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RHI: Rushed legislation has created raw deal for many NI participants

30 June 2019

The changes to RHI payments, which the Government rushed through the House of Commons in just one day, may lead to some participants in Northern Ireland's RHI scheme receiving tens or even hundreds of thousands of pounds less than participants in Great Britain, the report on Changes to the Northern Ireland Renewable Heat Incentive scheme payments, finds.

After legislative changes to the Renewable Heat Incentive (RHI) payments regime were made after just one day of debate on 6 March in the House of Commons, the Northern Ireland Affairs Committee launched an inquiry into the new payments. In its final report the Committee concludes that the rushed legislation has created a raw deal for many NI participants, and urges the Department for the Economy in Northern Ireland to revisit the payments as soon as possible.

The report outlines concerns that the Department for Economy could have made oversights in its calculation of the costs associated with becoming a participant in the RHI scheme, and investment decisions of businesses. The Committee is concerned that, in comparison with a similar scheme in GB, the repayment rate for the NI scheme is based on unrealistically low costing which results in unfair payments for participants.

The Committee states that the Department must account for the fact that people have made investment decisions in the belief the scheme would provide reasonable returns, and urges the Government to revisit the payments on this basis. The report also makes the following recommendations: 

  • The Secretary of State must commit to ending the practice of rushing through Northern Ireland legislation under emergency procedures as a matter of course
  • The buy-out scheme for participants should be amended to allow more people to access it and offers should be open to challenge. Challenges should be determined by the Hardship Unit if participants believe the figure is too low
  • In revisiting the payments, the Department for Economy should take into account realistic costs of servicing and repairs of biomass boilers, to prevent participants reverting to fossil fuels if boilers break.

Chair's comments

Commenting on the report, Committee Chairman Simon Hoare MP said:

"The need to recalibrate RHI payments has hardly been a secret over the past few years, but our Committee's report found that the Department of the Economy must revisit payments to ensure they are fair. RHI participants in Northern Ireland are now facing a raw deal with some payments worth half as much, or more, as in Great Britain or the Republic of Ireland.

It is entirely possible that the rushed approach taken first by the Department in calculating the upfront and investment costs for participants, and secondly by the Northern Ireland Office in passing the legislation using emergency procedures, has resulted in oversights and miscalculations. My Committee is calling on the Department to recognise the costs participants have committed to and revisit urgently its calculations. Difficulties with RHI have already risked losing public confidence in state-backed schemes, and the Department must address these errors. We also want to see an end to Northern Ireland legislation being rushed through Westminster without time for essential scrutiny."

Recalculating payments

The report notes that the changes made in April 2019 have seen a dramatic reduction in payments to scheme participants – some participants in Northern Ireland could receive tens, or even hundreds, of thousands of pounds less than participants in GB. It is not clear yet what a similar scheme in the Republic of Ireland will pay but it may see participants receiving at least twice as much as NI participants.

In 2012, the EU approved the NI scheme on the basis that payments would amount to a maximum of 12% of the investment participants made. The Department for the Economy therefore argued its hands were tied when recalculating the payments in April 2019, as it had to bring them in line with state aid rules. However, the report finds that the Department could now offer further evidence to the Commission in relation to the 12% cap.

The report suggests that the Department may have miscalculated wider costs such as planning permission, the cost of wood pellets vs fossil fuels and wider investments that have been made following the introduction of the scheme. The Committee urge the Department to revisit the payments to include parity with the schemes in Great Britain or the Republic of Ireland where possible, and to consider the wider investment decisions participants have made.

Buy out scheme

The changes to the scheme made in April 2019 also include provisions for voluntary buyout arrangements for participants who will not see at 12% return rate over the lifetime of the scheme. The report outlines evidence that the vast majority of participants would receive little or nothing from the buyout scheme in its current form. The report recommends that there should not be a 'one size fits all' calculation and that buyout must be calculated on an individual basis. The Committee also stress that participants must have recourse to challenge the Department's calculation and submit their own. This evidence should then be reviewed by the Independent Panel overseeing the Hardship Unit in cases of dispute.

Rushed legislation

While most bills which pass through the Houses of Parliament take many weeks or months to go through all legislative stages, the Bill which brought changes to RHI payments in April 2019 was rushed through all its Commons stages in just one day – allowing little time for scrutiny. The report criticises the Northern Ireland Office's justification for rushing through the Bill, highlighting that that there were many opportunities to avoid the use of emergency procedures. The Secretary of State was only informed of the need for legislative change in February 2019, even though the Department for the Economy had known for two years that the payment rates would need to change.

The report questions the Northern Ireland Office's continued use of these emergency procedures for bills and calls on the Secretary of State to end the practice of rushing through legislation relating to Northern Ireland.

Further information

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