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Summary

  1. Design of botched scheme outlined to Renewable Heat Incentive Inquiry
  2. Former senior enterprise department official Fiona Hepper gives evidence
  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 today...

There's much still to get through with Ms Hepper, says Mr Scoffield, so she'll probably have to come back another day.

"I think everybody could do with a finish at the moment," says Sir Patrick as he wraps it up for the day.

Parliament Buildings after dark
BBC

If we can make it up the hill through tomorrow's forecast snow, we'll be back in the chamber at 09:45 GMT.

And Tuesday's star witness, DETI official Peter Hutchinson, will be back in the spotlight - join us then.

'I assumed expert advice was right'

One of the main reasons why the RHI scheme turned into the disaster it did is because there was no tiering system in place for the subsidies on offer in the scheme.

It was an important way of controlling the cost of the scheme and works by lowering the tariff on offer once a certain limit of usage has been reached, with the intention of preventing a claimant from overusing their heating system to collect more cash.

Money
Getty Images

Ms Hepper says she asked the CEPA consultants who drew up the subsidy model for biomass boilers whether it needed needed to be tiered and the answer came back that it didn't.

Dr MacLean says the numbers didn't stack up in the documents presented by CEPA to DETI and Ms Hepper says she would've assumed that the expert advice would've been right.

'DETI didn't push consultants for particular conclusion'

Last week, internal emails between senior consultants at CEPA were revealed that appeared to suggest that they felt they could not firmly recommend that DETI should pursue an ongoing subsidy scheme, which they claimed the department had wanted them to do.

CEPA director Mark Cockburn told the inquiry that his firm's conclusion was tempered to suit DETI's policy agenda.

Boiler
BBC

But Ms Hepper says DETI was "certainly not pushing them in one direction or another - that is not what we were paying for".

"We wanted evidence, we wanted information, we wanted a professional recommendation."

'Big cost increase should've set alarm bells ringing'

Inquiry panel member Dr Keith MacLean asks whether Ms Hepper didn't think she should have drawn the minister's attention to one particular difference that emerged between CEPA's draft and final reports.

"The costs that were being advised to you in this report, just one month later than the previous one, had gone up by almost a third, by £111m," he points out.

"Would that not have been a significant factor to go back to the minister?"

Dr MacLean
RHI Inquiry

"I didn't go back to her on that - I submitted the report and I didn't specifically highlight anything further," Ms Hepper says.

Dr MacLean says the large cost increase "must have set alarm bells ringing".

'Foster was told of stark value for money difference'

The final CEPA report said the cost benefit of a up-front grant scheme was much better than an ongoing subsidy offer - in fact, it went so far as to say the differences between the two were "pretty stark".

The decision had already been made to go with a subsidy scheme based on the draft report, and Ms Hepper says she didn't feel there needed to be any further consideration when the final paper was received.

Dame Una questions whether Ms Hepper clearly raised the substantial difference in value for taxpayers' money between the schemes with the minister before the decision was taken - she says she did.

'Detail in submission doesn't match consultants' advice'

CEPA's advice on what type of scheme to pursue isn't accurately reflected in the submission to Mrs Foster, suggests Mr Scoffield.

In the submission, Ms Hepper wrote in one section that the ongoing subsidy scheme is the "preferred approach" and offers the "highest potential renewable heat output at the best value".

David Scoffield QC
RHI Inquiry

But the draft report had found that an up-front grant fund was better in that regard.

When Mr Scoffield suggests it's ambiguous, Ms Hepper insists that her intention wasn't to present it that way and it was explained to the minister when they met.

'Difficult to assess if minister received full details'

Sir Patrick says he's concerned that so much went on in the meeting with Mrs Foster on 13 June that isn't in Ms Hepper's submission and he asks if it was just held between the two of them.

"I had somebody else with me," she says, adding that she thought it was Peter Hutchinson but it could've been Joanne McCutcheon.

Sir Patrick Coghlin
RHI Inquiry

Ms Hepper explains that the details not in the submission were talked through to the minister at the meeting.

Panel member Dame Una O'Brien observes that: "It's extremely difficult to address whether fair information and full information was given to the minister."

'Biomass boilers installed on Stormont estate'

Pariament Buildings at Stormont
AFP

There was an intention for the public estate to lead by example in switching from fossil fuels to produce heat to using biomass boilers instead, says Ms Hepper.

