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Burned. Sam McBride
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Rapidly BS Holdings developed a marketing slogan: ‘20 years of free heat’. Far from being hidden away, the slogan was on all its literature, on its website, across social media and emblazoned on the side of its fleet of vehicles. Based on Hood’s calculations at that point, if a 99 kW boiler ran 24 hours a day, seven days a week, 365 days per year, the owner would need to pay about £35,000 for fuel – but would receive RHI funding of about £51,000, leaving a profit of more than £16,000 on top of the free heat. That crude calculation did not include payments for electricity to the boiler or servicing – but even with those costs built in, it was a lucrative proposition.
Hood’s earliest marketing material – sent out en masse across Northern Ireland to any business he thought might have a significant heat need – included a heading called ‘profit’ and said: ‘The more efficient we can make the plant the greater the opportunity for you to obtain profit on the heating you use. Theoretical profit could be 157% of the fuel cost – but inevitable losses in the system have an affect [sic] on that.’ In layman’s terms, for every £1 of fuel, Hood’s crude calculation was that claimants at that point could make £1.57. In reality, the figure would have been somewhat lower, given the additional costs associated with biomass boilers – particularly electricity and maintenance of a boiler which was working hard. But as the scheme went on, the profits would rise considerably because not only did the cost of fuel fall but the tariff increased significantly for people entering it in subsequent years.
And Hood’s figures were based on those using wood pellets. Claimants using wood chip, which was far cheaper, were in some cases receiving more than £2 for every £1 of fuel before electricity and others costs were taken into consideration.
Hood said that it was quickly clear to him that abuse was possible on the simple basis that ‘you’d open the windows but don’t turn the heating off’. However, he said that his clients were reputable companies who would not do such a thing. There was, though, an underlying assumption that the scheme was wildly generous because that was how the government wanted it to be, the middle-aged businessman told the inquiry. ‘They’d set the tariff, they’d done their due diligence and who are we, as a mere company, to question the Government? They’d got it right, as far I was concerned.’ Hood expected the tariff to start off high to stimulate interest and then gradually be cut – perhaps to as little as 2p. In fact, the opposite happened. ‘The problem is they didn’t turn the tap off. They turned the bath tap on and left it running.’ But even at this point, the only way that the bath could overflow would be if no one ever came back to check on it. With hundreds of millions of pounds of taxpayers’ money being committed for two decades into the future, it was reasonable to assume that the scheme was not being left unattended.
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The widespread concern that RHI was too good to be true meant that just two months into the scheme Foster decided to write to Northern Ireland’s main banks. In what was a personal, cast-iron guarantee to stand over the scheme, which Foster would later abandon, she urged them to look favourably on those wanting to borrow in order to buy equipment to get on to RHI. The two-page letter could have hardly been more reassuring. In language of sparkling certitude, it set out a commitment which must have brought smiles to the faces of the bank executives who could now lend – and profit – because of RHI. The letter, which was drafted by Hepper, said that the unalterable level of payments over 20 years provided ‘certainty for investors by setting a guaranteed support level for projects for their lifetime in a scheme, regardless of future reviews’.
Then, in a key section, which provided a seemingly unbreakable promise that subsidy rates would be locked in for 20 years, Foster said: ‘Tariffs are “grandfathered” providing certainty for investors by setting a guaranteed support level for projects for their lifetime in a scheme, regardless of future reviews.’ Foster said that her department believed that RHI was ‘a real opportunity’ for investors and concluded: ‘I am therefore writing to encourage you to look favourably on approaches from businesses that are seeking finance to install renewable technologies. The government support on offer through the incentive schemes is reliable, long-term and offers a good return on investment.’
The letters had actually been conceived some four months earlier at a meeting of a cross-departmental group promoting sustainable energy, which Foster chaired. At a meeting in September 2012, Foster’s spad, Andrew Crawford, had raised a query about how RHI would interact with a different biomass subsidy aimed at farmers. In response, a civil servant said that there were problems persuading banks to lend for renewable energy equipment. The minutes of the meeting show that Foster then ‘advised that she would write to the main banks to explain how the incentive mechanisms operate’. For four years, copies of her letter lay largely unknown in filing cabinets at DETI and in the plush offices of bank chief executives in Belfast. Then, at the height of the RHI scandal in December 2016, the letter suddenly re-emerged – and in a way which caused backbiting among senior DUP figures.
The Sunday World newspaper had reported on the existence of the letter after seeing reference to it in emails from a DETI official. But DETI refused to release the letter itself, so the contents were unclear. At the time, Foster was seeking to distance herself from the scandal and was heaping blame on both her civil servants and her successor as minister, Jonathan Bell. Belfast News Letter reporter Adam Kula asked the DUP for a copy of the letter and was surprised when within a few hours it was emailed to him by DUP Press Officer Clive McFarland. McFarland, a former DUP councillor from Omagh, was respected by the media for his honesty and lack of guile. One veteran Belfast journalist described him as ‘a proper human being’ whose conduct was in contrast to that of some other party figures who were regarded as slippery. But McFarland’s actions that night did not impress some of the DUP top brass.
The story of how Foster had personally given the banks a cast-iron guarantee about the generous RHI funding was published online that night and immediately picked up by other media outlets.
That evening John Robinson, the DUP spad to Simon Hamilton – the minister who had succeeded Jonathan Bell – sent a text message to fellow DUP spad Richard Bullick: ‘Did you know that Clive sent all the bank letters to Sam McBride [sic] earlier? All over Twitter. Unbelievable.’ Bullick replied that the key issue for the DUP had been to highlight one line from the letter – that the rate of return which Foster quoted was the relatively modest 12%. That, Bullick argued, showed that Foster had been unaware of how wildly over-generous the scheme had been, and that it was ‘not a licence to print money’. Robinson replied: ‘Exactly but just bucked out without any briefing. Mad.’ Hamilton then texted to say: ‘Just seeing this all now. What on earth did he do that for?’ Robinson responded: ‘Never mind that, he assumed every letter was the same and hadn’t read them all to see if there was anything nasty in any of them. Must have been on the drink.’
As DUP director of communications – the party’s chief spin doctor – before becoming a spad, Robinson had for years been McFarland’s boss and within months would be back in the role. The exchanges – only brought to light by the public inquiry’s sweeping powers of compulsion which gathered up DUP text messages – were an example of the tensions at the top of an outwardly united party and evidence of how decisions made in 2012 would come back to haunt the DUP.
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Just two months into the scheme, a letter landed on the desk of Stormont’s SDLP Environment Minister, Alex Attwood. The correspondence, from a firm called Renewable Energy Manufacturing (REM) Ltd, set out how it had a technology which turned poultry manure into fuel. That would have caused ears to prick up in Stormont for multiple reasons. Northern Ireland’s biggest employer was the poultry-processing giant Moy Park. Stormont policy was to facilitate its expansion but this intensive agriculture created huge quantities of nitrate-rich manure which was difficult to dispose of without damaging the environment.
The firm set out how ‘the current Northern Ireland RHI tariffs act as a deterrent for farmers to employ our Poultry Manure to Energy [product]’. The letter argued that Northern Ireland’s RHI meant that a farmer who installed two 99 kW biomass boilers would receive nearly four times more in incentives than a farmer who installed one 200 kW heat from poultry waste system – even though both systems produced almost identical