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25.06.18

HS2 reports ‘significant improvements’ since redundancy payout fiasco

Following widespread criticism of the company’s excessive redundancy payouts last year, HS2 has made “significant improvements” to its controls environment, including rolling out a new governance regime with clear accountabilities to ensure the fiasco doesn’t repeat itself.

Last year, HS2 owned up to a “serious error” which had resulted in a near-£2m overspend due to redundancy pay. The company was also blasted for weak internal processes preventing key decision-making bodies from receiving accurate information – issues which were further exacerbated by an “excessively high rate of staff turnover.”

MPs in the Public Accounts Committee even questioned whether further action should be taken against former chief executive Simon Kirby, who they argued had not been held to account for his actions.

In December, the DfT promised it would be carrying out re-induction of all staff, strengthening its controls, fully reviewing its governance structures, and ensuring effective corporate control oversight of HS2 Ltd.

In HS2’s fresh Corporate Plan for 2018-21, shared with RTM, the company confirmed that significant improvements had been made and that every member of staff had been re-inducted earlier this year “to underline the importance of observing these controls.” The re-induction programme, led by senior management, included training on the new governance regime to help embed the changes across the organisation and ensure all staff were up to speed.

“As a company we are conscious of the need to keep striving to earn that support each and every day, and when we do make mistakes, as we have in the past, we will not just correct them, but change to ensure they do not happen again,” wrote Mark Thurston, the current chief executive.

The company also promised it has “continued to improve our ways of working” with the HS2 board and the DfT. It is currently agreeing new communications protocols with the DfT to ensure it has a clear process in place when trying to seek any formal approvals.

“We learned some important lessons from the mistakes made in handling redundancy payments from the restructure and relocation, these were identified by the National Audit Office (NAO) and Government Internal Audit Agency (GIAA),” the document said. “The issues that the NAO and GIAA audits identified within our HR and Finance functions have been progressively addressed over the course of the year.

“We have strengthened our purchasing controls and oversight of expenditure ahead of the implementation of a new Enterprise Resource Planning system in 2018-19. Both the NAO and GIAA have provided positive feedback on the resolution of all the HR concerns they raised.

“This has led to a greater level of maturity of the company, and the processes and systems we have put in place will put us in good stead for the future.”

In terms of staff retention, HS2 said it has managed to decrease turnover to 13%, compared to 18% last year. It has also looked at the workforce split between its own employees and those of contractors, with 76% of staff now being directly hired by HS2.

“By improving our staff retention, reducing the number of contractors that we are reliant on, and improving our workforce diversity, we are improving the retention of knowledge and skills within the organisation, whilst reducing recruitment and contractor costs – helping us to deliver better value for money,” the corporate plan said.

“At HS2 Ltd we are committed to building on our experiences and, where we make mistakes, learn the lessons and make changes to the way we work.”

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