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Renewable Heat Incentive Scheme (Amendment) Regulations (Northern Ireland) 2017

Part of Executive Committee Business – in the Northern Ireland Assembly at 7:15 pm on 23rd January 2017.

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Photo of Simon Hamilton Simon Hamilton DUP 7:15 pm, 23rd January 2017

What I was going to say before the Member's intervention was that the Department for the Economy had not been inactive in addressing issues with the RHI scheme — far from it. I want to give a flavour of some of the things that the Department has been engaged in on the issue. When I took up post, I initiated site inspections on behalf of the Department by PricewaterhouseCoopers to investigate and examine accusations of fraud and abuse. Some 20% of installations have been inspected; that is a total of 295 installations. That work has been greatly useful in informing our work on cost control, particularly on the modelling of use. We also commenced an internal fact-finding investigation looking specifically at why warning signs were not heeded and particularly at what happened with the concerned citizen. That has impacted on the Department's capacity to undertake this important work. There has been a need to rebuild that team, and I outlined last week how we intended to do that. There has been ongoing, almost constant, work on a range of cost control options that has conversations with the Department of Finance and the European Commission, and, at times, that work has focused on different options. Options were favoured and worked up, and other options were then considered and moved above them. The accusation that the Department has been doing nothing on RHI, never mind in respect of working on cost control measures, is nonsense. It was always my intention to bring forward regulations such as these at around this time of the Assembly session, although I accept that it would be preferable had it been earlier. Obviously, circumstances have changed, and we are now doing so in a fashion that, I freely admit, is far from ideal.

Another issue raised is that this is a short-term solution. This is a two-stage approach, and it is deliberately that for good reason. First, we need to stop the losses to the public purse; hence the time-limited solution before us. Secondly, it creates the time and space to work on and agree a suitable long-term solution to the problems with RHI. That will be done initially by a consultation to commence very soon. It will examine, as you would expect it to, the full range of long-term solutions that could be brought forward. I believe that there are benefits to a two-stage approach. First, we can consult those who are affected to find the right long-term solution. We can look at a full range of options. We can test them, model them, take account of things and decide on the best way forward. Secondly, I believe that it improves the legal robustness of this approach rather than proceeding, as some have advised me, to a long-term solution now. The Examiner of Statutory Rules points out that benefit in paragraph 6.12 of her report.

Another point raised is that the costs of the scheme are not zero. I would be the first to point out that I never said that they would be zero. My public comments on the plan were that it would reduce costs to effectively zero or, in effect, zero. The estimated cost to the Northern Ireland Budget in 2017-18 is £30 million. This plan will have a cost of between £2 million and £2·5 million.

[Interruption.]

Some Members might not want to hear it, but that is a 92% reduction in the cost to the Northern Ireland Budget. I have said that it is "effectively zero", because I do not believe that that is where it stops. First, I believe that there will be behavioural change. The business case that underpins this has a conservative estimate of the behavioural change that will be caused by the introduction of tiering. I believe that that could go further and, indeed, may already be happening. Secondly — this is the very important point — I believe that the cost of just over £2 million will be reduced significantly further because of the bearing down on fraud and abuse. There will be a further bearing down on fraud and abuse that will produce cost benefits through the 100% site inspections that I referred to in response to the Finance Minister.