Amendment 1

Northern Ireland (Regional Rates and Energy) (No. 2) Bill - Committee – in the House of Lords at 4:23 pm on 19th March 2019.

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Moved by Lord Empey

1: Clause 6, page 5, line 24, at end insert “subject to section (Conditions of commencement).”

Photo of Lord Empey Lord Empey UUP

My Lords, I apologise for being out of position, but things have moved so quickly. I have tabled two amendments which I would like to speak to together. Their purpose is to get some fairness into the renewable heat initiative in Northern Ireland. As many Members will know, it has been one of the worst examples and it is how not to do a renewable heating scheme. It has ostensibly been responsible for the collapse of the devolved institutions in Northern Ireland. I am sure that many noble Lords will have received a large volume of emails over the past few days and weeks.

I have two things to say to the Minister. First, it is inappropriate that regional rates and an energy Bill are combined in one piece of legislation: they are totally unrelated. Secondly, the plan was that two major Northern Ireland Bills would go through all their stages in this place in one evening, ensuring that no scrutiny of any description was conducted into the legislation. Apart from anything else, that is bad governance.

Members will be aware that legal proceedings continue and are perhaps due to come to partial fruition later this month. The proposals in front of us would probably result in further legal action, because the fact is that government Ministers in Northern Ireland made promises some years ago and, regardless of the intricacies of that or who was involved, people were led to believe one thing and have now been confronted with a new situation. That is bad from every point of view. These amendments try to ensure that there is proper scrutiny of the proposals.

Any noble Lord who has been looking at, and trying to respond to, emails from farmers’ unions and others will have been completely amazed at the complexity of this legislation: the new tariffs for different sizes of boilers, whether 99 kilowatts or 199 kilowatts—I am sure we are all learning as we go along. While the bulk of the boilers are 99 kilowatts, those who have larger boilers or micro boilers feel that their circumstances have not been taken into account.

When it was proposed in the other place that the Northern Ireland Affairs Committee would conduct an investigation, I felt that this was the one and only piece of parliamentary scrutiny that this legislation would receive. That committee has a good reputation in the Houses of Parliament. A former distinguished chair, my noble friend Lord Cormack, is sitting here. Laurence Robertson MP, the previous chair, conducted his business exceptionally well over many years. The current chair, Dr Andrew Murrison, whom I had the opportunity to speak to last week, is also determined and he has already started work: he has sent out notices seeking assistance and gathering evidence from those involved. He said that he was intending to do this very quickly, and that is an excellent piece of news.

I am trying with these amendments to ensure proper parliamentary scrutiny, so the new tariffs would not be introduced until the Northern Ireland Affairs Committee report comes forward. At that point, the Secretary of State would be permitted to introduce a revised tariff, should she deem it to be necessary. That could be done by secondary legislation, approved by both Houses, without having to revert to primary legislation, which is so difficult.

What is the point of all this? First, the scheme is so complex that Parliament—at either end of the Corridor—has not had the opportunity to assess it. Secondly, is it wise to go forward with something that dramatically affects people’s livelihoods just as it stands?

The Bill contains clear proposals for a buy-out scheme, and an amount of £4 million per annum has been set aside in the Budget to allow that to happen. The European Union has an involvement in this through state aid, but because a 12% return is anticipated from the very beginning this scheme has been outwith that particular proposal. The European Union has a target, and the whole purpose of this was to ensure that the UK’s carbon footprint was reduced. This was part of Northern Ireland’s contribution to that UK target, but it has gone sadly wrong.

I have no doubt that all the emails that I have received and the communications that other noble Lords around the Committee have received will be the same. I do not believe that all these people are simply telling lies or have in some way profited inappropriately from the scheme. There is no question that some people have done well, and that is fine, but my anxiety is that some people have not done well and are being treated in the same manner. Amending the Bill to return it to the other place and ask it to think again is one of the things that it is open to us to do.

The Minister, in fairness to him, has been very attentive. A number of us have attended briefings with civil servants, and we are deeply grateful for that. If anything convinced us of how complicated this scheme is, it was the involvement of the civil servants. The Minister kindly spoke to me yesterday and again today, and I understand that he is trying to be helpful, but our principal anxiety must be to ensure that people do not fall through the cracks and find themselves in a position where they are financially stressed and embarrassed as a result of this change to the tariff.

In that regard, the Minister made a number of suggestions, which I have been looking at in the past 15 minutes, because we have not had much time and business has moved so quickly. I just want to try to test him, because it is very important that we get this right. The compensation arrangements in the original proposals were to set aside £4 million per annum to assist people who got into difficulties because the scheme’s tariffs had changed since they were originally set. When people were told at the beginning that this would be for 20 years, they went to banks or finance companies and leveraged out loans and perhaps built new chicken houses. They have now found themselves with two sets of reductions: one in 2015, and the last one that the Assembly made before it closed in 2017. That has dramatically changed their financial profile and circumstances.

On top of that, this new proposal is radical in what it does to the payouts of the scheme. People will go from receiving £16,000, £17,000 or £18,000 a year down to receiving £3,000 or £2,000. In some cases, cash flow will be dramatically affected, because if boiler users have used a certain number of kilowatt hours in the current year, they will not even be eligible for any payments perhaps until the latter part of this year or early next year. For all these reasons, I wanted to ensure fairness for those people. If they find themselves in a financial straitjacket because of actions and intent that the Government set out and if they followed that in good faith, it is unfair that those people should be put in the position of being financially embarrassed and stressed.

Let us be very clear on what we are trying to achieve here. I understand that public expenditure has to be taken into account, but equally there is a moral issue, as the noble Lord, Lord Morrow, said at a briefing I attended. There is indeed a moral issue, because if people state categorically that they are guaranteeing this and grandfathering rights are being guaranteed, and then people make an investment in good faith, even if the Government were wrong and the scheme was wrong—which it clearly was—there is still an obligation to those people.

The question is: what can this Committee do to help mitigate the conditions in which those people find themselves? I think the Minister will have to convince the Committee that he will be able to achieve this by other means than these amendments. It is the end we are concerned about, not necessarily the means. We want to ensure that people are not left financially embarrassed or stressed.

We have to remember, of course, that the overarching objective all along was to reduce the United Kingdom’s carbon footprint, yet we are actually ending up putting forward a proposal for compensation that will probably lead to people reverting to fossil fuels. So the whole thing is perverse. That is the situation.

I would like the Minister to explain to the Committee what he would propose we do, as the Government, to ensure that these people are not financially embarrassed and suffering a reduction in circumstances. Even if there are people who have done very well out of it, we are concerned with people who have not done well out of it, who have honestly and in good faith taken the scheme on, borrowed money and installed this equipment in good faith. What can he say to the Committee that would persuade us that there is another way, other than going down the route of these amendments?

The amendments are merely a means to an end, and I believe that, with the investigation that is currently under way by the Northern Ireland Affairs Select Committee, in which I have very great confidence, I think we can look forward and devise a means whereby those people can be compensated adequately and appropriately and that justice will be done to them and to the taxpayer. We have to remember that, had it gone on unchecked, the amount of money that would have had to have gone into the scheme, if everybody had carried it through to the end, was £1.3 billion. It is almost unbelievable, but that is where it would have ended up.

