Burned

by Sam McBride

  We discussed the need to introduce measure [sic] to manage expenditure on the [RHI]…You made the point that there was virtue in making sure NI was able to make best use of the AME funding available … you rightly said that we would not want to overreact by introducing restrictions too suddenly which took us back to previous underperformance. However both Chris [Stewart] and I emphasised that we have to demonstrate that measures were being taken to ensure proper controls and Chris pointed out that the AME arrangements may have additional caveats.

  Twelve days later, Mills emailed Stewart in evident frustration at the lack of movement from the minister or spad. He said that the lack of clearance of the submission was delaying the process of reducing the subsidy. There had been ‘no response’ from Cairns he said, to an email, despite a reminder from Stewart four days earlier. Responding the same day, Stewart said that he had spoken to Cairns and ‘he accepts the need for early control measures’, but asked if a more generous cap could be used – a proposal, as would later become clear, which had originated with Crawford. Unknown to officials, that request had been made because it would benefit a huge multinational which was massively benefiting from RHI.

  ***********

  But while on the one hand civil servants were putting pressure on Cairns, in an attempt to get a decision out of Bell, even by late July relative serenity continued to surround some senior officials who still believed that they just needed to get more money from London.

  In a meeting with the influential Ulster Farmers’ Union (UFU) on 22 July, officials faced lobbying for a delay to the introduction of tiering – something the UFU presented as a ‘grace period’ for those already in the process of installing boilers. UFU policy chief Chris Osborne later recalled at the inquiry that there was no sense of alarm about the situation: ‘It was neither urgent nor the opposite really. It seemed to be very sort of calm, very measured in terms of how they were presenting this to us.’

  Also at the meeting was Tom Forgrave, a large poultry farmer from Ballymoney who had six RHI boilers and was in the process of installing another four. He had directly contacted Wightman and Hughes more than a week earlier, pressing them to ‘give consideration to not rushing through any changes’ because ‘the proposed date of 1st Oct 15 does not give the poultry industry in NI time to adapt to a new tariff’. He said ‘many farmers, myself included’ were in the planning process ‘to build new poultry sheds for Moy Park’, with the cash flow projections on which their bank loans were approved, predicated on the continuance of the existing RHI subsidy, ‘alongside the income from the poultry’. He said that if the cost controls were introduced before the sheds were passed by planners, ‘it will put in jeopardy the viability of many of these expansion plans’. That sentence ought to have caused alarm within DETI because here was evidence that a business was only able to expand because of the RHI subsidy. There was in that at least the potential for a conflict with EU state aid law.

  There were no formal minutes of the UFU meeting. However, a handwritten note survived within DETI and reveals some of what was discussed. The note recorded the words ‘budget – over spent’. It then said ‘state aid 12%’, a reference to a fear that the RHI scheme was so wildly generous that it may be in breach of EU state aid rules. The note also proves the participants discussed that the changes were at that point scheduled for October – even though that was weeks away from being publicly announced, evidence of how the UFU was getting an inside track about the looming changes. Then, highly significantly, the meeting discussed poultry farmers’ use of RHI – the single biggest drain on the scheme because of their massive heat requirements. In essence, what DETI officials said at the meeting shows that they were aware of almost every one of the problems with the RHI scheme. And yet they were openly giving warning to the sector they knew had the highest heat demand that it would be reined in within two months. Osborne said that at the meeting ‘DETI pointed out that subsidies could be exceeding the cost of biomass fuel’. That shows that Wightman had read the document which had been sent to him six days earlier.