She says the Department of Finance, which controls the public estate, "availed of biomass" for parts of the Stormont estate but she's not sure if it's collecting money from the RHI scheme.

'Advice to minister based on assumption'

In the submission, Ms Hepper told the minister that the RHI scheme would be open until 2020 as far as the Treasury was concerned.

But given that the funding had only been guaranteed until 2015, Sir Patrick says the view expressed in the submission was based on an assumption.

Sir Patrick Coglhin
RHI Inquiry

He asks why Mrs Foster wasn't advised that there was no guarantee from the Treasury.

Ms Hepper says: "I think that's what I was trying to tell her."

'Foster didn't ask me for scheme preference'

"Did the minister ask you, as the director of energy, what route you thought she should take?" Mr Scoffield asks

Ms Hepper says they had a full discussion of the alternatives but she doesn't remember having, sharing or "being asked for a preference.

Fiona Hepper
RHI Inquiry

Mrs Foster expressed a preference at the end of the meeting, according to Ms Hepper, but said she would "reflect and come back".

"I think she signed the documents off the next day," she adds, saying that there could have been a further discussion between Mrs Foster and her special adviser after the meeting.

'Foster wasn't given advance copy of report'

Matters move to a submission Ms Hepper sent to the minister, Mrs Foster, on 8 June 2011 ahead of a public consultation on a possible RHI scheme.

Mrs Foster was told of the conclusions in the CEPA's draft paper and the point was made that "issues" had to be addressed before the final report would be published later that month.

Arlene Foster
Reuters

A copy of the draft was not included with the submission, but Ms Hepper says she took one to a meeting with the minister shortly afterwards because it would be easier to show and talk her through the detail in person.

Mr Scoffield suggests that is counter-intuitive, and it could've been easier for Mrs Foster to look through the figures before the meeting than to have them presented to her during it.

Ms Hepper says Mrs Foster "appeared to be content" with receiving them at the meeting, and neither she nor staff in her private office requested a copy beforehand.

'Officials made assumption that others knew'

We're back in the saddle, and inquiry chair Sir Patrick Coghlin informs us we'll be here until 17:00 today.

Looking at the funding for the RHI scheme, inquiry counsel David Scoffield QC refers to the first submission to DETI minister Arlene Foster on the subject of renewable heat, in May 2011.

Sterling banknotes
Getty Images

It states that the Treasury "has advised that £25m" of funding is available, but Mr Scoffield asks why DETI did not make it clear that the funding was an unusual type and overspending would have implications for the Northern Ireland block grant.

Ms Hepper confirms that it was described in the submission in standard terms as a way of "shorthand".

"I certainly think it wouldn't have been unhelpful to have been a little more explicit," she says, adding that the officials "probably made an assumption that people knew there was a qualification there".

Time for lunch...

We've a short break for lunch now, and Mr Scoffield and Ms Hepper will resume their Q&A at 14:00 GMT - join us then.

'I couldn't understand consultants' logic'

CEPA delivered its draft final report in May 2011, and it recommended an ongoing subsidy scheme, in spite of the fact that several tables in the paper indicated that a up-front grant offer would give better value for money.

DETI's Peter Hutchinson asked CEPA for clarification, and it replied that the recommendation "is based on the assumption that DETI wants to do" a subsidy scheme.

Fiona Hepper
RHI Inquiry

Ms Hepper says the body of the draft report weighed both up but "then we plonk into" the concluding chapter and the "sole recommendation" is to do subsidy scheme.

It was not CEPA's place make an assumption, Ms Hepper adds, and "that was a surprising statement for them to come back with".

She says she had a meeting with the renewable heating team "because I couldn't understand the logic" behind the recommendation.

'My staff didn't accept all they were told'

DETI did not have the necessary economic expertise to set up the RHI scheme without the help of external consultants, accepts Ms Hepper.

She is asked therefore what assurance she had that her staff had the necessary knowledge to understand what the consultants ultimately recommended and and spot and challenge the errors they made.

Fiona Hepper
RHI Inquiry

Ms Hepper says the reviewing her staff did it was "as good as we could do" and when they didn't comprehend what they were told they "kept going back to ask until we got an explanation that was understandable".