So we have a dilemma and, knowing the Minister as we do, I have no doubt that he will come forward with a solution in Committee and that we will be able to rejoice that we will have achieved something on behalf of the people we represent. With that, I beg to move.

Photo of Lord Cormack Lord Cormack Conservative 4:30 pm, 19th March 2019

My Lords, I support what my noble friend Lord Empey said: this is a question of fairness, justice and equity. As my noble friend said in his powerful and persuasive speech, those of us who take an interest in the affairs of Northern Ireland have had many communications from people who, frankly, are at their wits’ end as to how they can survive financially. I have had letters from poultry farmers, hoteliers and others who, in good faith, with a written ministerial assurance, made an investment. It is not for us to say whether that was wise or not, but we have to recognise that these people were acting on government advice. I do not want to quote a lot of letters but I shall quote just one sentence from a poultry farmer: “Is it fair for the Government to renege on tariff payments that had been guaranteed?”

The system is incredibly complex—my noble friend Lord Empey made that plain— and I do not pretend that I understand all of it but, as a former chairman of the Northern Ireland Affairs Committee in the other place, I am delighted that my successor but two has decided to take this on. I hope his committee will be able to conduct a thorough, expeditious inquiry. I know not what it will say, but I know that this particular scheme, however well intentioned, was certainly not well designed. However pure the motives, the results have been catastrophic; they would have been even more so had something not been done. As my noble friend said in his speech, we would have been talking of a sum in excess of £1 billion for a part of our country which I love dearly but is not the most populated part.

I share my noble friend Lord Empey’s faith and confidence in our Minister. He is a man of totally good intent and I hope that he will be able to come up with a solution that will persuade my noble friend not to press his amendment. I hope there is another solution to that.

I come back to one simple point. We are dealing with citizens of the United Kingdom who have been—maybe inadvertently, although I am not entirely sure of that—misled, who have made financial decisions, who have in some cases, in good faith, borrowed and been lent very large sums of money, and who now find their very livelihoods on the brink of collapse.

We have lamented time and again in recent debates, particularly last Tuesday when we were critical of the fast-tracking of Northern Ireland legislation, the fact that for over two years neither the Assembly nor the Executive have met. In all parts of your Lordships’ House, this is something that we deeply deplore. It means that, temporarily at least—I very much hope it is temporarily—a great weight of responsibility rests on our shoulders for the people of a much loved and, over the years, much troubled part of our United Kingdom. I hope we will be able to do them justice.

I hope above all that my noble friend the Minister, who is both determined and sensitive—we know that in this House—will be able to satisfy the points raised so admirably by my noble friend Lord Empey. I have great pleasure in supporting him.

Photo of Lord Rogan Lord Rogan Deputy Chairman of Committees, Deputy Speaker (Lords)

My Lords, I find it interesting that I am addressing your Lordships this evening from these Benches.

Photo of Lord Cormack Lord Cormack Conservative

The noble Lord is very welcome to stay.

Photo of Lord Rogan Lord Rogan Deputy Chairman of Committees, Deputy Speaker (Lords)

I support the two amendments in my name and the name of my noble friend Lord Empey.

I have said this several times over the last two years and will continue to say it, but it is a matter of deep regret that we are debating this at all. Rather than in your Lordships’ House, it should be taking place in the Northern Ireland Assembly, with local representatives defending the Bill’s provisions rather than the Minister—much as we enjoy seeing a master at work.

Of course, the scandal surrounding the RHI scheme itself has much to do with why we are discussing the subject here rather than the MLAs debating it at Stormont. Noble Lords can argue about whether RHI was the principal reason Sinn Féin/IRA chose to collapse the Executive when Martin McGuinness resigned as Deputy First Minister. What is beyond dispute, however, is that the scheme has been a catastrophe. There must surely be consequences for those responsible for its many failings when Sir Patrick Coghlin and his excellent team produce their final report.

The RHI inquiry also exposed deep failings in the system of governance at Stormont, which must be addressed if the Assembly’s eventual resurrection—should that happen—is to be sustainable and lasting. One must live in hope if nothing else.

The antics of the DUP and Sinn Féin Ministers, including the systematic abuse of the petition of concern, did great damage to the credibility and functionality of the devolved institutions. Changes to the rules must be made. Despite the Prime Minister’s dependence on the DUP in the other place to keep her in office, we need Her Majesty’s Government to lead the way on these matters.

As the Minister made clear at Second Reading last week, it is important that this legislation passes. Without it, there will be no legal basis to maintain payments to participants in the RHI scheme. Equally, however, it is vital that the interests of the taxpayer are at the core of the decisions made by this House and the other place in attempting to reach a fair compromise for all. It is noteworthy that DUP representatives did not oppose the Bill when it was debated in the other place less than two weeks ago, despite the role played in the RHI scheme by DUP Ministers at Stormont, including the party leader, Arlene Foster.

I have sympathy with the overwhelming number of RHI applicants. They joined the scheme with perfectly honourable intentions and in good faith. They based their decisions on the formal advice provided at the time. They were entitled to expect the promised return on their investment and they have been badly let down. Together, the amendments represent a compromise that I hope your Lordships can unite around in the Division Lobby if the Minister does not feel able to embrace them at the Dispatch Box. RHI became a partisan issue at Stormont because the DUP and Sinn Féin Ministers failed to take proper responsibility for their actions when they had the opportunity to do so. It is very likely that similar battle lines will be redrawn when the inquiry team’s report is published. In the short term, it is essential that your Lordships act as one, accept these sensible additions to the Bill and invite the other place to think again. I commend the amendments to the Committee.

Photo of Baroness Harris of Richmond Baroness Harris of Richmond Deputy Chairman of Committees, Deputy Speaker (Lords) 4:45 pm, 19th March 2019

My Lords, I too thank the noble Lord, Lord Empey, for his powerfully persuasive speech, as the noble Lord, Lord Cormack, described it. This is a very complicated matter, as we all know. We are very happy to support his amendments.

We have been asked to pass the Bill virtually blind, as the noble Lord, Lord Empey, said. There has been no scrutiny whatever in the other place, and we know that this scheme was turned into a disaster by a mixture of incompetence and inappropriate political interference. Let us hope that this will be sorted out as soon as the Northern Ireland Affairs Committee gets down to business. Of course, I join in with all the praise for the Minister, whom we all greatly admire. We hope he will be able to consider this amendment and take it in, so that the other place has another chance to vote for it.

Photo of Lord Lexden Lord Lexden Deputy Chairman of Committees, Deputy Speaker (Lords)

My Lords, I strongly support this amendment, introduced so powerfully by my noble friend Lord Empey and supported so powerfully by my noble friend Lord Cormack and others. I expressed my general concern about the issue at Second Reading last week. By that time, I had received a few emails from deeply troubled farmers and small business men in Ulster. Since then, the trickle has become a flood of deeply worried people who accept that a reduction in grants is just and right, but seriously question the justice of the extent of the reductions to which they will be subject.

It is good news that the Northern Ireland Affairs Committee in the other place—I sometimes wish we had an equivalent body in this House—under its highly respected chairman, Dr Andrew Murrison, will be conducting a full investigation. This has given comfort to those from Ulster who have been in touch with us. It would be unfortunate, to say the least, if that inquiry, which is now under way with, I understand, every intention of its rapid completion, should be pre-empted by decisions taken in advance of it.

