence to the inquiry last month, pointed out time and time again that the overgenerous subsidy on offer meant people were needlessly producing heat to collect cash.

She knew that a cost control mechanism called tiering could prevent that - it works by reducing the subsidy rate on offer once a certain limit of heat production has been reached.

Janette O'Hagan
RHI Inquiry

In March 2015, she emailed DETI to ask why nothing had been done to tackle the issue, and Mr Hughes told her that tiering wasn't being considered at the time but may be later.

That was even though Mr Hutchinson had said in his handover note 10 months earlier that the mechanism should be considered "as a matter of urgency" in order to "prevent excessive payments".

Mr Hughes tells the inquiry that it hadn't even been discussed within the department by that stage.

The response Ms O'Hagan received from Mr Hughes left her "raging", she told the inquiry.

'Review of RHI fell off the radar'

After the lunch break, Mr Aiken turns to the matter of reviews of the RHI scheme, explaining that there were three types.

The first is a full scheme review promised in the 2012 business case for the initiative.

As far as Mr Hughes is concerned, that was never on the table, and Mr Aiken and Sir Patrick agree that it had "fallen off the radar" before Mr Hughes appeared on the scene.

Joseph Aiken
RHI Inquiry

The second type of review is the need for re-approval by the Department of Finance by March 2015.

No-one ever told Mr Hughes that was needed, nor had his predecessor Davina McCay been told.

The third type of review Mr Aiken describes as "bespoke", and he gives the example of the review of tariffs marked as "urgent" in Mr Hutchinson's handover document.

That's lunchtime...

The inquiry rises for a break and will return at 14:00 - join us again then.

'I've just seen scheme's risk list for first time'

A register of risks associated with the RHI scheme had been drawn up in March 2012, but it had essentially been left on the shelf and never updated after its creation.

Mr Hughes says he was familiar with risk registers from his previous work in the civil service, but he had not been involved in reviewing them.

A folder marked: Risk management
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Inquiry panel member Dame Una O'Brien asks him when he first saw the RHI risk register.

"Just there now," he says.

It's fair to say that's followed by a brief stunned silence in the Senate chamber.

'Non-publication of data could've led to legal challenge'

DETI had a statutory duty to publish statistics about the RHI scheme but that wasn't realised by the civil servants running the initiative.

But that never happened in the three-year lifetime of the scheme.

A finger pointing to figures on a screen
Getty Images

Mr Hughes says the issue was noticed in September 2014 and the intention was to address it but "events overtook things".

Mr Aiken explains that was a "serious" matter and the department could've faced and lost a legal challenge by not publishing the data.

'No-one spotted danger of rise in applications'

By the end of 2014, the number of applications to the RHI scheme was rising steadily, with the uptake having been slow for much of its earlier lifetime.

Dr MacLean asks if there were "cheers going up in the office" as the numbers increased.

A biomass boiler
BBC

"We were thinking: 'This is now starting to work the way it was meant to work' - people were applying for it," replies Mr Hughes.

He accepts that he didn't understand that what was actually happening was that people were beginning to pile into the scheme because they saw how lucrative it was.

The lack of staff continuity after the overhaul earlier in the year was a contributing factor to that because no-one with experience of the scheme from its early days was left to notice dangerous trends.

'DETI wasn't monitoring boiler running times'

DETI should have been closely monitoring the RHI scheme and the department was receiving regular reports from Ofgem.

Looking at some of the data, Mr Aiken points to scheme participants who were running their biomass boilers for far longer than the department had anticipated.

The subsidy on offer was based on an estimated running time of about 1,500 hours a year, but those big users were burning biomass for about 5,000 hours, allowing them to claim far money money than was intended.

A biomass boiler
BBC

Mr Hughes says he wasn't keeping an eye on that.

Mr Aiken puts it to the witness that none of the factors that could have indicated overcompensation, or gaming of the system, were being monitored by him or by anyone else at DETI.

The witness confirms that no-one raised the need for monitoring with him, and he wasn't go doing it.

'Extraordinary that key documents not stored together'

Mr Hughes says he didn't check how long the RHI scheme's approval from Stormont's finance department would last for.

As it happened, the initiative needed reapproval in March 2015 - about two-and-a-half years after it opened - but DETI never sought that it the scheme ran on for several months before anyone noticed that the approval had elapsed.

Documents
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There was nothing in the handover note that Mr Hughes was given that explained that reapproval should be sought - other more senior staff were told about it but they didn't pass the message on to him.

In the civil service's record-keeping system, the business case for the scheme and the original approval letter that followed it, which outlined the conditions of the approval, are not stored together.