She insists that her staff did not simply accept everything they were told.

'Economist didn't have necessary energy knowledge'

The consultancy Cambridge Economic Policy Associates (CEPA) drew up the report in 2011 that assessed several options for a heat scheme.

Ms Hepper says DETI economist Sam Connolly provided "the required professional challenge" to the work - he was not an energy expert but he had experience of energy issues, she adds.

the RHI inquiry in session
RHI Inquiry

Mr Scoffield says the economist's written evidence shows he felt didn't have "the knowledge or experience to look in detail at the calculation of tariffs, or assumptions, or modelling".

Ms Hepper says that while he did consider the wider economic analysis "he did provide some perceptive comments in and around the tiering issue".

'Did Foster specify preference for subsidy scheme?'

Dame Una asks whether Ms Hepper had "an explicit steer" from the minster Mrs Foster along the lines of: "I really want a scheme like the [GB RHI] scheme - that's what I'm after".

Dame Una O'Brien
RHI Inquiry

The minister would never have given a specific direction like that, says Ms Hepper.

"I don't recall any conversation across the whole time that we were doing the work where she would have been as specific as that," Ms Hepper replies.

'Scheme model not selected before economic report'

One of the key questions the inquiry has focused on so far is whether DETI had a preference for the type of renewable heat incentivisation scheme before any economic appraisal was carried out on the options for it.

An up-front grants scheme for installing biomass boilers was found in an economic report to offer a much better cost benefit than an ongoing subsidy scheme similar to the Great Britain RHI initiative.

A man making calculations
Getty Images

But the subsidy scheme was ultimately adopted, and Mr Scoffield picks out documents from 2010 that appear to suggest that DETI had already decided it wanted to go with that model before a review was done.

Ms Hepper accepts that it looks that way "in the cold light of retrospection" but says it would have been wrong to "pre-judge the economic appraisal" and insists that no decision was taken before it was produced.

'Renewables sector felt it was being left behind'

Mr Scoffield takes the inquiry through the recommendations of consultants at Aecom and Pöyry in 2010, who DETI commissioned to research the potential for developing renewable heat production.

He asks whether there was an assumption at DETI that an incentivisation scheme similar to the RHI in Great Britain was "the way to go".

Burning wood pellets
BBC

Ms Hepper says the view was that money was available and DECC was using it for an RHI scheme.

"The (renewable heat) sector were saying: 'What's happening here? We're going to be disadvantaged and we're going to be left behind'," she says.

'No references to cost controls in key handover note'

A first review of the RHI scheme was to take place in early 2014, which would have allowed a chance to identify any problems with it and make the necessary changes to it, but it never actually happened.

Ms Hepper outlines some of the work she did in preparation for the review before she left DETI in November 2013.

Inquiry panel member Dame Una O'Brien wants to know what Ms Hepper laid out for her successor John Mills in terms of what he needed to do concerning the review.

Two people look at a note on a clipboard
Getty Images

Ms Hepper says she had a half-day handover session with Mr Mills and "talked him through the key issues" but can't say what level of detail she gave him, although she can remember telling him about the need to add cost controls to the scheme.

Sir Patrick indicates that her handover note of almost 30 pages included only "two or three" on renewable heat and there were no references to cost controls: "It was all verbal, was it?"

Ms Hepper says it was, and with that Sir Patrick sits back in his chair: "Thank you very much..."

'Extra staff resources were only part-time'

A number of witnesses have told the inquiry that the DETI team dealing with renewable heat was under-resourced - there was simply not enough staff.

This was particularly clear on Tuesday, when we heard from civil servant Peter Hutchinson, who did much of the early spade work on the RHI scheme.

Ms Hepper says the staffing was "adequate but not optimum" and that she recognised the problem and acted on it, bringing in "a bespoke principal" to head a separate renewable heat branch.

Sir Patrick Coghlin
RHI Inquiry

Inquiry chair Sir Patrick Coghlin doesn't seem impressed, pointing out that that principal, Joanne McCutcheon, only worked part-time.

"She was the principal in charge and she was part-time, and you were asking for resources and Mr Hutchinson was doing most of the work?" he says.

"He was doing a lot of the work," Ms Hepper replies.