The noble Lord, Lord Empey, is a personal friend of mine. He is also deeply respected on all sides of our House as a wise, well-informed, moderate voice for the people of Ulster, and we should particularly bear in mind that he speaks too as a former Energy Minister in the Northern Ireland Executive.

Photo of Lord Hay of Ballyore Lord Hay of Ballyore DUP

My Lords, I welcome the debate in Committee this afternoon. I wonder, as I listen to some—not all—of the speeches whether this is all about having a go at the Democratic Unionist Party, or perhaps because there is a local government election on the horizon. I say that very clearly. I wonder whether, in trying to resolve a serious situation, this is about politics more than anything else. At the outset, I thank the Minister for the many meetings we have had with him on this complex situation, as the noble Lord, Lord Empey, said.

The Minister will be aware of our deep concerns over the lack of proper scrutiny of these proposals; we have made him aware of that on several occasions. I said in the House last week that if people entered the RHI scheme in good faith and feel that they are now being treated unfairly, it is certainly not the fault of the people who entered the scheme. But, of course, we know that this situation has resulted from a decision by the European Commission on state aid rules; it is very clear on this. Maybe the Minister could clarify that the Commission has indicated that it is not in a position to approve a tariff that delivers a rate of return of higher than 12%. Can the Minister confirm that this is a way of putting this scheme on a strong legal footing? There are legal issues with this scheme. Certainly, the failure to go down the road of looking at a scheme with a rate higher than 12% would make the scheme illegal. That is an interesting point, which I would like the Minister to clarify as well.

I am certainly led to believe that the failure to agree this scheme would mean that payments would not be made to anybody, and the closure of the scheme. These issues deeply concern us, and certainly concern many of the people who bought into the scheme and who now feel very aggrieved—I can understand all that. However, the Minister tells us that if we do not go down this road of agreeing this scheme, there is no scheme, and if we agree the amendment in the name of the noble Lord, Lord Empey, it will make the scheme illegal. All these issues need to be clarified by the Minister.

I welcome the Northern Ireland Affairs Committee’s inquiry into the scheme; it will be interesting to see where it sits on this issue. I welcome the Secretary of State for Northern Ireland, who has undertaken to consider carefully any recommendations regarding the scheme from the Northern Ireland Affairs Committee. However, once again, we are told that this scheme must be approved by 1 April, because if it is not, nobody will be paid and there will be no scheme. There is therefore a conundrum here for all of us as we try to find a way through this difficult issue. When you are told about that information, and all that comes together, it is a conundrum. It is either this scheme or no scheme, and it is important that the Minister clarifies all those positions and issues when he winds up.

We are all getting emails and letters from individuals about the scheme and how they entered it, and so on. Will the Minister also undertake that he will investigate the cases of individuals who came to him directly, or who come to us and we pass on to him? That might help us to resolve some of these problems, because people are sending everyone emails—I think we have all received a number of them—but it is difficult to guide them to where they should go for further investigation. If the Minister could say that he and his department will take that on, it might be a way to get people who have deep concerns about the scheme to where they need to go for full investigation.

With the Northern Ireland Affairs Committee’s investigation going on as well, my problem is that if we wait until the committee’s report is published, it will be too late. The scheme must be operational by 1 April or no one will be paid and the scheme will be gone.

Photo of Lord McCrea of Magherafelt and Cookstown Lord McCrea of Magherafelt and Cookstown DUP

Surely the Minister needs to clarify. Can he not find a legal way to keep the tariffs as they are until the Northern Ireland Affairs Select Committee has concluded its deliberations? It is difficult: this axe will fall because the date of 1 April has been set. Surely the Minister can find another way to fulfil his obligations to Europe but allow the present situation to continue until a proper investigation is concluded into this matter.

Photo of Lord Hay of Ballyore Lord Hay of Ballyore DUP

I was coming to that point. I know that the Minister is around this brief—he is around every brief, but this one in particular—because we have had so many meetings with him. I think my noble friend Lord McCrea is saying: yes, he can still do what needs to be done, but is there any way legally that might help us to move all this on? The issue is ensuring that whatever is done from here on is legal. Let us try to take the politics out of this, because this is too serious a situation to involve politics. Let us take the politics out of it, deal with this serious situation and try to find a way forward.

Photo of Lord Mackay of Clashfern Lord Mackay of Clashfern Conservative

My Lords, this is undoubtedly an extremely complicated situation, but I think the principle is that when a member of the public makes an investment in a government scheme, that member of the public is entitled to trust the terms on which the scheme was launched. Therefore there can be no doubt that those who invested in the scheme, relying on the Government’s statement of what was involved, are entitled to be protected by the Government from any failure on their part to meet the terms on which the scheme was set up. That rule applies to the United Kingdom Government, but also to the Governments of the devolved Administrations. That is the basic principle which cannot be set aside by any legislation that we may pass here, although the ultimate terms of the performance obligation are a matter that we cannot determine here, for various reasons that have been given. The principle seems to me absolutely clear and sound.

Photo of Lord Trimble Lord Trimble Conservative

My Lords, I think we have just heard a contribution that settles the issue to a large extent and indicates what should be done by the Government when the various reports become available. I say “the various reports” because there are two. There is the statutory inquiry conducted by Patrick Coghlin and the inquiry to be held by the Northern Ireland Affairs Select Committee. But there is no overlap here: the first looks to the past and how the scheme was framed and administered, whereas I hope the Northern Ireland Affairs Select Committee report will be more focused on the future and how one sorts out the problem beneficially for people. I am a bit worried to see the DUP nodding their heads at this stage; I will not say anything more in case I am accused of being political about the matter, which of course I am not.

The only other point I make is to thank the Government and the Chief Whip for giving us this evening to discuss this matter. It has been commented earlier, and on earlier legislation, that the way legislation is handled here during the regrettable absence of the Northern Ireland Assembly is not itself satisfactory. It was heart-warming to see the spontaneous revolt on the Floor of this House last week against the provisions to rush through this legislation in a way that would not have enabled us to discuss it in the way we have this evening. I am glad the Chief Whip listened and gave us the time, and I also thank the many noble Lords who have come in to listen to this discussion. That too is heart-warming for us.

Photo of Lord Maginnis of Drumglass Lord Maginnis of Drumglass Independent Ulster Unionist 5:00 pm, 19th March 2019

My Lords, I would be more than happy to be a signatory to the amendments, and I am particularly pleased that two of my Belfast-based colleagues are responsible for tabling them. Someone like me—representing, as I did for many years in the other place, the south-west of the Province of Northern Ireland—knows what it is like for farmers to find themselves misled and encouraged to participate in a scheme such as this. I am seeing this happen to those who were my constituents. We get some change and, like many, I have some hope that the Minister will have a means towards resolution.

I go back a long way in farming in Northern Ireland. Moy Park, which grew from very small beginnings, is now an internationally known farming enterprise. As a teenager—when Dungannon Park, as it was originally known, was establishing its breeding stock—I had the annual job of going to Dungannon Park and testing every single breeding stock for BWD. Members will not know what BWD is, but I will not go into the finer details. I saw Moy Park grow from small beginnings to the firm it is now. The people who helped it grow were the ordinary farmers, the people who have been misled.

