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Burned. Sam McBride
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Porter, a former flight lieutenant in the RAF’s legal branch who in that role undertook courts martial, was so alarmed at what DETI was doing that on several occasions he recorded in writing to Ofgem colleagues that the body should consider refusing to take on the administration of the scheme until DETI agreed to address the deficiencies.
In June 2012, a further Ofgem legal review of the regulations reminded DETI of the GB cost controls. That same month a crucial teleconference took place involving six Ofgem staff and two DETI officials – Hutchinson and McCutcheon. Ofgem emphasised again the problem of DETI pressing ahead with implementing a scheme known to have multiple deficiencies. But minutes of the meeting show that DETI said it was their intention to do so and then alter it the following summer. Ofgem’s minutes recorded:
Ofgem’s advice was to wait until the GB regulations are amended as the amendments will serve to negate any risk that the regulations currently pose. However, DETI were clear that they have a commitment with their minister to bring the regulations into force by the end of September … It was also felt that to do otherwise would also put financial arrangements in jeopardy.
Porter, the experienced Ofgem lawyer who was on the call, later told the inquiry that the concerns he raised at that meeting ‘seemingly made no impression on DETI’. He was dismayed.
The officials, who were already behind schedule on getting the scheme launched, appear to have believed that they could not delay any further. Hepper said that the timetable for launching RHI had been set by Foster. Foster accepted that she had told the officials to get the scheme launched ‘as soon as possible’ but said the ‘as possible’ was crucial in that context and added: ‘I certainly don’t have any recollection of saying “This has to happen by September.”’
The impression of officials feeling under ministerial pressure to move rapidly is reinforced by an email sent just minutes after the June 2012 meeting by senior Ofgem manager Luis Castro. Castro, who had been present, said to a colleague that DETI officials had told them that ‘NI ministers want the scheme to go ahead as soon as possible … and will not wait for amended GB regs’. Ofgem manager Keith Avis, who chaired the teleconference, was ‘nervous’ about the minutes of the meeting containing criticism of the GB regulations, something which would be implicitly critical of DECC, a major client of Ofgem. But Porter felt strongly that the minutes should reflect what had been said. Two days later, after being shown draft minutes, which did not fully convey what had gone on, he emailed Avis to ask for the minutes to be changed. After Avis expressed reluctance to do so, Porter said: ‘I think it important that there is an official record that, at our first “meeting” with DETI we hammered home the fact that we had significant concerns regarding the course they are proposing to adopt.’
The following day Castro emailed to back up what Porter was saying: ‘I think that what is important is that we capture the fact that our clear recommendation to DETI was to wait until regs are amended due to the risk the current ones pose.’ Hutchinson – the only DETI official on the conference call who gave evidence to the inquiry – did not dispute that Porter had made clear the risks of pressing ahead. However, he suggested that once it was made clear that DETI intended to do so the Ofgem figures accepted that and moved on to discuss other issues. It was a hugely significant moment. Months earlier, DECC had decided that tiering on the GB scheme was insufficient to protect public money, and moved to urgently implement an interim cost-control measure ahead of a longer-term sophisticated system to prevent an overspend. DETI, meanwhile, was moving in the opposite direction – stripping out the limited cost control of tiering and making no concrete plans to implement the changes happening in London.
The absence of tiered tariffs concerned many of those who viewed DETI’s proposals. Ofgem’s Oliver Moore noted internally in July 2012 that the increased biomass tariffs had jumped out at him, as well as the fact that there was no tiering. He highlighted that tiering had proved a good way of reducing the incentive to waste heat, adding pointedly that ‘taking it out increases the likelihood of abuse and heat wastage’. But, determined to get RHI launched soon, DETI’s mind was made up.
The inquiry heard illuminating evidence from two Ofgem figures who worked closely with DETI officials in the design of the scheme. Both of them separately said that they believed the civil servants were under pressure from someone higher up in Foster’s department to get the scheme opened quickly even though they knew it was flawed. Both Catherine McArthur, a former senior policy adviser to the Energy Minister in New South Wales, and Keith Avis were clear that the urgency did not originate with the officials they dealt with. When asked for her sense of where the time pressure was coming from, McArthur said:
My sense, having worked with [DETI officials] Peter and Joanne, is that there was somebody – a layer removed perhaps from them; I don’t know how many layers removed – who was putting on the time pressure and was making the decisions. It seemed that they were unable to give guidance or a steer of any kind which to me suggested that they didn’t have a great deal of control necessarily and that it was in somebody else’s hands.
Avis had a similar sense:
My overall view is that it [the time pressure] was coming from high, high up in the organisation – that it really was something that they were very much committed to and if, throughout this process, you mentioned about timing or any sort of delay it was very much ‘we hear what you’re saying; however we have got a commitment to push forwards’. I think there were stages where there was direction right at the top, at ministerial level, where there was a need to move forward quickly.
That impression is clear from a contemporaneous email from Ofgem’s Matthew Harnack to colleagues in August 2012. Relaying a phone conversation with Hepper, he said: ‘They noted that the minister is adamant that the scheme must go live in October, and I had to give them an assurance that there is no risk to this happening …’ Foster told the inquiry that if officials took her desire for haste to mean that they should press ahead with a defective scheme, they were wrong and they did so without ever properly informing her.
The final point at which it is alleged there was still a chance for DETI to pull back from the brink towards which it was rushing came just days after the June 2012 teleconference call with Ofgem. Hepper, who said that those on the call had fed the Ofgem warning through to her, insists that she spoke to her superior, David Thomson, and then to Foster herself. Thomson said that he recalled Hepper having brought the issue to him and that at that point she was going to bring the issue to Foster for a decision. But that critical conversation is now disputed – and with no written record of what actually transpired, it is Hepper’s word against Foster’s. Hepper told the inquiry that she had a ‘clear recollection of the conversation with the minister’ about the warning and that ‘I don’t believe that this was downplayed in any way’.
When asked if the minister was told specifically that Ofgem’s recommendation was not to proceed without cost controls, she said: ‘Yes, and I did not downplay that; I said that’s the advice from their lawyers.’ Hepper admitted that there had been no formal written ministerial submission on the issue, and accepted that with hindsight that ought to have happened but blamed time pressure for not having done so.
The DUP is a party which is exceptionally precise in its use of language – even when lawyers are not involved. For that reason, Foster’s evidence to the inquiry on this point was striking for what it did not say. In her written evidence to the inquiry – evidence which would have been carefully put together – Foster, who by then was DUP leader, said: ‘I have no recollection of being clearly informed about the risks of proceeding without cost controls.’ Because of what it does not say, the comment leaves open the possibility that Foster was informed clearly but has forgotten it, or even if that was not the case that she was informed in some way of Ofgem’s warning – but not in explicit terms. Whatever happened in that conversation – if, as seems to be the case, it took place – nothing was done to halt the launch of a scheme which many, if not all, of those launching it had been told was seriously flawed.
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