UK Taxpayers Face £1 Billion Bill Over Green Subsidy Scandal

  • Date: 03/01/17
  • Sean O’Neill and Sean O’Driscoll, The Times

A botched green energy scheme that has ignited a political crisis is on course to cost taxpayers more than £1 billion.

The Treasury faces the bill after a massive overspend on subsidies encouraging farmers and businesses in Northern Ireland to run eco-friendly power schemes. The Renewable Heat Incentive (RHI) was supposed to cost £25 million in its first five years but the bill is likely to reach £1.15 billion over 20 years.

The Treasury can claw back £490 million from the block grant to Northern Ireland, leaving £660 million to be financed by taxpayers in England, Scotland and Wales. The scandal threatens the future of Northern Ireland’s first minister Arlene Foster, leader of the Democratic Unionist Party (DUP). She was the minister responsible when the scheme was set up in 2012. It was intended to boost renewable energy, but critics say Mrs Foster and her officials did not cap costs.

Businesses that signed up could receive £160 from the government for every £100 they spent on fuels, such as wood pellets, burnt in biomass boilers. As people spotted the gains to be made, there was a surge in applications and costs spiralled.

Flaws in the scheme were exposed by a whistleblower who said businesses were buying biomass boilers solely to collect the subsidy. The whistleblower alleged that one farmer expected to make £1 million over 20 years for using a biomass boiler to heat an empty shed, while heating a number of empty factories would net their owner £1.5 million.

Northern Ireland’s auditor-general, Kieran Donnelly, says the RHI had “serious systemic weaknesses from the start” because it did not have the built-in spending controls imposed on a similar scheme in Great Britain. He added that the scheme was vulnerable to abuse and possible fraud.

Mr Donnelly’s report calculated that a business in England could receive RHI subsidies of £192,000 over 20 years if it ran a boiler all year round while one in Northern Ireland might collect £860,000.

Mrs Foster survived a no-confidence vote in the Stormont assembly last month. But leaked letters have emerged showing that she encouraged senior bankers to view the RHI as “a real opportunity for consumers and investors” and urged the banks to “look favourably” on loan applications.

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