Noble Lords will remember that last week I read on to the record the letter sent to the banks by the then Minister of Enterprise in Northern Ireland, which grandfathered—to use her word—the scheme that encouraged ordinary farmers to take out loans to be repaid over a five-year period. Remember that farms in Northern Ireland are small enterprises compared with farms in GB. That will now become impossible because of the reduction—I may not have these figures right—from £13,000 per burner per year to a mere £2,000. This new biomass scheme encouraged farmers to look to the future, to the son who would inherit their small farming enterprise and carry it forward as part of the backbone of the Northern Ireland economy.

I hope that noble Lords will look very carefully, not at the emotional dilemma that I face—noble Lords will understand why—but at the moral dilemma that the Government should face when they allow things to move forward without maintaining a firm hand on the tiller. In Northern Ireland, we have endured years of non-government by the Assembly, yet we find the money to keep that afloat when many of us believe that a more radical solution—a return to direct rule—is a way forward. When speaking here, we would feel that we had a direct influence on what the Government thought and did. Instead, I had what was intended to be a helpful briefing yesterday evening from the Northern Ireland Civil Service, the people who conspired—I should not use the word, but I will, for want of a better one—with the Minister in charge of this scheme to bring forward what has proved to be a flawed scheme. I do not believe that there can be any moral justification whatever in leaving Northern Ireland’s farmers to carry the can for that error.

I hope that the Minister will address how the Civil Service can be allowed to concoct something that perhaps frees it from an inquest into its behaviour and, at the same time, leaves our farming industry in a dilemma which I fear it will be difficult for it—and impossible for some—to survive.

Photo of Lord McCrea of Magherafelt and Cookstown Lord McCrea of Magherafelt and Cookstown DUP

I feel that some facts need to be stated. No one in the political establishment in Northern Ireland comes out with any glory whatever from the RHI scheme. I remind Members that the Northern Ireland Executive, who represented a large range of political parties, passed this scheme unanimously. The Northern Ireland Affairs Committee, which scrutinised this scheme from the Northern Ireland Assembly, passed it and so gave its backing to the scheme. The idea that somehow one person or one Minister decided on the scheme is not factually correct. It was the Northern Ireland Executive who passed the scheme, and they include the range of major political parties in Northern Ireland.

The heart of the scheme was a good one, because—as it says in the title—it was an incentive scheme. No one will be surprised to hear that those who entered into the scheme were being granted an incentive to do so, and found that incentive attractive. For many of them, things have turned out to be very different, but they entered into the scheme in good faith. I too have received a number of emails because, like the noble Lord, Lord Maginnis, I was a Member of another place, in my case representing for 25 years Mid Ulster and South Antrim, both of which have large farming communities. I am also a farmer’s son and own land—I declare that interest; however, I point out that I have nothing to do with the scheme. We ought to await the report of the public inquiry into the overall scheme. Irrespective of who may be identified as having made mistakes in the development of the scheme, the vast majority of participants did not. It may be that a few abused the scheme, and no one in your Lordships’ House can justify anyone abusing such a scheme, but I reiterate that the vast majority of those who entered into it were hard-working, honourable people, who now face uncertainty at a time of tremendous economic challenges.

I know there are those who seek to point fingers. However, as the noble Lord, Lord Trimble, indicated, we should move forward to see how we can assist at this time. It should be said of this scheme, because it seems to have been obliterated from the record, that the then Minister at the Department of Agriculture—now the leader of Sinn Féin in Northern Ireland—sent officials around Northern Ireland to have clinics and meet farmers to encourage them to get into the scheme. That ought to be put on the record. There are those who seem to forget that involvement in encouraging people to take up the scheme.

I am deeply saddened that, in the light of the proper inquiry launched by the Northern Ireland Affairs Committee, the Government have stated that they cannot delay making changes to the present tariff until the inquiry is completed.

We also need to find out, in detail, information concerning the tariffs in operation in the scheme in England and the proposed tariffs for a scheme in the Irish Republic. Remember, these are all under EU rules, and therefore we need to ensure that the participants in the scheme in Northern Ireland—who are not only farmers—are not disadvantaged compared to the rest of the United Kingdom, especially England, or the Irish Republic.

It is a sad reality that this has been tagged on to the end of a rates Bill. That causes anxiety, because it means there is no appropriate and proper scrutiny of this situation. No stone should be left unturned in finding the appropriate way forward so we can ensure that, under the present EU rules, Northern Ireland participants in the renewable heating scheme are not treated less favourably than anyone in the Irish Republic or in England.

In closing, I want to ask the Minister these simple questions. Is it definite that the Government have no legal way to continue the present tariff until the Public Affairs Select Committee concludes its work and issues its finding? That, in my opinion, would have been a decent and honourable thing to do.

If these proposals are not actioned, and no matter how the Members of this House might feel, is it a fact that on 1 April the participants in the scheme will cease to receive any payments under the RHI scheme? Can the Minister give a cast-iron guarantee that, should the Northern Ireland Affairs Select Committee identify an injustice under EU state aid rules between what operates in England and what is proposed in the Irish Republic, the Government will immediately rectify that situation and remove that injustice, with repayments being made accordingly?

Can the Minister give further details of the proposed buyout scheme for those who feel trapped and are unable to continue in the renewable heat incentive scheme because of the major drop in tariffs being paid to them? Will the amount offered under such a scheme be sufficient for farmers to get out of the scheme and not face financial hardship?

I feel that there are many questions still unanswered. I trust that the Minister will be able to clarify some of them, because they are very important. I agree with noble Lords that there are people who are genuinely hurting through no fault of their own. They should not be left to pay the penalty.

Photo of Lord Kilclooney Lord Kilclooney Crossbench 5:15 pm, 19th March 2019

My Lords, I support the amendments and, as I said during Second Reading, I feel inclined to oppose the Government on this Bill.

The position we are in has arisen due to people having been somewhat misled, as the noble and learned Lord, Lord Mackay, said. They were given guarantees by government that are now not being honoured. People feel very aggrieved about that, and not just farmers. Someone said that it was an act of faith, and I notice that some gospel halls were also involved in this heating scheme. They feel aggrieved because there is no Assembly, as Sinn Féin, the DUP, the Ulster Unionists and other parties have not reached an agreement about an Assembly. This is a devolved matter, and we are debating it here in this Chamber because the other opportunities have come and gone. The Stormont Assembly failed.

The other place did not make a decision favourable to those involved in the scheme. Those who now feel aggrieved—there are thousands of them—and who will be hit financially very hard are holding up the House of Lords as the last place in which they might be rescued. Therefore, this is a very serious matter for this Chamber.

As the noble Lord, Lord McCrea, said, there is a deadline of 1 April. The European Commission ruled that the present scheme was contrary to the European Union’s state aid rules, and therefore—I do not like saying this phrase in relation to Northern Ireland—we basically have a gun to our head. We have to reach a decision. It has been suggested that there will be an interesting report from the Northern Ireland Affairs Committee in the other place. I keep asking myself: is it far too late for that committee to discuss this matter? This issue has been going on for well over a year. At this late moment, the Northern Ireland Affairs Committee will eventually—I am told promptly—consider this subject.

