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What is Cash for Ash scandal?

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What is the Renewable Heat Incentive (RHI)?

Set up in November 2012, the Renewable Heat Incentive scheme was an attempt by the Northern Ireland Executive to help to increase consumption of heat from renewable sources.

It was run by then Department of Enterprise, Trade and Investment (DETI). Its functions, and therefore the responsibility for the RHI, are now under the remit of the Department for the Economy and its minister, the DUP’s Simon Hamilton.

The DETI minister at the time was the now First Minister, Arlene Foster.

Why was it introduced?

Northern Ireland Executive ministers wanted 4% of heat to come from renewables by 2015, with a further target of 10% by 2020.

How was it meant to work?

The RHI offered a financial incentive for businesses and other non-domestic users to install renewable heat systems on their premises.

Those systems included biomass boilers, mostly burning wood pellets, as well as solar thermal and heat pumps.

What was the uptake like?

The scheme was budgeted £25m for the period 2011-15.

In the 2014-15, the department actually underspent by £15m due to a lack of uptake. However, applications for the initiative increased “significantly” in April 2015.

Some 984 applications were received in just three months – September, October and November 2015 – after officials announced plans to cut the subsidy but before the change took effect.

This spike added significantly to the overall cost.

When was the scheme closed?

In February 2016, both domestic and non-domestic initiatives were formally closed by then minister Jonathan Bell, “in view of the significant financial risk to the Northern Ireland block grant for the next 20 years”.

Stormont officials had told the enterprise committee that £30m would have to come out of the block grant in 2016/7 to pay for the continuing implementation of the scheme.

It was therefore closed to new applications.

How was the scandal exposed?

An investigation into the scheme got under way in February 2016.

It was prompted by the spike in applications and because a whistleblower contacted the Northern Ireland Executive in January alleging that the scheme was being abused.

How was the scheme exploited?

One of the claims made by the whistleblower was that a farmer was aiming to collect about £1m over 20 years for heating an empty shed.

The whistleblower also claimed large factories that had previously not been heated were using the scheme to install boilers with the intention of running them throughout the year to collect about £1.5m over 20 years.

Northern Ireland’s auditor general, Kieran Donnelly, said in July 2016 that there was “no upper limit on the amount of energy that would be paid for”.

“The more heat that is generated, the more is paid,” he said.

In one example cited by a report from the Northern Ireland audit office, a business taking part in the same scheme in Great Britain could collect about £192,000 over 20 years by using a boiler all year round, but a Northern Ireland firm doing the same could earn £860,000.

Mr Donnelly said the scheme had “serious systematic failings from the start”.

How does the scheme differ in NI from its equivalent in Great Britain?

The RHI schemes in NI and GB are similar but there are important differences.

Here, a generous subsidy was paid at a flat rate guaranteed for 20 years.

In Great Britain, there was a tiered rate with the upper amount paid for a percentage of the heat generated and a much lower rate for the rest.

In addition Great Britain had “degression”, a price-control measure which allowed for the reduction of the subsidy rate in response to demand and to close the scheme quickly.

That is how the costs in Northern Ireland spiralled in a way they have not in Great Britain.

Why was there no limit applied?

That is the key question at the root of the controversy and what investigations into the scandal will undoubtedly focus on.

What are the figures involved?

1,946 applications were approved under the non-domestic RHI scheme – a 98% approval rate.

The assembly’s Public Accounts Committee was told that a subsequent independent audit had found issues at half of the 300 installations inspected.

14 of those fell into the most serious category where fraud was suspected and payments to five of these have been suspended.

Why is it still costing money?

The scheme was closed to new applications but still continues to make payments to successful applicants.

As a result, more than £1bn of public money is due to be paid out over 20 years.

About £600m of this is money coming from the Treasury, but a £400m shortfall over the 20 year term will have to be paid out of Northern Ireland’s block grant.

What happens next?

The economy minister Simon Hamilton said he and the first minister Arlene Foster are working on a plan that will reduce the cost to Northern Ireland taxpayers.

“This issue is the number one priority for my department and I hope to bring forward the details of that plan early in the New Year,” he said.

Officials from the Northern Ireland Executive will inspect all non-domestic claimants of the scheme and will write to them to seek permission for their names to be made public in a bid to restore public confidence.

Under the regulations governing the scheme, officials can revoke applicants’ certification to participate in the scheme.

However, Mrs Foster told the BBC she wants to see the publication of a full list of names of those availing of the scheme.

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