  In preparation for the meeting with the farmers, Cathal Ellis at the Department of Agriculture had drawn up at DETI’s request a brief paper, which ought to have made Wightman, the recipient, realise why RHI was so popular. Ellis showed, in a simple table, that the cost of wood pellet fuel was significantly less than the subsidy. Wightman told the inquiry that on reading the paper he realised that ‘the cost of heat production was lower than the medium biomass tariff’. However, he said that he rationalised it to himself and ‘did not appreciate that the fuel cost being lower than the tariff created a perverse incentive to “burn to earn.” This is because I knew the tariff had to also cover other costs’. But, explicit as the paper was, DETI did not realise just how much input those with a vested interest in RHI had in its creation. Ellis did not reveal that he had spoken to huge poultry processor Moy Park to discuss what would be a reasonable annual heat requirement for its poultry farmers. Ellis initially did not even disclose his contact with Moy Park to the inquiry but, when pressed about the paper he confirmed that he had spoken to Moy Park manager David Mark and ‘would have run the average [heat] figures that we had generated past him’. And those figures were heavily dependent on what had been given to him by Forgrave – who was in the process of installing biomass boilers. When it was put to Ellis that Forgrave had obvious ‘vested interests’ of which he ought to have been aware, the civil servant said that he ‘didn’t really have any concerns that he was trying to game the scheme or make things better’ for himself.

  Ellis seems to have realised that what he was doing was irregular. When his paper was complete, he emailed a copy to DETI and then separately sent a copy to Forgrave, but told the farmer that it was ‘probably wise if DETI don’t know you’ve seen final version’. At the inquiry, Ellis said: ‘I can’t explain why I would’ve said that’. Ellis, Stormont’s foremost expert in green energy, told the inquiry that although he was regularly attending and speaking at events where RHI was being openly marketed as ‘cash for ash’ he never saw such material because he would have spent much of his time giving talks or ‘dashing’ through where the trade stands were situated.

  Cairns told the inquiry that he recalled a separate meeting around this time between himself, Bell, officials and the UFU – but could not find it recorded in the ministerial diary. He said that the UFU had been lobbying against suddenly reducing RHI payments. The UFU had long been close to the DUP, and the party’s policies rarely diverged from those of the farming organisation.

  Just 12 days before the UFU meeting, Wightman and Hughes had received an explicit warning about how some farmers were allegedly abusing RHI, a letter which ought to have prompted urgent action. On 10 July – coincidentally, two days after the submission to Bell – major green energy firm Solmatix wrote to Hughes about what it had heard were looming changes to the RHI. The detail set out by the company shows that it had a firm inside track on DETI’s thinking – even though there had been no public announcement at this point. Although the letter was asking for a delay in cuts to the scheme, the company was at pains to distance itself from what it said was ‘exploitation’ by the poultry sector. Informing DETI of the abuse, the letter said: ‘We also appreciate that a number of unscrupulous beneficiaries are not only taking full advantage of RHI support, but in many cases, notably within the poultry sector, appear to be actively exploiting it … it would appear that those exploiting RHI are primarily large suppliers within the agri-sector. It is right that the changes should veto this continued exploitation.’ Wightman said that he did not recall the letter. But Hughes told the inquiry that he remembered it and had discussed it with Wightman who had then agreed to set up a meeting with the company for 22 July – the same day as the UFU meeting – at which Hughes said: ‘I don’t recall any specific discussion on the issue of exploitation’.

  However, although Wightman and Hughes later claimed to be ignorant of how RHI was open to abuse,
another document suggests that might not be the full story. Five days after the Solmatix and UFU meetings, Wightman wrote the first draft of a formal document which would go to the Department of Finance seeking to regularise the irregular spending on RHI. In that first draft he wrote: ‘The introduction of the tiered tariff will reduce the risk of “gaming” and installations being operated over and above the required kilowatt hours just to generate RHI income.’ Somehow, at this late stage, it had got through to Wightman and Hughes that RHI was open to abuse. But it had also got through to Arlene Foster’s handpicked adviser – and he was now to make a fatal move.