There is great praise for the Minister, and deservedly so. He is embarrassed by the praise that he gets from Northern Ireland, but he takes a genuine interest in our problems across the entire community. My question to him is this: since we have a deadline of 1 April from the European Commission, should the Northern Ireland Affairs Committee come out with different proposals in a month or two, will it be possible to rescue this scheme and save the farmers and the other people who are suffering as a result of doing what the Government asked them to do?

Photo of Lord Browne of Belmont Lord Browne of Belmont DUP

My Lords, I said at Second Reading that this legislation is controversial and far-reaching. We all know it is regrettable that there is a lack of scrutiny. The legislation is extremely complicated and, indeed, was flawed from the outset. People genuinely entered into the scheme in good faith; they deserve to be treated fairly so that they do not suffer hardship.

However, we have to pay attention to the legalities of all this. The tariffs in the Northern Ireland (Regional Rates and Energy) Act 2018 are sunsetted. Therefore, if this Bill does not pass today, the department will have no legal authority to make payments in respect of boilers accredited under the scheme before 18 November 2015—some 1,800 boilers are, I believe, involved. So there are legal aspects to this that we must pay attention to. The other thing is that an independent review—the Ricardo report—said quite clearly that, under European Commission state aid rules, we had to stick to a rate of return of 12%. Can the Minister confirm that the base case tariffs or a compulsory buy-out have to be compliant with European state aid rules?

I can be brief—I think my other points have been made—but I hope that noble Lords will pay attention to the legalities involved in this scheme. We do not want anyone to suffer hardship, but we have to be very careful that these payments can be made. If we stop them there will be more suffering.

Photo of Lord Murphy of Torfaen Lord Murphy of Torfaen Labour

My Lords, I support the amendments in the names of my noble friends Lord Empey and Lord Rogan. I call them both my noble friends of over 20 years, despite the eccentric seating in place today.

This is a sorry business, all of it—a terrible mess. The whole situation in Northern Ireland for the last two years started with the collapse of this appallingly planned scheme. We cannot get away from that. Sir Patrick Coughlin is currently conducting an inquiry into the scheme, the courts are ready to pounce and the Northern Ireland Affairs Select Committee has been asked to look at it as well. The difficulties go back to the way the legislation first came to us. There should not have been a Bill that, on the one hand, decided the regional rate in Northern Ireland and, on the other, decided the details of the RHI.

Equally wrong was the length of time taken by the department in Northern Ireland to deal with its consultation process. As a result, apparently, all the details that we need to consider for the Bill did not arrive until January, even though it was known full well that the previous Bill put forward was sunsetted to end at the end of March. This meant there would be totally inadequate scrutiny of the Bill by Parliament. What is done is done, but it means that we are in a mess. The noble and learned Lord, Lord Mackay, referred quite rightly to the fact that some of the people who, in good faith and on the advice of the Government, went to their banks and decided to take out loans to deal with this issue are now in a terrible mess. What happens to them? The Government are in a dilemma—partly one of their own making, because of what I have just referred to with respect to process.

If we do not pass the Bill, there will be no regional rate in Northern Ireland and the scheme will collapse, so people who are currently benefiting from it, in whatever sense, will not have any money to deal with it. At the same time, in the other place, the Secretary of State welcomed the Select Committee on Northern Ireland looking at it. Perhaps she did not realise that, under the circumstances of the Bill, it would have just under two weeks to consider it, which of course is impossible.

The Government and the Minister in particular, who has been rightly praised by all sides of the House on this and other issues, have to come up with a solution that will satisfy my noble friends Lord Empey and Lord Rogan, and the rest of us, about what can be done. They to ensure that the rates are collected and that the scheme does not collapse but, at the same time, looks after the people who took part in this scheme in good faith. There may well be ways the department could look sympathetically at cases in Northern Ireland. There may also be a way, although I cannot see what it would be at the moment, for the Northern Ireland Affairs Select Committee’s recommendations to be taken into account after the legislation has been improved, unless further primary legislation could be brought before this House to amend the Bill we are considering—it may come to that.

A general point has to be made: so long as there is no devolution in Northern Ireland, with no Assembly or Executive, we cannot have Northern Ireland legislation coming to us in bits or as emergency legislation that denies proper scrutiny. The dilemma that all of us, and the Government in particular, are in today results from the fact that the business managers have not taken Northern Ireland legislation seriously. That has to change, until such time when the institutions are revived in Northern Ireland, which I hope will not be that long away.

These Benches will support a Division, if my noble friend Lord Empey calls one. I hope that can be avoided with what the Minister is about to tell us, because we want to ensure that the legislation goes ahead. However, we also want to ensure that the hundreds of people in Northern Ireland who are now in a sorry state because of this RHI can be dealt with in a proper, decent, humane manner.

Photo of Lord Duncan of Springbank Lord Duncan of Springbank Parliamentary Under-Secretary (Northern Ireland Office), The Parliamentary Under-Secretary of State for Scotland

My Lords, I will begin in a slightly eccentric way. I have to make a correction of one of my earlier statements. In the debate last week, I stated that,

“the scheme in Great Britain is a 20-year scheme, whereas that anticipated in Northern Ireland is a 15-year scheme”.—[Official Report, 12/3/19; col. 1009.]

Noble Lords will no doubt realise that I meant to say that the anticipated scheme in the Republic of Ireland, not Northern Ireland, is a 15-year scheme.

That was the easy bit. I will see what I can do to take us forward. Let me begin at the beginning. All the points made by noble Lords this evening on the amount of time and the manner in which scrutiny has been facilitated in this House have landed, and landed well. It is not acceptable that this House is treated like a rubber ball to be bounced gently into some sort of decision. I accept that. It should not happen. There needs to be proper scrutiny in this House and in the other place—now more than ever, in the absence of an Executive.

On combining the two elements of the Bill—namely, the regional rates and the heating incentive—there is no doubt that they do not fit comfortably together. There is also no doubt that, depending on your Lordships’ will this evening, the situation regarding the heating incentive will have an impact on the regional rates. These rates remain an important element of the overriding Northern Ireland budget. That combination was a mistake and I do not think we should ever find ourselves in a situation with two elements which clearly do not fit comfortably together. I need to reflect on that. There should be opportunities for this House to look at them separately and, where appropriate, give endorsement to that which it seeks to endorse, and criticism and understanding to that which requires further work.

Photo of Lord Maginnis of Drumglass Lord Maginnis of Drumglass Independent Ulster Unionist

I apologise for interrupting the Minister. In reference to the mistake he just alluded to, would I be right in saying that this was not a mistake but a tactic which emanates from the Northern Ireland Office and which, despite the good offices of the noble Lord and others, has landed us in this situation?

Photo of Lord Duncan of Springbank Lord Duncan of Springbank Parliamentary Under-Secretary (Northern Ireland Office), The Parliamentary Under-Secretary of State for Scotland

The noble Lord makes an interesting point. Unfortunately, I will not comment on it at this particular moment. The reason the noble Lord, Lord Empey, and I seemed to be scrambling to get in here at the beginning of this debate was because we were sitting next door trying to work out how we could find a way through some of the challenges encountered this evening. I am blessed that he managed to find his way to his place and that I did too.

