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.

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Lutz   20/07/2017 at 16:38

So, the unanswered question is; how is this money going to be recovered?

Graham Nalty   21/07/2017 at 20:35

There seems to be some serious flaws in the work ethic and culture of HS2 Ltd. Perhaps because it is because they seem to have almost unlimited power to build the line where they choose and to pay their staff 'above average' salaries on the basis that they want to attract the best talent. Certainly a high speed line project should not expect to be so heavily criticised on so many fronts. An examination of the choice or routes and station demonstrates that the HS2 senior management lacks the diversity in the many technical disciplines necessary to create value for money. In short the HS2 route has all the hallmarks of being planned solely by DfT officials and Network Rail engineers, with very little apparent from sales or commercial or urban planners. And convenience for passengers appears to be extremely low in HS2 priorities. On journey time savings, their claimed figures in some cases involving interchange, are more spin than accuracy. That does not earn respect from people who know railways as well as RTM readers. And their attempt at social engineering by insisting that all contractors have a diversity policy seems to me more like forcing their opinions on companies who want to earn business from HS2 than respect for their supply chain. I suppose some people might consider that a company with such a large available budget was engaging a form of bullying. HS2 sometimes seems more about being 'Politically Correct' than doing the 'right thing'.

John Grant   21/07/2017 at 21:45

How come they are making large numbers of people redundant? Must be a failure of planning -- maybe hiring as permanent people who should have been on short term contracts?

Jerry Alderson   24/07/2017 at 20:21

The RTM article is not at all clear but could it be that it was not the person who authorised the redundancy payment that was at fault but the person who offered a contract with a generous (above statutory) redundancy payment clause, which then had to be honoured?

Paul Bowers   25/07/2017 at 12:16

Pull the plug now! HS2 is a compete and utter waste of time and resource. Another grandiose scheme that will be paid for by all taxpayers for the benefit of an elite few. Put the money where it is actually needed and let's once again have an adequately funded Health Service and Police Force instead.

Paul   25/07/2017 at 15:03

This is time for the Mp's on the Transport select committee to start asking questions of the civil servants in charge of this major project. Are the civil service capable of monitoring these costs and have the balls to ask the awkward questions of the culprits and ask them to absorb the costly over spends i suppose the lawyers will go through the contracts and gain the loop holes. Well I hope the top lackies are sacked who have been instrumental in the drawing up of these contacts to be sacked but who knows what the DfT people do...

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