  CHAPTER 11

  FAMILY FIRST

  On the night of July 20, Andrew Crawford sent an email that would give away the game – at least as far as he was concerned. Crawford sat with his iPad at 9pm and typed a 433-word email, which was never expected to go beyond the screen of a fellow DUP spad and so he made explicit what others in Stormont spoke of elliptically. The punch line of the email was an unvarnished articulation of what was a largely unspoken policy around the corridors of Stormont: extract as much money out of the Treasury as possible. Crawford’s email was a belated response to the 8 July ministerial submission to Jonathan Bell, which Tim Cairns had forwarded to him. Crawford did not reply immediately but on 20 July the man to whom Cairns had been told to turn for advice responded with remarkable candour.

  In setting out his understanding of the issues with RHI, Crawford demonstrated considerable knowledge of the scheme. Foster’s spad said that ‘the main problem with the non domestic rhi [sic] is that DETI have been caught out by the profile of applications. DETI has received a spike in the number of applications over the last number of months as a result of Moy Park suppliers buying biomass boilers …’ He went on: ‘I believe that the majority of Moy Park producers who are going to convert to biomass will already have converted.’ That sentence did not convey what had actually happened – and Crawford was unusually close to Moy Park. Just a few months earlier, the company had told Seamus Hughes that just 36% of its poultry sheds had converted to biomass and that it expected to get to 60% by the end of the year – there was room for Moy Park alone to drive a spike in applications, even if no one else applied to the scheme. Crawford told the inquiry he was unaware of those figures at that point.

  Crawford suggested that Cairns speak directly to Moy Park manager David Mark and offered to ‘set up a meeting for you with one of the main biomass installers if you wish’. Cairns contacted neither, telling the inquiry that he thought it would have been ‘inappropriate’ for him to speak to major beneficiaries of RHI at a time when the department was attempting to bring it under control. Demonstrating further knowledge of what was to come, Crawford told his colleague: ‘The word on the street is that there is [sic] going to be changes made in October and you are going to get a massive spike in applications before this date …’

  But it was the penultimate paragraph that exposed Crawford’s belief that it was acceptable to deliberately extract money from the Treasury for a scheme which was known to be flawed, over budgeted and open to abuse. He told Cairns:

  I am a little confused over what the problem is for the non-domestic scheme. The scheme is being funded from ami [sic] and therefore if we go over our 4% target all that will happen is that we will get more than our fair share of the UK pot. I would have thought that this is to NIs [sic] advantage bearing in mind we are likely to opt out of the cfd scheme [another green energy scheme] in a couple of years and may not be able to incentivise renewable generation after this date.

  He went on: ‘I suspect that the problem is that we have only got a guarantee of funding for the next couple of years and long term we may have to pay for the scheme out of the NI block [grant].’ Then, showing his own knowledge of the significance of the absence of tiering, he said: ‘I think that it is sensible that deti [sic] introduce a tariff and reduce their [sic] above a certain level to stop potential “abuse” of the scheme but you need to be careful that they don’t reduce it too much.’

  Crawford’s argument about Northern Ireland benefiting from an RHI overspend revealed an element of his thinking that potentially explains the entire fiasco. It does not prove that he or anyone else in Stormont had deliberately set the scheme up so that it would be very easy for it to overspend. But, based on his flawed understanding that the Treasury was paying the full bill, that would be an entirely logical way of ensuring that Northern Ireland got ‘more than its fair share’. Even if the scheme was not deliberately set up to take advantage of what seems to have been viewed as someone else’s bank account, once it was running, had he or others in DETI come to see the potential for such a ‘benefit’ by facilitating its implosion? Again, there is no evidence of such deliberate action by Crawford or anyone else prior to 2015.

  But the practices of Stormont whereby many key discussions were never written down and the inquiry’s particular concerns about Crawford’s ability to produce all relevant documentation mean that we will never see the full picture of the spad’s involvement in RHI.