If I may take the wider point into its widest possible connection, the heating incentive was, at its heart, a noble idea. Its purpose was to reduce the carbon footprint of Northern Ireland. That is an ambition of this Government and the outgoing Executive. At heart, it was a noble endeavour. But frankly, its construction was flawed top to bottom—flawed in almost every possible way—to the extent that we could almost describe its construction as a good old-fashioned scandal. Indeed, there is an inquiry into that scandal right now. It will report in due course, and it will examine all the basic elements of how on earth we got into a situation in which a scheme that was designed to reduce the carbon footprint of Northern Ireland could have created a situation in which the amount of money going to that scheme over a 20-year period would have been £1.3 billion to about 1,500 recipients. That amount of payment is absolutely extraordinary, and rests uncomfortably upon the errors conducted and permitted in Northern Ireland by various actors. The noble Lord, Lord McCrea, is right to point his finger and say that there is no single individual but rather a collection of individuals, who no doubt will have to explain why they found themselves where they did.

The important thing that constrains us today is that the European Union state aid rules are very clear. We are now in receipt of correspondence, shared with us by the Department for the Economy in Northern Ireland, which it has had with the Commission regarding the rate at which it should be set. The answer is 12%, not just for the scheme in Northern Ireland but for the scheme in Great Britain and elsewhere. That is the rate at which it was set.

However, we must remember that under the maladministration at the outset, the scheme in Northern Ireland was in excess of 50%, and therefore, quite quickly the costs spiralled to the point at which the amount spent on this would have all but crippled the economy of Northern Ireland had we not sought to constrain it in some way. Exacerbated by the absence of an Executive—as the noble Lord, Lord Murphy, rightly reminds us—this matter, which should really be addressed in Stormont, rests here with us. I believe we have all been in receipt of emails and letters from individuals in Northern Ireland who, in good faith, acting upon written guidance, have found themselves in the most invidious of situations. How a Government could have allowed that to happen is a scandal. It will be investigated as such, and the findings will determine what has happened.

The noble and learned Lord, Lord Mackay, always puts his finger on a very serious issue. He asked about those acting in good faith on written terms. But of course he will recall that when this matter was examined by the courts, the courts themselves examined the legitimate expectation of those in receipt, and looked at the public interest and the financial probity question. On that issue, they averred on the side of the public purse. This is still before the Court of Appeal, and no doubt other issues will unfold from this, but it is a reminder that the situation we find ourselves in is one in which we do need to be conscious of the wider finance.

The noble Lord, Lord McCrea, asked whether we could maintain the rate as it has been set. The answer to that, unfortunately, is no, because that rate is still in excess of the 12%, which is a limit set by the European Commission. That is what sets our legality. For those civil servants in Northern Ireland—and let us remind ourselves that there are no Ministers to take this forward—

Photo of Lord Duncan of Springbank Lord Duncan of Springbank Parliamentary Under-Secretary (Northern Ireland Office), The Parliamentary Under-Secretary of State for Scotland

Interestingly enough, this was always known; it was just never fully understood or applied. What the Government here have sought to understand is exactly what information the Northern Ireland Executive has been in receipt of. We have been very clear about pinning that down, because the 12% was always there; it was simply not used correctly, which allowed it to spiral massively, up to and in excess of 50%. We have had sight of correspondence from the European Commissioner that tells us very clearly that, were we to maintain the rate as it stands, we would be in breach of state aid rules. Civil servants in Northern Ireland—noble and diligent as they are—cannot move forward on the basis of an illegal rate. That is why we find ourselves where we are today.

I will touch on a couple of points made by the noble Lord, Lord Empey. He notes that this proposal really covers the medium-sized boilers. He is correct that it does not affect the larger boilers or the micro boilers. These matters were to be considered after we had settled this question, which covers the bulk of boilers in Northern Ireland. That said, the issue is a very simple one, and the noble Lord, Lord Cormack, put it very well: it is fairness, justice and equity. That is the issue we need to address tonight.

There is no question that the individuals who have emailed us, setting out their case and their distress in black and white, must get an adequate response. I am hopeful that I can put forward a proposal to the noble Lord, Lord Empey, and the noble Lord, Lord Rogan, that will help us move this matter forward, but your Lordships must be more of a judge of that than I am. My proposal is that the Department for the Economy in Northern Ireland—not on our instruction but because it believes it to be the right course of action—sets up a unit within the department, under independent chairmanship, that will be responsible for examining the case of every individual who has received funds from the RHI initiative and believes that they have experienced hardship. I propose that each element of their case is considered in thorough detail and with their participation, in order to understand exactly what that hardship looks like.

As a consequence of that, and with the Northern Ireland Affairs Committee inquiry running alongside that, those two elements should together help inform the part of the Bill that covers the issue of the voluntary buy-out. Currently, the voluntary buy-out is more or less a statement that lacks mechanical details. If we construct the buy-out to adequately and appropriately meet the needs of the farmers who rest within it, it could be adjusted in accordance with these elements. At the same time—and necessarily—the Northern Ireland Affairs Committee will consider future issues, and this should inform the overall functioning of this—not just the buy-out but the wider questions that rest within it.

Now, I will not try to sell your Lordships a pig in a poke, so what I will need to do to make this function properly is lay a written report before your Lordships’ House, so that your Lordships can see what this would look like in practice. There is no point in pretending that this can be achieved in a fortnight—there are too many cases that need a thorough and detailed examination. The point is, however, that we need to be in a situation where the compensation element is adequate and informed by these elements. If we can move forward on that basis, we can go some of the way towards meeting the issues raised by the noble Lord, Lord Empey.

Photo of Lord Cormack Lord Cormack Conservative

My noble friend is obviously trying very hard to be helpful, for which we are grateful. Would it be possible, on Third Reading, to add a short schedule to the Bill that would refer to this proposal?

Photo of Lord Duncan of Springbank Lord Duncan of Springbank Parliamentary Under-Secretary (Northern Ireland Office), The Parliamentary Under-Secretary of State for Scotland

I always like to be asked a question, and I turn my eye gently and think: I have no idea of the answer to that. I will, however, find out the answer and report back to the noble Lord in real time as soon as it is available.

The reason that I am putting this proposal before your Lordships’ House tonight is because it would be unfair to pretend that we can treat all those individuals as an average; we need to see each in their own terms, understand how their world fits together and how this invidious scheme has been constructed to their detriment. It is unfair of this or any Government to expect those acting in good faith to be penalised for that. We must also be cognisant of the draw on the public purse—there is no point pretending that there is a bottomless pit of money for our approach to this matter. The noble Lord and I have, however, had discussions about what moneys might be required.

It says here, “No to bringing back on Third Reading”. I am afraid, therefore, that the answer to the question from the noble Lord, Lord Cormack, is no. I can, however, put on record that we will need to understand the timing of this to be able to deliver it—without the timing there is a risk it will drift into the long grass. I give an assurance that we will be able to—

Photo of Baroness Harris of Richmond Baroness Harris of Richmond Deputy Chairman of Committees, Deputy Speaker (Lords)

While the Minister is looking at that for Third Reading, can he also indicate how much will probably need to be put aside for this independent review?

