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RHI cost-cutting plans to cost £2.5m

DUP economy minister Simon Hamilton at Stormont. Picture by Mal McCann
DUP economy minister Simon Hamilton at Stormont. Picture by Mal McCann DUP economy minister Simon Hamilton at Stormont. Picture by Mal McCann

STORMONT is set to spend £2.5m on plans aimed at cutting the cost of the botched Renewable Heat Incentive (RHI) scheme.

MLAs on Monday approved an RHI cost-cutting plan put forward by DUP economy minster Simon Hamilton.

The measures amend legislation to move claimants receiving the costly uncapped subsidy to a tiered one, which reduces payments after a certain number of usage hours.

A public consultation will then be carried out to decide on a longer-term solution to curb the projected £490m overspend.

But there are concerns the move could face legal challenges from claimants who signed up to the original, more generous scheme.

Speaking in the assembly, Mr Hamilton said his plans will cost between £2m and £2.5m.

But he stressed that it was significantly less than the estimated £30m cost to the annual Northern Ireland budget if no action is taken.

"This is a two-stage approach, and it is deliberately that for good reason. First, we need to stop the losses to the public purse, hence the time-limited solution before us," he said.

"Secondly, it creates the time and space to work on and agree a suitable long-term solution to the problems with RHI. That will be done initially by a consultation to commence very soon."

Changes to the tariff structure for RHI payments were made towards the end of 2015, but by that stage many applicants had already availed of the uncapped scheme.

Mr Hamilton said a consultation "improves the legal robustness" of any long-term actions.

However, Green Party MLAs have argued against the plan as they fear it could cost taxpayers more money due to legal challenges.

North Down MLA Steven Agnew suggested a windfall tax solution – a tax on companies to reclaim the benefits of an unexpected windfall.

He branded Mr Hamilton's amendment proposals as "blatant electioneering" and an "attempt to save face ahead of the imminent assembly election".

"A windfall tax returns the RHI scheme to what was intended originally – an incentive to move toward renewable energy," he said.

"Similar taxes have been implemented successfully elsewhere, including in the UK and a number of EU countries."