20.07.17
HS2 admits to ‘serious error’ in £1.76m redundancy payments overspend
HS2 has already exceeded rates set by the DfT for the costs of redundancy pay by £1.76m, a report on the company’s accounts by the NAO has today revealed.
Despite work not yet starting on the high-speed rail line, and assurances from directors at HS2 that it was sticking to time and budget, the report has showed that in some areas, financial aims were not being met.
It also follows transport secretary Chris Grayling stating in the Commons that it was “incredible, inconceivable and simply nonsense to suggest that HS2 will cost five times the amount HS1 cost per mile. We have experience of major projects in this country”.
The head of the NAO Sir Amyas Morse stated that poor “culture and behaviours” were observed at HS2, something that needed to change to protect taxpayers’ cash.
“During the year, HS2 Ltd spent outside the agreed framework, and did not comply with HM Treasury rules, by running a redundancy scheme at enhanced terms without the necessary approvals,” Sir Amyas said in his report.
“Relevant commitments of £2.76 m were, I estimate, £1.76m in excess of the amounts payable on the statutory rates authorised by the department.”
Sir Amyas went on to say that while the DfT had given the instruction that redundancy terms should be made at statutory levels, this was disregarded by the company.
In a statement, HS2 chairman David Higgins said that the organisation took full responsibility for the mistake, and accepted that they had made a “serious error”.
“HS2 takes its responsibility for spending taxpayers’ money extremely seriously so when we get things wrong we will hold our hands up,” Sir David stated. “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.”
He went on to add that the company was now implementing all of the NAO’s recommendations in full and that HS2’s new chief executive, Mark Thurston, will ensure that this doesn’t happen again.
“HS2 is on track and has achieved a lot in its short lifespan,” Sir David added. “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.”
A DfT spokesperson added that the department takes this matter “very seriously” and have “made clear to HS2 Ltd in the strongest terms that we expect it to always meet its obligations and responsibilities to the taxpayer”.
The news comes the same week that HS2 made a number of important announcements on its Phase 2 route, construction contracts and station designs.
Have you got a story to tell? Would you like to become an RTM columnist? If so, click here.