Officials in the Northern Ireland Civil Service lacked the resources and competence to run a scheme as “novel and complicated” as the Renewable Heat Incentive, the inquiry into the scandal has concluded.
The report into the initiative, which was set up in 2012 to increase uptake of renewable heat energy but which went on to rack up a £490m subsidy bill, says Northern Ireland’s Department of Enterprise, Trade and Investment should never have embarked on the scheme.
According to the 656-page report, officials in the department – which later became the Department for the Economy – failed to properly understand the perverse incentive in the scheme that led to the subsidy bill and did not include budget controls that were in the Great Britain version of the scheme.
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The inquiry into the scheme, the fallout from which led to the collapse in power-sharing at Stormont in 2017 and was chaired by Sir Patrick Coghlin, also found that a NICS policy of “deploying generalist civil servants” who did not have core energy-sector knowledge exacerbated the problems with the scheme.
The report said that while DETI minister at the time Arlene Foster – who is now DUP leader and Northern Ireland's first minister – had been incorrectly briefed on the NI RHI scheme and had been presented with documents that missed out crucial cost information, so she should not have signed off on the NI RHI in such circumstances.
Damningly, the report notes that many of the design flaws with the NI RHI were “quickly identified” by other parts of the public sector and the private sector – but DETI officials were “not encouraged” to have a questioning attitude when concerns were aired.
It noted: “Whilst one junior official with detailed working knowledge of the scheme, and who was starting to have concerns about it by May 2014, made a commendable effort to pass on key knowledge in a handover document, his effort had insufficient impact and certainly never reached anyone senior at the appropriate time”.
Among the report's 44 recommendations is the need for a “fundamental shift” in NICS’s approach to recruitment and selection for government jobs that “must involve an up-front assessment of the skills that are required to fulfil the specific role in question, rather than matching a person to a role according to an individual’s grade and level of pay”.
Another warns: “If there is insufficient resource to implement adequate project management then projects should not proceed.”
A further telling recommendation states: “Civil servants who are responsible for holding and monitoring a budget should have to demonstrate core requirements in financial literacy and an understanding of how public spending operates.”
They inquiry panel noted that while work had already progressed in relation to some of its recommendations, the panel would “counsel against any tendency to conclude that some of the necessary changes have already been fully achieved”.
'Accepted part in failure'
In a detailed response to the report, economy minister Diane Dodds, whose department is the successor to the Department of Enterprise, Trade and Investment, thanked Coghlin and his team for their work in producing “a thorough and comprehensive”
She added: “It is very important that we acknowledge the findings in the report, and having learned the lessons from RHI, now move forward. Today must be about ending the disruption of the past so we are better equipped to face the challenges which lie ahead.”
The department had “long accepted its part in this failure”, she said. “Over three years ago, it began the task of fixing what was clearly broken. It set up the RHI Taskforce which has worked diligently to bring the scheme back into line – with policy, with budget and with proper governance.
“The long-term future of the scheme is currently being considered and our focus remains firmly on delivering an effective and sustainable energy strategy. Also, we can never lose sight of the fact that we must be fair to those who joined the scheme in good faith while, at the same time, remaining fair to the taxpayer.”
The report also identified significant gaps in the department’s corporate governance and assurance system that left the scheme open to abuse, Dodds said, but “I am reassured that these gaps have been addressed”.
Leadership, direction and experience at senior levels across the department have been significantly strengthened, with recruitment of industry and commercial expertise as well as corporate governance and business management expertise, she said,
“More specifically, a dedicated directorate – tasked with maintaining high standards in corporate governance – has been created. It now plays an essential policing role in how the department enters into and manages commercial relationships – including grant schemes – and in overseeing how it administers projects and programmes.”
Reforms also include a stronger system of internal control and assurance, and improved processes around business planning and performance measurement and reporting. There has also been a reorganised management structure to better align with its policy focus, and a new energy group formed in the department.
“These improvements reflect my commitment to high standards of transparency and accountability. We want to secure and maintain public confidence. And to do this, we will be better,” Dodds added.
“The report, while detailing the significant failures of the past, also provides recommendations to help us move forward. I remain committed to do what I can to ensure those lessons are learned. We will now consider the report in full.”
'Onus to turn the recommendations into action'
Finance minister Conor Murphy, whose department commissioned the report, said the report was “exceptionally detailed”, with 319 findings and 44 recommendations for change.
“My role as sponsor for the Inquiry is to consider the findings and what actions need to be taken. As the report acknowledges, implementing the recommendations will require sustained, system wide change over a period of time,” he said,
“All ministers will have a contribution to the response which we will discuss at Monday’s executive.”
He highlighted reforms including a new ministerial code of conduct alongside civil service reform.
“The inquiry team has completed their programme of work. The onus is now on us to turn the recommendations into real action and reform. We need effective governance and to manage public money in the public interest. This must never happen again.”
Report makes “uncomfortable reading”
Dave Penman, general secretary of the FDA union, said the inquiry report would make “uncomfortable reading” for senior officials in Northern Ireland, as well as ministers and special advisers.
“As the report makes clear, there was an ambition in the civil service to be seen as supporting the new government structures and a ‘culture of delivery’ emerged, which did not encourage questioning when problems arose,” he said.
“Understanding how problems arose, and recommending remedies for the future, inevitably leads to a question of accountability. Civil servants, like all public officials, expect to be held accountable for their actions. As the report makes clear, much of that accountability is shared across civil servants, ministers, special advisers and, indeed, the Assembly.”
Penman said the FDA welcomed the inquiry’s proposal for an independent panel, separate from the inquiry and NICS, which would assess the report and consider whether individual civil servants should be subject to disciplinary action.
“This panel will have the opportunity to consider the full report and context in which civil servants were operating,” he said.
“Our hope is that ministers and the political parties similarly consider how they will assess the accountability of individuals for their role in the scheme and make those considerations public.”