Photo of Lord Duncan of Springbank Lord Duncan of Springbank Parliamentary Under-Secretary (Northern Ireland Office), The Parliamentary Under-Secretary of State for Scotland

The noble Baroness asks a question to which I once again do not have an adequate answer, but I think that it would be fair to say that appropriate funds must be set aside to address these issues. That might seem a vague assertion, but it need not be. I recognise that, where those hardships have been iterated and are evidence based, there should be support for the individuals concerned. I am afraid that I do not know what the overall sum would be; I know that the sum set aside under current arrangements is £4 million. Clearly, if there are to be adjustments to those arrangements, there will need to be adjustments to that figure, and I suspect that they would be in the upward and not the downward direction. As to the exact figure, I am afraid that I do not have that information. If I am to report back to the House in a Written Statement, I think that I will be able to put the figure to the House very clearly, because, by that stage, we would know exactly what this looked like.

I do not know whether that satisfies the noble Lord, who is sitting on the friendly Benches behind me, but I hope that it is. I hope that both he and the wider community recognise that we are seeking to ensure that we make progress.

A number of noble Lords have raised the issue about what happens with the grandfathering clause. The grandfathering clause of 1 April creates serious problems for us. Moving forward on that basis would mean that we were unable to ensure the functioning of the scheme full stop, let alone at any rate which noble Lords might wish to see or set. In addition, as we see the scheme moving forward, we need to make sure that it is fully compliant with the base of the law. We have also to recognise that expecting civil servants in Northern Ireland to act in a fashion which they know to be illegal is simply not possible nor a fair request of that service. It is for those reasons—and I am loath to say it—that we must move forward within the basic structure and parameters of the Bill but allow for the adjustments that I have outlined, which I believe will take us some way to address the genuine hardships which have been reflected to all here gathered.

Photo of Lord Maginnis of Drumglass Lord Maginnis of Drumglass Independent Ulster Unionist

I apologise for interrupting the Minister again, but will not his solution lead to a divide-and-conquer situation? Do we have any idea of how many individuals will require to give evidence, what the length of time will be and whether that will again be manipulated to take us out of the time limits that have been placed on us?

Photo of Lord Duncan of Springbank Lord Duncan of Springbank Parliamentary Under-Secretary (Northern Ireland Office), The Parliamentary Under-Secretary of State for Scotland

The noble Lord is correct to ask about the parameters. I cannot say with accuracy what the exact numbers are. I am aware of how many emails I have received—that number is 75—but I suspect that there are many more. I am not sure whether we are all copied into the same 75, so there may be considerably more even within this round, but there are a significant number. There will be those whose participation in the scheme is not subject to the various issues which we are taking forward today because they are functionally comfortable within the returns that they have been able to expect, but there will be those—the 75 may be a reflection of that figure, but it could be higher—who find themselves in the invidious and unpleasant position of being in financial constraint and hardship as a consequence of simply being faithful to the guidance given by Ministers and civil servants in Northern Ireland. It is to those we must turn our attention.

As many noble Lords will be aware, the scheme was such that there will no doubt be participants who have sought to benefit from a remarkably generous scheme. To those, the notion of hardship will not necessarily apply in the way that it does to those who have written to us setting out in some detail the pain and disaster they face as a consequence of this situation. I hope that there will be adequate time for this. We need to ensure that we move in a more appropriate fashion; we cannot allow this to be delayed.

The Civil Service will act in good faith; I know that the noble Lord has had some issues with it in the past. This rests in the hands of the devolved departments in Northern Ireland which are responsible for it. We must ask them to take the lead in this matter, albeit, I hope, under the chairmanship of an independent individual. Rather than there being any sense of conspiracy within the department—as the noble Lord more than hinted at—this will, therefore, hopefully rest in the hands of someone who can gain trust from all. I am not sure if that is adequate for my noble friend Lord Empey.

Photo of Lord McCrea of Magherafelt and Cookstown Lord McCrea of Magherafelt and Cookstown DUP 5:45 pm, 19th March 2019

Can the Minister clarify the position on a question which I asked? Should the Northern Ireland Affairs Select Committee find that an injustice or inequality has been done, given the tariffs received by those in England or those in the Irish Republic under the state aid rules, will the department ensure that that will be rectified immediately and further repayment made accordingly?

Photo of Lord Duncan of Springbank Lord Duncan of Springbank Parliamentary Under-Secretary (Northern Ireland Office), The Parliamentary Under-Secretary of State for Scotland

One of the challenges in trying to compare the schemes across these islands is that a like-for-like comparison of the various elements is hard. However, the rate of 12% is broadly the constraint within which all must operate, because that is the state aid rule. Were the NIAC to discover a particular inequity which breaches beyond that point, they would be compelled to act in that regard. However, the 12% being applicable to all should mean that there is fairness. The noble Lord should be aware that, because the earlier scheme in Northern Ireland set its returns at such an extraordinary rate—upwards of 50% —the challenge remains that any adjustment thereafter down to 12% on the basis of averages would take that 12% higher than it would otherwise be, had it been 12% at the outset. I do not wish to make any particular point about that issue, I merely note that the challenge is now to remain within the law as specified by the European state aid rules.

Photo of Lord Kilclooney Lord Kilclooney Crossbench

One of the problems with the Bill, which has already been underlined during the debate, and which the Minister has been honest enough to state himself, is that it is wrong to link rates—which is council tax in England—with this heating scheme. They are two totally separate subjects and should not be in one Bill. Should the Bill be rejected, would it then be possible to introduce urgent legislation for rates only?

Photo of Lord Duncan of Springbank Lord Duncan of Springbank Parliamentary Under-Secretary (Northern Ireland Office), The Parliamentary Under-Secretary of State for Scotland

The noble Lord is right to raise that. I dearly hope that we do not reject the Bill now because, even if we were to act with a certain degree of urgency, it would still be a delay to what we need to deliver in terms of the rates themselves. If we are unable to address the rates question in real time, we are talking about a substantial loss to the revenue of Northern Ireland.

I hope that noble Lords will recognise that the endeavours this evening have been solely for the purpose of trying to address the genuine hardships experienced by those in the scheme. The purpose of the Bill is to make sure that nobody is considered to be part of an average and that each individual is seen as such. That data will then be used to inform the development of an appropriate element of the overall bill which will then be determined and placed before noble Lords in written form, so they can see it. There is no attempt on my part to mislead the Committee or to sell noble Lords something in a poke that you cannot put your hand into.

I hope that this is adequate for my noble friend Lord Empey. I know how much effort he, and all the Northern Ireland Peers, have rightly put into this matter. It concerns them on their doorstep, but it concerns all of us in these islands. Equity, fairness and justice must be the cornerstone of any Government. I hope that we have been able to reflect this evening on what this Government can do, within the constraints of state aid rules and the wider timing question. I hope that, on that basis, the noble Lord will be able to withdraw the amendment.

Photo of Lord Empey Lord Empey UUP

My Lords, I am grateful to the Minister for his contribution. I also thank the noble Lord, Lord Murphy, from the Labour Party, and the Liberal Democrat Benches, for supporting these amendments alongside other colleagues on this side of the House. I just want to repeat my interpretation of what I think the Minister is saying, because if you withdraw amendments at a point such as this, it is your last throw of the dice and you lose control of the whole process.

