Good morning.
We're live with the Renewable Heat Incentive Inquiry from 9.45am.
Senior civil servant Andrew McCormick is giving evidence for a second day after his written submission revealed "dysfunctional" relationships within the DUP contributed to RHI failures.
Dr McCormick's oral evidence yesterday revealed widespread failures how his department handled the scheme. "The baton was dropped," he said.
He was permanent secretary at the Department for the Economy, formerly Deti, which set up the botched scheme.
He was appointed in July 2014 after the scheme was set up.
For anyone unfamiliar with the RHI scandal, here's a quick reminder.
The botched scheme, which was designed to encourage people to use more eco-friendly technology, effectively paid users for burning fuel.
RHI is expected to cost taxpayers around £490 million.
Hearing begins
9.45am
- Dr McCormick is explaining the lack of staff in the energy division contributed to issues with RHI
- He said concerns were raised with him over staffing levels in the autumn of 2014
- John Mills, who was responsible for the RHI scheme from January 2014 through a key period when flaws began to emerge, has previously described how running the energy team was an "extremely heavily loaded" post - an assertion Dr McCormick agreed with
- Dr McCormick said Mr Mills told him in February 2016 that RHI was a "good scheme". "By that stage he knew how bad it was," he said. He added: "I'm trying to be very fair to him... I remain an admirer of what John does"
- He said he could imagine a "parallel universe" where the north had a similar scheme to RHI in Britain. "Better resourcing would have reduced the risk...what we should have done was... ask are we capable of taking this on?" He said the question should have been asked in 2011
- Panel member Dr Keith MacLean pointed out that the Scottish government decided that a separate RHI scheme was a "step too far for them" and they fell into the wider British scheme
10.30am
- Dr McCormick said when issues about the scheme came to light in 2015, they should have been addressed
- He said he often tells senior management: "If you can't manage a risk, you need to escalate it..."
- Chair Sir Patrick Coghlin said "no one looked" at the RHI 'at-risk register' which reflected possible risks including incorrect subsidy levels
- "By the time I became aware (of problems with RHI)...they were no longer risks, they were actualities," Dr McCormick said
11am
- When asked why whistleblower Janette O'Hagan's concerns that the scheme was open to abuse were not acted on, he said "I can't see any defensible explanation... It's glaringly obvious it should have been acted on. It only took her five minutes to understand why it was happening"
- He said she had exposed a "fundamental error" that the scheme tariffs were wrong
- He said he promotes collaboration between different parts of the civil service but said it needs "better commercial skills" including "if I were to try and rip the (RHI) scheme off, how would I do it?"
- Dr McCormick said leaders need to tell staff "it's alright to raise a problem"
11.45am
- Following a short break, the inquiry hears issues about the scheme became obvious in March 2015
- "The first reaction was 'that's not a problem', that's one of the major flaws," Dr McCormick said. He added that a scheme which looked to exceed its budget should have been drawn to the attention of more senior staff
- Between March and May 2015, the scheme was not escalated
- He said the department's finance director should have been made aware of the issues first
- Inquiry senior counsel David Scoffield said a key email on March 25 2015 showed that Deti was to exceed its 2015/16 budget due to a high uptake for the RHI scheme
- The department's finance division was made aware of the problem. Dr McCormick said he "didn't know why" finance did not come back with a quicker reply and why the energy division did not push for an answer to the issue. "Just waiting isn't enough," he said
- "Part of the email culture is to say 'I've sent the email so I'm safe'," he said. "I've done it myself"
Midday
- The inquiry hears that issues with the scheme were highlighted by civil servant Alison Clydesdale 18 months before it opened for applications
- She highlighted the need for cost controls in May 2011
- Dr McCormick said once it became clear to the finance division that the scheme couldn't just stop spending because it had a legal obligation to pay customers more questions should have been asked
- "The fundamental answers were pretty clear," he said
12.30pm
- Issues with RHI were only drawn to Dr McCormick's attention in late May 2015
- He said he had received assurances that the RHI risk "was low" and that it was presented to him as a successful scheme which just needed more cash
- "This was John (Mills) looking for help... in getting access to more money... That theme continues for a long time"
- "What I assumed... was that it was still a fundamentally sound scheme," he said
- A key email from Treasury official Jon Parker, sent in April 2011, made clear that the Treasury was not paying for any RHI overspend in Britain, instead the Department of Energy & Climate Change (DECC), would cover it. He said the same rules would be applied to Northern Ireland and in the case of an overspend there would be a 5% penalty. Dr McCormick said he wasn't made aware of that email until February 2016
- He said a fundamental point is that public servants have to work within a set expenditure
- He said advice given to the Deti minister in July 2015 about a potential overspend was "misleading" and did not make clear the north's Executive would have to cover it
- "There was a working assumption that this was a good scheme," he said. He added: "It was too superficial an assumption... that's part of the whole concern about the whole thing"
1pm
- At a meeting with his counterpart in DECC in late May 2015, Dr McCormick made clear that spending on the scheme had doubled. He said the discussion was "very brief" and "I don't think it helped that much"
- He said it was "futile" to try and get more money from DECC
Hearing resumes
2.10pm
- After a break for lunch, the inquiry hearing has resumed
- At a senior management meeting on May 29 2015, Dr McCormick said there was a row between Mr Mills and Deti finance director Trevor Cooper over additional money for RHI and/or clarification of the budget. "It was getting a bit destructive," he said
- He said at the time, around June 2015, tension between Deti's finance and energy sections was "high" amid warnings the scheme might have to close
- Asked by Mr Scoffield about a civil service culture of not being seen to criticise colleagues, he said: "I'd rather have a row and clarity than politeness and folly"
- RHI was supposed to cost around £12.8 million a year, he said
- He said there "wasn't a good answer" why the scheme wasn't reviewed on March 2015 when re-approval was supposed to have been sought
- He said the "primary responsibility" for departmental schemes is with the particular division but "secondary responsibility" should be with the finance section of each department
- Mr Scoffield asked Dr McCormick why, by June 2015, he did not realise how different the scheme was to a similar one in Britain, despite his meeting with DECC the month before. "It didn't register how radically novel it was," he said. His written statement has already said that by the same month, fears that clients could effectively earn money for burning fuel had not been "communicated clearly to energy division or escalated to me"
- He expressed his frustration that the scheme's problems were not clearly communicated early enough. "We seem to have got so close asking the right questions," he said
- Dr McCormick said he cannot see "any valid reason" why concerns that customers could be over-compensated were "not pursued" in 2015
- Jonathan Bell's written statements to the inquiry have been published. Mr Bell is due to give evidence tomorrow and Friday
Here's a link to the three documents:
- The hearing has finished for today but resumes tomorrow. Join us from 9.45am for live coverage as Jonathan Bell gives evidence
