RHI scandal: Foster told banks scheme was ‘real opportunity for investors’

First Minister, Arlene Foster.
First Minister, Arlene Foster.
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Details of a letter sent by Arlene Foster to the North’s most senior bankers in the early days of the catastrophic Renewable Heat Incentive (RHI) scheme show she promoted it as a “real opportunity for consumers and investors”.

The scheme – which now looks set to carve a nine-figure hole into the North’s public finances due to the cack-handed way it was set up – had only been running for a matter of months when Mrs. Foster wrote the letters, asking bankers to “look favourably” on businesses who wanted to borrow money for installing RHI systems.

TUV leader Jim Allister said the letters indicate “a far greater ministerial attachment” to the RHI than had been acknowledged before.

He also said that, since they contain assurances that the government was guaranteeing the scheme, they might make it harder to find a way of cutting down on the ultimate cost which the scheme will spell for the North’s taxpayers.

In an edition of the Sunday World on Saturday, the paper reported that such letters were known to exist, but not what their exact contents were.

The DUP has now revealed the letters in full.

They were sent to directors of Ulster Bank, Danske Bank, the Bank of Ireland, First Trust, HSBC, Barclays and Santander.

They are dated January 7, 2013, and signed by Mrs. Foster as the then-minister for the Department for Enterprise Trade and Investment (DETI).

The RHI scheme had been set up for business and farm applicants the previous November.

She described the need to increase renewable energy use as being “imperative”.

She said the tariffs (subsidy rates paid under the scheme) provided “certainty for investors by setting a guaranteed support level for projects for their lifetime in a scheme, regardless of future reviews” – although she added they would increase with inflation for both new and existing installers.

It went on to say that “DETI believes that the RHI is a real opportunity for consumers and investors to install new renewable heating systems and enjoy lower energy costs and ongoing incentive payments”.

It said the uptake of the scheme was dependent in many cases on people obtaining loans, adding: “I am therefore writing to encourage you to look favourably on approaches from businesses that are seeking finance to install renewable technologies.

“The government support, on offer throughout the incentive schemes, is reliable, long term and offers a good return on investment.”

Mr Allister said the letters pointed to “a far greater ministerial attachment to this scheme than hitherto has been admitted”.

He added: “Moreover, if those letters stressed the long-term security of the tariffs, then, it further underscores ministerial knowledge and satisfaction with that situation – to the detriment of the taxpayer.

“It would also now make it more difficult for the Executive to retreat from the contractual commitments made. With each new revelation the need for a full judicial inquiry becomes more imperative.”

As previously reported, the scheme was set up in such a way that the tariff paid out per kilowatt of heat generated was worth more than the cost of the fuel being burned – so users made a profit based on how much fuel they incinerated.

Unlike the rest of the UK, there was also no limit on how long people could run boilers for.

The subsidies would run for 20 years.

In the end, the costs spiralled out of control, and estimates for how much the North may need to find to plug the gap have ranged from about £400m to £600m.

Mrs Foster has previously said: “I left the department in May of 2015. No problems were highlighted to me, my officials, there was no recommendation in relation to doing anything differently.”

The party said yesterday: “The then DETI minister Arlene Foster wrote to financial institutions in January 2013 following the launch of Renewable Heat Incentive in November 2012.

“The correspondence was aimed at informing the main institutions of both renewable heat and other renewable electricity incentives.”