Latest Rail News

25.10.17

HS2 loses another executive as CFO resigns over redundancy payments

HS2 Ltd has announced that another one of its bosses will leave the company at the end of the financial year.

Chief financial officer, Steve Allen, will leave HS2 following irregularities in the project’s redundancy payments that were revealed in July.

A report by the NAO showed that HS2’s redundancy payments had exceeded the rates set by DfT by a huge £1.76m.

Redundancy compensation was set at one month’s salary per year of service, which whilst broadly in line with the Civil Service Compensation Scheme, these terms had been superseded in November 2016 before any redundancies were finalised, and were well in excess of the authorised statutory level.

In addition, enhancements in the voluntary element of the scheme meant that individuals could receive lump packages of over £95,000.

Commenting on the findings of the NAO report, Steve Allen said: “The weaknesses highlighted by the NAO report resulted in both the HS2 Executive and Board being misinformed about the status of critical approvals for redundancies.

“Those assurances were given by teams for which I was responsible and, obviously, I regret that.”

Explaining the decision for his exit, he added: “So, whilst we are now putting in place the measures to strengthen financial governance systems and to provide robust financial stewardship for the company, I believe it will be appropriate for me to move on.”

The chief executive of HS2 Ltd, Mark Thurston, explained some of the issues faced by the organisation when he joined earlier this year, which included redundancies agreed by the company.

He thanked Allen for his work in rectifying the errors made, but described his decision to move on as “honourable.”

He also added that Allen’s departure will allow him to: “build the executive team for the next phase of the project.”

Allen is the latest in a line of executives to have left the company over the past 12 months. In August Alison Munro announced her retirement from her role as HS2 phase 2 managing director, and in September RTM reported that Paul Griffiths had been appointed as her successor.

Beth West announced that she would be leaving her role as the organisation’s commercial director back in June, to join land developer, Landsec.

And at the end of last year, former chief executive, Simon Kirby, stood down shortly after an NAO report warned that the project risked missing its target of delivering phase 1 by 2026 - a decision that sceptics, such as Joe Rukin, campaign manager at Stop HS2, have criticised, .

Both Thurston and Allen are required to give evidence at the House of Commons Public Accounts Committee regarding the redundancy payments on 30 October.

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Comments

Stratfan   25/10/2017 at 14:12

Why didn’t the initial appointments make it clear that the posts would eventually be relocated to Birmingham? Why werent he and others sacked for acting contrary to instructions? If they can’t be trusted to act professionally why are we allowing them to spend at least 56 billion. Pounds of our money?

Ian Watkins   25/10/2017 at 20:50

Gravy Train and OPM are two phrases that spring to mind.

PAC   25/10/2017 at 22:30

Seems like misconduct in a public office, it should surely be a police matter with the money involved.

Stratfan   27/10/2017 at 07:49

Why did hs2 want to enhance the payments anyway?

Fenlandpaul   27/10/2017 at 09:54

The sense of outrage over this story is utterly ridiculous. Anyone who has worked in businesses going through restructures or plant closures knows that if you don't provide an incentive for people to stay on and work well right up to the end, the project will fail. In almost all instances, the most effective incentive is money. The redundancy packages that Grayling and co think should have been offered are a compensation, not an incentive. If these guys had only been offered the statutory redundancy rates then they would have been all out for themselves, understandably, and many would have jumped ship to another job before the project was completed. That would have been disastrous for the relocation project and ultimately for HS2, costing a lot more to unpick and sort out than the sums that have actually been paid. Put yourself in the redundant employees' shoes - if you felt like you were genuinely being treated fairly, and had enough to keep your family housed, fed and watered for a decent period afterwards while you found a new job - you'd be a lot more likely to do everything in your power to keep the project on track and do a good job. If you were getting the bare minimum, you'd probably give bare minimum effort, zero ownership and the project would fall apart. Excitable politicians and journos need to stop turning this into something it isn't. Get in the real world.

Stratfan   27/10/2017 at 12:11

Except; Project nowhere near finished Many were given ‘garden leave’ No evidence payments linked to staying to a particular date I bitterly resent my tax being redistributed to well paid people

John Grant   27/10/2017 at 16:27

@Fenlandpaul: redundancies are usually a result of things that weren't foreseen when the people were hired, e.g. market shrinking or losing share; HS2 ought to have been able to plan ahead and if necessary hire people on fixed-term contracts (which might well include incentives to actually finish the job).

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