COMMONS

Unauthorised redundancy payments a shocking waste of taxpayers' money

15 December 2017

The Public Accounts Committee report says that during 2016–17 HS2 Ltd made £1.76 million of unauthorised payments to staff—a shocking waste of taxpayers' money—through compulsory and voluntary redundancy schemes offered at enhanced terms well in excess of those authorised by the Department for Transport.

Unauthorised schemes proceeded due to weak internal processes

There is no means for these sums to be recovered. The unauthorised schemes were able to proceed because weak internal processes at HS2 Ltd prevented key decision-making and scrutiny bodies from receiving accurate information.

HS2 Ltd lacks basic financial controls in other important areas, heightening the risk of fraud and financial errors such as duplicate payments. This situation is exacerbated by an excessively high rate of staff turnover.

Both the Department and HS2 Ltd need to address these issues as a matter of urgency to ensure that this flagship infrastructure project is delivered successfully and that the company meets the high standards expected of it.

We remain concerned that the relationship between the Department for Transport 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.

Background

High Speed 2 Limited (HS2 Ltd) is a government-owned company which was established in 2009 to manage and deliver the £55.7 billion High Speed 2 rail link between London, Manchester and Leeds, via Birmingham.

In 2016, HS2 Ltd’s management decided to relocate staff from its London office to Birmingham, and chose to run a redundancy scheme for staff who would no longer be needed or who were unwilling to move.

Despite David Prout, the then-Director General High Speed 2 Group within the Department for Transport, telling Simon Kirby, the then-Chief Executive, in April 2016 that it was only allowed to offer statutory redundancy terms, HS2 Ltd offered staff enhanced redundancy terms.

£2.76 million redundancy paid to 94 individuals

HS2 Ltd committed to paying a total of £2.76 million in redundancy payments to 94 individuals. In comparison, statutory redundancy terms would have resulted in payments to the same individuals worth a total of only £1 million.

The Comptroller & Auditor General issued a qualified audit opinion on the company’s accounts in July 2017 as £1.76 million of the redundancy payments were unauthorised.

Both the Comptroller & Auditor General and the Government Internal Audit Service found a number of significant weaknesses in HS2 Ltd’s controls, which create risks of fraud and error.

Further information

Image: HS2 Ltd.

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