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Consider legal action over HS2 redundancies, MPs say

MPs have called for consideration of legal action over excessive HS2 redundancy payouts.

The Public Accounts Committee has criticised the £1.76m of unauthorised payments made during 2016-17 as a “shocking waste of taxpayers’ money.”

In the committee’s HS2 Annual Report and Accounts, it said that the unauthorised schemes were able to proceed due to weak internal processes at HS2 Ltd, which “prevented key decision-making and scrutiny bodies from receiving accurate information.”

It also claimed that HS2 Ltd lacks basic financial controls in other important areas, which it argued increases the risk of fraud and financial errors such as duplicate payments.

The committee said that these issues were then exacerbated by an “excessively high rate of staff turnover.”

In the report, MPs claimed that the then-CEO, Simon Kirkby, chose to run the redundancy scheme despite the then-director general, David Prout, telling him that the company could only offer statutory redundancy terms.

Under the terms of the redundancy scheme 94 individuals received payments totalling £2.76m, whereas under the statutory scheme for these payments would have totalled just £1m.

The committee said that it is concerned that HS2 appears to have a culture of “failing to provide full and accurate information to those responsible for holding it to account.”

The then-HR director, Peter Gregory, reportedly briefed the HS2 Board and the executive committee, telling them that the redundancy scheme had been approved by the department, which the committee argues was factually incorrect.

Additionally, an internal audit found that a presentation on the redundancy scheme from February 2016 had been altered to make it appear to the National Audit Office (NAO) that the enhanced terms had been raised with the department then.

HS2’s internal review is underway, and it has reported that its preliminary findings suggest the work of “a rogue individual” attempting to cover up a mistake.

As part of its own investigation, the committee said that Simon Kirby “had been specifically instructed by the department that enhanced redundancy terms were not acceptable but apparently chose not to communicate this to anyone else within the company.”

“Even though the former chief executive no longer has a contractual relationship with either the company or department, they both should carefully consider whether any further action can now be taken against that individual,” it continued.

“We remain concerned that the relationship between the department and HS2 Ltd was not robust enough to prevent this and that ultimately Simon Kirby, the then-chief executive of HS2 Ltd., has not been held to account for his actions.”

An HS2 spokesperson said that the new chief executive, Mark Thurston, told the committee that HS2 takes its responsibility for spending taxpayers’ money “very seriously.”

“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. We are now implementing all of the NAO’s recommendations in full and Mark and the HS2 Executive team will ensure this doesn’t happen again,” they added.

“HS2 is on track and has achieved a lot in its short lifespan. 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.”

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Lutz   18/12/2017 at 18:31

HS2 would benefit from a thorough review by the Parliamentary Select Committee for Transport, not just with regard to the unauthorised payments.

Andrew Gwilt   18/12/2017 at 22:12

Lutz is spot on.

DP   19/12/2017 at 07:57

Am I stupid to ask why HS2 is making people redundant in the first place? Or if all these people are surplus to requirements before a metre of track has even been laid, why they were employed in the first place?

Noam   19/12/2017 at 10:12

It may surprise you to learn, DM, that a £50bn+ project requires a fair bit of planning, financing and developing business cases. HS2 had a large office of people in Canary Wharf doing just that. Now that the construction phase is due to begin, these people are no longer required and focus will shift instead to engineering, setting up and running training colleges in places like Birmingham and Doncaster. If you fancy your chances persuading Docklands-based finance analysts to be redeployed as electrification engineers in Doncaster then why don't you offer your services to the company? Otherwise I'm not sure what your objection is. I do agree paying terms almost three times statutory to people who will walk into high-paying jobs elsewhere is excessive.

Mark Hare   19/12/2017 at 12:36

RTM - The guy's name is Simon KIRBY, not Kirkby.

John Grant   19/12/2017 at 14:52

@Noam: The question is, why did HS2 not know they would only be required for a limited time. Or if it did, why were they not on fixed-term contracts? Though I suppose if they were the ones doing the planning maybe they were the only ones that could work out how long they'd be needed for. And couldn't do that until after they'd been hired.

Jerry Alderson   19/12/2017 at 17:53

The article says "under the statutory scheme for these payments would have totalled just £1m." Does it really mean "statutory" or does it mean "contractual"? It's 11 years since I was last an employee of a company that I didn't run so I may be out of date, but at the time *statutory* was one week per full year ***capped at around £300 per week***. So, 500 people with six years' employment = £1m (i.e. 500 x 6 x £300 = £900k). Ps. The place Kirkby (Lancs) is pronounced Kirby so I can understand how RTM got it wrong.

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