Sir Patrick says he finds that "extraordinary" and "the logic of that defeats me entirely".

'I wasn't informed of cost controls decisions'

Prior to the DETI staffing shake-up on the RHI scheme in 2014, there had been a long-running saga concerning cost controls for the initiative.

The department had decided not to add the budget protection mechanisms introduced to the GB RHI scheme, instead preferring to develop its own interim control measure.

That was not communicated to Mr Hughes at the time he started working on the scheme.

Sterling cash
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In December 2014, DECC supplied Mr Hughes with a summary of regulatory changes made to the GB RHI scheme since its inception.

One of the headings included the word "digression" with reference to cost controls, and Mr Hughes says the word would have meant nothing to him at that time.

Digression, if you haven't been entirely glued to our coverage for the last few months, is a mechanism that allowed the subsidy on offer through the scheme to be lowered in response to increased demand, keeping the initiative's budget on course.

'No-one told me how complex RHI was'

There were "a lot of twists and turns" in the RHI scheme but there was "very little opportunity" to discuss the nuances with people who had a greater understanding of it, says Mr Hughes.

A magnifying glass
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Inquiry panellist Dr Keith MacClean wonders whether anyone told Mr Hughes about the complexity of the RHI scheme when he started working on it.

"I don't recall anybody actually saying to me it was a complicated scheme but it didn't take very long to work out it was," says the witness.

'My knowledge of energy policy close to zero'

Mr Hughes accepts that his level of understanding of the RHI scheme and other energy projects that DETI was running was "close to zero", as suggested by the inquiry barrister.

The witness says he had no background in energy policy and the role was "totally new" to him.

A man carrying folders
Getty Images

He says the UK government's Department of Energy and Climate Change (DECC), which was running the Great Britain RHI scheme, was new to him too.

Reports by external consultants about key aspects of the scheme were "very, very complex... and they didn't make a lot of sense to me, to be perfectly honest, on initial reading".

'Scheme wasn't discussed at Hutchinson meeting'

The sole matter described as urgent in Mr Hutchinson's (below) handover was a review of the RHI scheme's tariffs.

Mr Aiken says that wasn't considered at all until "potentially the start of 2015".

Peter Hutchinson
RHI Inquiry

Mr Hughes says it's probably reflective of his work on the domestic RHI scheme and the knotty problems of Carbon Trust loans and data sharing with the RHI scheme administrator Ofgem.

"There was no scope, or no time to do anything else," he says.

He did have a meeting with Mr Hutchinson in August 2014 but the non-domestic RHI scheme "wasn't touched on in the meeting at all".

'Clear that work wouldn't be done in time'

After joining the RHI scheme team in June 2014, Mr Hughes was given a handover document by Ms McCay, who had been working on the project in a temporary role.

It was originally put together the previous month by Mr Hutchinson, the DETI official who had been most hands-on in his work on the scheme from its inception in 2011.

A stamp marked: Priority
Getty Images

It listed "immediate actions" that Mr Hutchinson felt had to be addressed by the end of August 2014, including the consideration of a way to adjust the subsidies on offer in order to prevent excessive payments.

In her evidence on Tuesday, Ms McCay said she quickly realised that "there just wasn't time" to get through all of it in the suggested timeframe.

Mr Hughes agrees: "There was a lot of stuff on that list and we certainly weren't going to get it done by the end of August."

'Scheme team very, very under-resourced'

The team working on the RHI scheme was "clearly... very, very under-resourced", says Mr Hughes.

In his near 40-years working in the civil service has never dealt with anything as complicated as that heat initiative.

People looking at charts
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Mr Aiken puts it to Mr Hughes that the large turnover in staff wasn't helped by the nature of the handover process.

"Not only was the whole team changing but the changeover was being done through someone (Davina McCay) acting up in one of the posts for a six-week period" he says.

'Amount of staff changes on scheme unprecedented'

It was "very, very unusual" for there to have been so many changes to staff at the same time as happened on the RHI scheme in 2014, says Mr Hughes.

The issue of staffing is one of the key themes of the inquiry, and Mr Hughes says the high turnover of people working on the initiative during a key period in its lifespan and the lack of continuity "significantly contributed to the problems that arose".

The RHI Inquiry
RHI Inquiry

"The whole team was different - they were all new, so there was no link back to the past, really."

In his written witness statement, Mr Hughes said the changes were "unprecedented".

"I am a civil servant with almost 36 years service across a number of departments and I have never encountered this level of staff change at the same time in any division before."

