Email reveals Department for Transport forbidding extra HS2 redundancy payments warning of "enormous reputational damage"

Rebecca Smith
HS2 said it is putting the right systems in place to ensure the mistake is not repeated
HS2 said it is putting the right systems in place to ensure the mistake is not repeated (Source: HS2)

It has been revealed that the Department for Transport (DfT) wrote to the former boss of HS2 in April last year refusing an extra £1.76m in redundancy payouts at the rail group, saying the proposals could cause significant reputational damage.

The payments later went ahead unapproved and were revealed in a National Audit Office report in July this year, which found that HS2 was making payments of £2.76m. Of that, £1.76m had not been appropriately authorised.

In the email, seen by City A.M., the DfT's then director general for HS2, David Prout, warns the payout request could cause "enormous reputational damage" for HS2.

Last week, the Public Accounts Committee released a report branding the unauthorised payments a "shocking waste of taxpayers' money" through compulsory and voluntary redundancy schemes offered at enhanced terms of those authorised by the DfT.

MPs expressed concerns that the former chief executive of HS2, Simon Kirby, who received the email from the DfT, "has not been held to account for his actions", and criticised HS2 for weak internal processes within the organisation.

Read more: TaxPayers' Alliance urges Treasury review over £56bn HS2

Now it has been revealed that Prout wrote to Kirby last April over the proposed payouts, asking if Kirby could "nip something in the bud for me".

He said:

Your HR team is asking my sponsor team if it would be OK to offer civil service rather than statutory redundancy terms to staff who decide to leave the company rather than relocate to Birmingham.

This is an absolute RED LINE for us. Company employees are not civil servants. They have to take the rough with the smooth.

If this proposals surfaces in terms of a written proposition that gets anywhere near the top of the office here it will do enormous reputational damage to the company.

The email, first reported in the Guardian, comes after a PAC hearing in October discussed how Kirby, who is now chief operating officer at Rolls-Royce, had received the email from the DfT on redundancy payments, and that the email had not been forwarded onto colleagues.

After the email was sent, HS2's then human resources director Peter Gregory authorised the redundancy payments.

Kirby said in a statement after the PAC session: "I did not approve the payments at issue and deny any allegation of wrongdoing.

"While I do not recall whether I forwarded one specific email from David Prout to others within HS2, the issue of statutory severance was well known within HS2 and I recall regular contact between HS2 and DfT – at a number of levels – on this specific issue.”

HS2 has said the NAO report was clear the group "did not have the approvals we needed to proceed with these redundancy payments and, therefore, that was a serious error".

It said it is "implementing all of the NAO's recommendations in full", with current boss Mark Thurston and the HS2 executive team ensuring it does not happen again.

Read more: HS2 blasted for wasting taxpayers' money on unauthorised redundancy payouts

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