First of all, the Minister is not in control of the Northern Ireland Department for the Economy; that is a fact. Therefore, in the Budget, £4 million was set aside in each of the next three financial years to deal with the buyback or buyout scheme. If that was simply looking at the individual burner in isolation, I could understand why such a sum of money might be payable. But, of course, many users used the profit on the boiler, perfectly legitimately, to lever out additional borrowing to do other things. The point that my noble and learned friend Lord Mackay of Clashfern has made all along is perfectly true: there is a moral issue. There is also, of course, a legal issue, but that will follow its proper course.

If I recall correctly, the facts, according to the Minister, are these. One point I understood him to make is that, as of 1 April, there is no ability for the state to pay subventions for these boilers—the point made, I believe, by the noble Lord, Lord Browne of Belmont. On the European issue, I would argue that the scheme has been ultra vires state aid for a long time, not just now. It has been wrong from the very beginning, when payments in excess of a 12% return were made. As my noble friend Lord Lexden said, the 12% figure was set in the original letter in 2012 by the European Commission, approving the scheme in the first place. From that point, the 12% was always there but, of course, it went astray.

Let us get back to the point of fairness, justice and equity, because that is the key to all of this. We want to ensure that people get fairness, justice and equity, bearing in mind that the taxpayer has a big stake in this as well. Originally, a compensation or buyout scheme was planned. This is my interpretation of what the Minister is saying; if he disagrees with anything, perhaps he will let me know. He is saying that the status of that group will be upgraded to the point where it will not be an internal issue within the department but will be chaired by an independent, outside person who is not a member of the Northern Ireland Civil Service. He is saying that he will put forward, in writing to this House a Statement setting out the terms of reference. The question I need to ask him is: how does he do this when he is not in charge of the department? At the end of the day, my anxiety is that if we let the thing go, it will slither away, and somebody somewhere will say, “Well, I’m not doing that. The Minister can give an undertaking to the House of Lords, but he doesn’t rule me”. There is a genuine opportunity here to ensure that what is taken into consideration is not only the cost of the boilers versus the revenue that they would now be getting, but the leverage they used to ensure that the borrowings they undertook for further activities on the strength of that. That is the key issue, which was missing—if I may say so—from the original suggestions.

Can the Minister confirm those two points? Can he also reiterate for our benefit the answer that he gave—either to the noble Lord, Lord Browne, or the noble Lord, Lord McCrea of Magherafelt and Cookstown—about the legality and so on? I do not worry about the state aid issue because, in my view, we have been wrong on that from the very beginning, and it has gone on for years without any legitimacy. But could he just clarify those points before I conclude?

Photo of Lord Duncan of Springbank Lord Duncan of Springbank Parliamentary Under-Secretary (Northern Ireland Office), The Parliamentary Under-Secretary of State for Scotland

My Lords, I thank the noble Lord for affording me the opportunity to make some points of clarification. He is absolutely right to say that I am not in charge of that department. My comments are based on conversations earlier today with senior officials in the department. I cannot instruct them, but the discussions led to that proposal, which I believe would be a step forward for noble Lords this afternoon and this evening, on that basis—not my instruction but rather an acceptance on their part that this would be the right way to move this aspect forward. On the terms of reference, yes, these need to be very clearly understood. Financial hardship must be understood in all its manifest forms and I believe it would be incumbent on all those who are investigating and considering to ensure that all aspects of financial hardship, whatever their source or their cause, are examined in detail to ensure that there is a fair and equitable understanding of the situation. So I think the answer to that is yes.

As for what happens on 1 April if we have not made progress, it is very simple: we will not be able to move forward on this scheme, because as a number of noble Lords noted, we have grandfathered in the clause to end on 1 April. At that point, irrespective of our desire to be able to offer or afford support, without the legal underpinnings we will not be able to do so.

On state aid, there has clearly been a kerfuffle, for want of a better word, in Northern Ireland over what that rate should be, but the one thing that has been clear throughout is that the European Union Commission has had no dubiety about what it should be: it has been very clear that it should be 12%. That this has been, one might argue, misinterpreted by certain individuals in the Province is the reason we are having this wider discussion tonight and why there is a particular scandal being investigated across in Northern Ireland. None the less, we are still bound by that rule—namely, state aid at 12% return—and we cannot move away from that.

I hope those points of clarification help the noble Lord to move forward.

Photo of Lord Mackay of Clashfern Lord Mackay of Clashfern Conservative

I should like to be absolutely certain that there is nothing in the Bill that damages any legal right that people had in Northern Ireland as a result of dependence on the action of the Northern Irish Government taken on behalf of that Government by authorised officials or Ministers. Because that is the fundamental matter: if that is not affected by the Bill, the way in which matters should be brought forward to encourage that is perfectly reasonable as a way forward. The fundamental point is that the legal rights of those who may have been damaged by their contract with the Northern Irish Government, through Minister or official, would not be touched.

Photo of Lord Duncan of Springbank Lord Duncan of Springbank Parliamentary Under-Secretary (Northern Ireland Office), The Parliamentary Under-Secretary of State for Scotland

My noble and learned friend makes a useful point. I can happily confirm that this will not affect the legal rights or standing of any of those who have been affected by the scheme thus far.

Photo of Lord Empey Lord Empey UUP

I thank the Minister for those points of clarification. He will be aware that everybody who spoke in this debate was basically on the same page: we want to help these boiler operators and owners. We want, as he put it, fairness, justice and equity. I have to say to him that if we accept these assurances—if I withdraw the amendment—and we were to find subsequently that these conditions were not being honoured, in spirit as well as in letter, there would be a great deal of anxiety and angst in this Chamber. The Minister needs to be very clear about that, because there are more people in this room tonight than I have seen here on a Northern Ireland issue for years. He knows, and his colleagues in the Northern Ireland Office and in the Department for the Economy who are watching this know. I had the honour to be Minister for the two departments that were merged into this department, so, to coin a phrase, I know who they are and I know where they live.

We are talking about the livelihoods of good, honest, decent people and it is the will of this House to see that justice, equity and fairness is delivered to those people. If there is any variation or moving away from that, there will be a lot of very angry parliamentarians. On that basis, I beg leave to withdraw the amendment.

Amendment 1 withdrawn.

Clause 6 agreed.

Amendment 2 not moved.

Clause 7 agreed.

Schedule agreed.

House resumed.

Photo of Viscount Younger of Leckie Viscount Younger of Leckie Lord in Waiting (HM Household) (Whip)

My Lords, it may assist the House if I say a word about the further stages today of the Northern Ireland (Regional Rates and Energy) (No. 2) Bill. We are about to move the Motion that the Report be now received. From that point, the Public Bill Office will immediately be accepting amendments ahead of Third Reading, and will do so for the next 30 minutes. There will then be a further 30 minutes before Third Reading begins. We are about to move on to two repeated Urgent Questions. I anticipate that the House will need to adjourn during pleasure after the second repeated Urgent Question. We will not resume before 7.01 pm; that is, 60 minutes from now. Timings will be displayed on the annunciators.

Bill reported without amendment.