'Absolutely no knowledge of RHI when I took job'

Asked what knowledge he had of the RHI scheme when he joined DETI in June 2014, Mr Hughes says: "Absolutely nothing at that time."

He was appointed as a deputy principal on the team working on the scheme, mostly focusing on the day-to-day running of the domestic scheme but later splitting his time between it and the non-domestic initiative.

Seamus Hughes
RHI Inquiry

That was the same level of position held by Peter Hutchinson, who worked on the scheme from its outset until he left in May that year.

Mr Hughes says that in spite of his lack of knowledge about the project he was up for the challenge.

New witness Seamus Hughes gives evidence

"Congratulations to all who made it this morning," smiles inquiry chair Sir Patrick Coghlin as he opens proceedings.

Junior counsel Joseph Aiken congratulates Mr Hughes for braving the feared snowstorm - the Beast from the East - to make it up the hill here at Stormont.

Seamus Hughes makes the affirmation
RHI Inquiry

Mr Hughes has had a long career in the civil service dating back to 1981 when he joined the old Department of Commerce, a predecessor of DETI and what is now the Department for the Economy.

Having since worked in other departments, including a spell in the Department of Agriculture and Rural Development, his career came full circle in 2014 when he joined DETI.

Mr Hughes's witness statement is available on the inquiry's website.

What happened yesterday at the RHI Inquiry?

BBC News Northern Ireland

Former DETI minister Arlene Foster and senior civil servants knew the department delivering the RHI scheme was "badly under resourced" but still decided to go ahead with the project, the inquiry heard.

David Thomson
RHI Inquiry

David Thomson, a retired former senior manager at the department, said there was a staff shortage in a "critical area".

He also said the initiative "wasn't ignored" by DETI's top management team but bosses and the minister decided not to make it a priority.

What is the RHI Inquiry?

BBC News Northern Ireland

An independent inquiry into the RHI scandal was established in January last year by the then finance minister Máirtín Ó Muilleoir.

He ordered it in the wake of the huge public concern and what was then a developing political crisis surrounding the scheme.

The RHI Inquiry began in November and Sir Patrick Coghlin (below), a retired Court of Appeal judge, is its chair and has been given full control over how it will operate.

Sir Patrick Coghlin
Pacemaker

It will look at:

  • the design and introduction of the RHI scheme
  • the scheme's initial operation, administration, promotion and supervision
  • the introduction of revised subsidies and a usage cap for new scheme claimants in 2015
  • the scheme's closure

For more information on the RHI Inquiry, you can read our handy Q&A.

RHI scheme - the fallout

When the scale of the overspend emerged, public and political concern rocketed.

As the minister in charge of the Stormont department that set up the RHI scheme, the Democratic Unionist Party (DUP) leader Arlene Foster faced calls to resign from her role as Northern Ireland's first minister in December 2016.

Arlene Foster and Martin McGuinness
PA

She resisted, and Sinn Féin's Martin McGuinness then quit as deputy first minister in protest at the DUP's handling of what had by then become a full-blown political crisis.

That move brought about the collapse of the Northern Ireland Executive. Now, more than a year on from that, Northern Ireland remains without a devolved administration.

You can find much more detail on the RHI scheme in our need-to-know guide.

RHI scheme - the flaws

The budget of the RHI scheme ran out of control because of critical flaws in the way it was set up.

Claimants could effectively earn more money the more fuel they burned because the subsidies on offer for renewable fuels were far greater than the cost of the fuels themselves.

Burning £20 notes
BBC

The most recent estimate for the overspend was set at £700m, if permanent cost controls aren't introduced.

The massive overspend bill will have to be picked up by the Northern Ireland taxpayer.

RHI scheme - what was it?

The Renewable Heat Incentive scheme - or RHI for short - came to the fore of the Northern Ireland public's knowledge in late-2016... and the fallout from the scandal attached to it is still being felt in the region's politics today.

A biomass boiler
Getty Images

The scheme was set up by the Northern Ireland Executive in 2012, as a way of encouraging businesses to switch from using fossil fuels to renewable sources for generating their heat.

Those who signed up were offered financial incentives to buy new heating systems and the fuel to run them.

Good morning

The wintry weather is setting in on the hill at Stormont, but we've made it up to Parliament Buildings - let's hope the usual RHI crew have all been able to do so too.

Stormont's Parliament Buildings
BBC

We have a new witness today - civil servant Seamus Hughes who joined the Department of Enterprise, Trade and Investment's (DETI) energy division in June 2014.

Proceedings begin shortly, and we'll have the usual live stream and text commentary.