'Took time to build energy knowledge and experience'

Taking a look at the Northern Ireland's civil service, Mr Scoffield says it is viewed as "generalist".

As the public and those in business see it, he says, it appears that civil servants who have connections and experience in a specialist area are moved to another part of the service.

Office staff look at charts
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Ms Hepper says DETI's energy division was different: "People did tend to stay in post for a longer period."

That's because it was a "fascinating area to work in" and staff had a "genuine interest" in it, but also because it did take "some time to build up the knowledge and experience" as it was such a "complex" field.

'We need to plough our own furrow'

DETI needed powers to be devolved from Westminster if it was to set up a Northern Ireland heat incentive scheme.

So why didn't it use the opportunity to join the Greta Britain RHI scheme that was set up by the Department of Energy and Climate Change (DECC), as the Welsh and Scottish devolved administrations had done?

Wide shot of the senate chamber
RHI Inquiry

Ms Hepper says that "by good luck" DECC was putting an energy bill through Westminster and DETI could piggy-back on it.

She says that by that stage the GB scheme was far advanced and DECC wouldn't have wanted a Northern Ireland RHI "to derail their progress".

"The feeling was we need to plough our own furrow here " she says, to find a solution appropriate for Northern Ireland.

'Major businesses keen for renewable heat scheme'

Some major manufacturers in Northern Ireland were keen in 2010 for a renewable heat scheme to be put in place, says Ms Hepper.

They were facing increasing gas and electricity prices and were "finding things difficult", she adds.

Workers in a factory
Getty Images

Those within industry and commerce brought those issues to the then enterprise minister Arlene Foster.

And they were keen to know when a heat initiative, like the RHI scheme that existed in Great Britain, would be implemented in Northern Ireland, says Ms Hepper.

Energy team head had central role in RHI scheme

Senior counsel to the inquiry David Scoffield will be doing the questioning today - he introduces Ms Hepper and she is sworn in.

Today's session will cover matters up until the the making of the scheme's regulations in October 2012.

Fiona Hepper
RHI Inquiry

Ms Hepper explains her role in the instigation of the RHI scheme and it quickly becomes clear that she was a central protagonist.

She was the head of the renewable energy team at DETI when the scheme was being set up.

The list of tasks she outlines runs from procurement of energy expertise from consultants, all the stages of the scrutiny and approval process, ministerial approval, the state aid approval process and the passage of the necessary regulations in the assembly.

What happened yesterday at the RHI Inquiry?

BBC News Northern Ireland

Stormont finance specialists did not fully understand the budget plan for the RHI scheme before its costs spiralled, a civil servant told the inquiry.

Senior finance department official Mike Brennan said various things had gone wrong in the scheme's planning stages.

Mike Brennan
RHI Inquiry

When those thing combined they created "the horror that we've seen".

There was no grasp the scheme's potential to "critically undermine" Northern Ireland's budget, he said.

What is the RHI Inquiry?

BBC News Northern Ireland

An independent inquiry into the scandal was established in January 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.

Sir Patrick Coghlin
Pacemaker

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

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

Public and political anger erupted when the scale of the overspend emerged.

The Democratic Unionist Party (DUP) leader Arlene Foster (below) had been the minister in charge of the Stormont department that set up the RHI scheme in 2012, and she faced calls in to stand down as Northern Ireland's first minister in December last year.

Arlene Foster
PA

She refused, 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.

By doing so, he brought about the collapse of the Northern Ireland Executive. Now, nearing a full 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 RHI scheme's budget ran out of control because of critical flaws in the way it was set up - the most recent estimate for the overspend was set at £700m if cost controls are not introduced.

Burning £20 notes
BBC

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.

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

RHI scheme - what was it?

Before we begin, here's a quick refresher on what the RHI scandal is all about...

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

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, biomass boilers, for example, and the fuel to run them.

Good morning

A chilly, blustery day up here at Stormont's Parliament Buildings but the heat is on inside the Senate chamber for the RHI Inquiry.

The RHI Inquiry
Pacemaker

We're back here to bring you live video and text coverage of the inquiry's proceedings, and today former senior Department of Enterprise, Trade and Investment (DETI) official Fiona Hepper will sit in the witness chair.

She's due to face a full day of questioning from the inquiry's counsel, and we'll bring you the key details.