Northern Ireland

Foster 'should have been told RHI costs'

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Image caption Peter Hutchinson was asked who was doing the checks on the figures coming from the consultants

An official running a flawed green energy scheme has said it would have been "prudent" to advise Arlene Foster that the projected cost had risen significantly after her decision to proceed.

Peter Hutchinson was giving evidence to the Renewable Heat Incentive inquiry.

As Department of Enterprise, Trade and Investment minister, Mrs Foster gave the go-ahead for RHI in June 2011.

She made the decision based on draft findings of an economic appraisal.

When the consultants responsible sent their final report to DETI several weeks later, the projected cost had risen considerably.

We have already been told that Mr Hutchinson's boss, senior civil servant Fiona Hepper, did not think it necessary to go back to Mrs Foster with the new numbers.

The inquiry was told that between the draft and final reports the projected bill for an RHI scheme had gone up by more than £100m.

Mr Hutchinson was asked if the changes should have been drawn to the minister's attention.

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Media captionRHI Inquiry panel feeling the cold, says chair

"They could have been drawn out in more detail or been clearer about the advice to the minister saying you made this decision three weeks ago, you will want to bear in mind that costs have changed and these are the costs that now have changed," he said.

Mr Hutchinson was asked who was doing the checks on the figures coming from the consultants.

He said it had been left to him and a departmental economist.

He said there was no "critical friend" double checking and another "independent viewpoint" would have been helpful.

Panel member Dr Keith MacLean said when looked at on the page the numbers were "relatively harmless", but when you "turn them into pound notes that's a big pile of money".

Mr Hutchinson said at this point the scheme had not started and no public money was being spent.

He said there may have been an expectation that all of this would be teased out at other points in the approval process, including the business case.

But the inquiry's chairman Sir Patrick Coghlin pointed out that no-one had raised the costing issue at a later stage.

"They just disappeared really," he said.

The RHI scheme offered to subsidise the cost of its claimants' fuel - mostly wood pellets - for running their heating systems.

But the fuel actually cost far less than the subsidy they were receiving, effectively meaning that users could earn more money by burning more fuel.

The most recent estimate put the projected overspend at £700m over 20 years.

The scandal generated significant public concern and the fallout surrounding it led to the collapse of Northern Ireland's devolved administration and a major political crisis that exists to this day.

Later, Mr Hutchinson conceded that the "fatal flaw" in the scheme design should have been picked up.

It meant that the amount of the subsidy was set higher than the cost of biomass fuel - creating the burn to earn incentive.

Mr Hutchinson said he'd given "too much credence" to the the findings of the economic consultants Cambridge Economic Policy Associates or CEPA who set the tariff levels.

"Looking back you can only say: 'Yes, CEPA should have picked it up, and we should have picked it up and it should have been picked up throughout the scrutiny process.'

"Or if it wasn't picked up, it should have been queried more strongly. But I probably had a level of contentment that CEPA would have recommended it if they had spotted it."

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