  In evidence to the inquiry, Crawford linked his thinking about RHI with his thinking about NIRO, which incentivised green electricity generation with payments known as Renewable Obligation Certificates (ROCs). As with RHI, in that scheme the department in which he and Foster had spent seven years had chosen to diverge from what the rest of the UK was doing, had tweaked the scheme to make it more generous in Northern Ireland and had managed to get the rest of the UK to pay most of the bill. Having done that – successfully in their view – and seen an explosion of investment in wind farms across Northern Ireland without having to pay for them, it would be natural to attempt to replicate that ‘success’ with another green energy subsidy.

  In evidence to the inquiry, Crawford explained his email to Cairns by saying that he thought it was

  a perfectly reasonable argument for us [to go] above that 4% figure [more than Northern Ireland’s proportionate share]. And, indeed, this is what happened with the ROCs scheme. So, there Northern Ireland went well above … you know, looking at the total ROCs pot, Northern Ireland had more than its 4% share of that particular pot. And I was just replicating, I suppose, what happened there with coming across to the RHI scheme.

  Crawford told the inquiry that he was just seeking to assist his colleague, and ‘I never had any belief or understanding that my doing so would ever be construed as attempting to interfere with or set the policy direction that the department would take in relation to the matter’. Cairns had initially expected to have a decision on the 8 July submission by the time of Bell’s return from holiday at the end of July. But Crawford’s advice suddenly complicated what had seemed a straightforward decision to approve what officials were recommending.

  ***********

  It was a time of great industry for the Crawford family. Business was booming and money was being made. While Andrew Crawford was now eight years into his £85,000-a-year role as Arlene Foster’s handpicked adviser, back in County Tyrone several of his relatives were turning to poultry to make their money – and RHI was facilitating their expansion plans.

  As DETI was working on cutting the subsidy, Crawford’s brother James Crawford had returned from working as an engineer in Asia and was constructing two large poultry houses, his cousin Richard Crawford was putting up his own two poultry houses and another cousin, John Crawford, was beginning work on a further two poultry houses – all of them to intensively produce chicken for Moy Park. By this point in July 2015 the spad’s cousin Richard had three RHI boilers and was installing three more, his brother James was in the process of deciding to get two RHI boilers and his cousin John had not yet installed RHI boilers – but eventually would do so as well. All three relatives lived within ten miles of the spad’s family home in Beragh outside Omagh, part of a rural community where information passed around freely, exchanged at livestock markets, in the village and in churches.

  While Crawford was giving advice to C
airns in the summer of 2015, Cairns was oblivious to the Crawford family’s major financial interest in the decision now facing DETI. Cairns spoke to Crawford and another DUP spad, Stephen Brimstone, about the 8 July submission to Bell and then on 16 July forwarded it to both of them. Unknown to Cairns, Brimstone was also conflicted, having just weeks earlier decided to install a non-domestic RHI boiler to heat his home. The submission had been sent to them as government advisers, paid handsomely from the public purse – not so that it would be of personal benefit to them or their families. The submission, as Crawford would have known, was confidential and of acute commercial sensitivity. However, he quickly forwarded it to his cousin Richard. For someone either considering or in the process of installing RHI boilers, as Richard was, it was a useful document to have. At the very least – even if, as the Crawfords say, he was already in the process of installing his final three boilers, it made clear that he should rush to get them accredited on the scheme because the subsidy was going to be cut and anyone who missed the deadline would lose out on a huge sum.

  Andrew Crawford denied that his intention was to warn his cousin of the looming cuts. He said that he believed his cousin already had installed his boilers but was concerned about a retrospective cut to tariffs, and he was seeking to reassure him on that front. Richard Crawford said that he had installed the boilers ‘in or around July 2015’ and that the company which installed them had handled the paperwork for the RHI accreditation. However, while it is difficult to prove when Richard installed his boilers, he was only invoiced for them on 2 September – six weeks after he had been sent the ministerial submission. At the inquiry, barrister Joseph Aiken questioned whether a company needing to charge him £132,000 ‘would hold off billing for a couple of months’. The applications for accreditation to Ofgem indicate that the boilers were operational from 9 September.