HS2 says it made a 'serious error' over unapproved redundancy payouts after spending watchdog criticises £1.76m scheme

Rebecca Smith
How HS2 should look at Euston once complete
How HS2 should look at Euston once complete (Source: HS2)

The head of HS2 said today the state-funded high speed rail group made “a serious error” proceeding with unapproved redundancy payments, after the National Audit Office published a critical report into the payouts.

The NAO said an unapproved £1.76m redundancy scheme at HS2 went ahead after being forbidden by the Department for Transport, and it had qualified the HS2 accounts "owing to its running a redundancy scheme at enhanced terms without the necessary approvals".

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Simon Kirby, now chief operating officer at Rolls-Royce, was at the helm when a publicly funded redundancy regime was proposed, with HS2 making commitments of £2.76m. The NAO estimated that £1.76m was not authorised as it related to "unapproved enhancements".

Head of the NAO, Sir Amyas Morse, said in the report: "The company's actual scheme terms remained unapproved and were further enhanced beyond civil service rates."

Today, HS2’s chairman Sir David Higgins said:

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 our new chief executive, Mark Thurston, will ensure this doesn’t happen again.

He added: "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.”

In March last year, HS2 sought approval for a relocation and redundancy scheme, as the group moved its headquarters to Birmingham in an effort to cut costs. The DfT gave written permission with a "clear restriction" that redundancy terms should be at statutory levels.

HS2 then requested a more generous scheme based on the civil service scheme, and was told explicitly that "no enhancements would be approved".

Morse said:

HS2 Ltd made commitments based on enhanced terms despite the absence of an approval to do so.

He added that a "robust control environment" within HS2 and regarding interactions between it and the DfT was essential to ensure delivery risks for the new rail line are "appropriately mitigated" and that taxpayers' money is protected.

John O'Connell, chief executive of the TaxPayers' Alliance, called the redundancy regime "an appalling abuse of taxpayers' money".

"Not only is it a slap in the face to all those who are having their lives blighted by this awful project, it is more evidence of the blasé way officials at HS2 treat taxpayers' money," O'Connell said. "Instead of this slow drip of damaging stories that continually prove just how bad this vanity project is, officials at the DfT would be better to just cancel the project altogether."

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