Money spent by High Speed 2 Ltd on unauthorised redundancy payments has been dubbed a “shocking waste of taxpayers’ money” by the Public Accounts Committee in a new report published today.
In total £2.76M of redundancy payments were made to 94 individuals from 2016 to 2017 when the company decided to relocate offices from London to Birmingham, £1.76M more than the statutory minimum authorised by the Department for Transport (DfT).
According to the report, DfT then-director general for HS2 David Prout, told HS2 ex-chief executive Simon Kirby in April 2016 it was only allowed to offer statutory redundancy terms, but HS2 Ltd still offered staff enhanced redundancy terms.
The report said weak internal processes at HS2 Ltd had prevented key decision-making and scrutiny bodies from receiving accurate information, allowing the payments to be made.
In addition, the PAC report alleged HS2 Ltd lacked basic financial controls in other important areas, heightening the risk of fraud and financial errors such as duplicate payments. The situation was exacerbated by an excessively high rate of staff turnover, it said.
It concluded by saying it remained concerned that the relationship between the DfT and HS2 Ltd was not robust enough to prevent this, and that Kirby had not been held to account for his actions.
“Both the Department and HS2 Ltd need to address these issues as a matter of urgency to ensure that this flagship infrastructure project is delivered successfully and that the company meets the high standards expected of it,” it said.
In November, in response to the issue being raised by the National Audit Office, HS2 Ltd hired Crossrail’s finance and analysis director Elizabeth Gillbe as its new finance director after it was announced the then chief financial officer Steve Allen was leaving the organisation.
An HS2 spokesperson said in response: “As our new CEO Mark Thurston said when he appeared at the Public Accounts Committee earlier this autumn, HS2 takes its responsibility for spending taxpayers’ money extremely seriously so when we get things wrong we will hold our hands up. The NAO report is clear that we did not have the approvals we needed to proceed with these redundancy payments and, therefore, that was a serious error. We are now implementing all of the NAO’s recommendations in full and Mark and the HS2 Executive team will ensure this doesn’t happen again.
“HS2 is on track and has achieved a lot in its short lifespan. It has been able to do so because of our ability to have the right people in the right jobs at the right time. But while that was the reason for these payments it is clear that we got the process wrong and we are now putting the right systems in place to make sure that does not happen again.
“We thank the Committee for its work and the opportunity to give evidence to its members. We welcome this report and will review its recommendations.”