HS2 finance chief quits over unauthorised redundancy payouts

The man in charge of finances at the company delivering the £56bn HS2 high speed rail network is to resign after the national spending watchdog revealed evidence of unauthorised redundancy payouts worth almost £2m.

Chief Financial Officer, Steve Allen, will leave his role with the company at the end of the financial year.

The payouts were made to staff in London who were unwilling to relocate when the company moved its headquarters to Birmingham.

The Department for Transport had stipulated that redundancy terms should be at statutory levels, as per HS2 Ltd’s established framework agreement with the ministry.

However, the National Audit Office said that HS2 had made redundancy commitments of £2.76m, of which the NAO estimated that £1.76m were not authorised because they related to unapproved enhancements. Redundancy compensation was, as HS2 Ltd had proposed, paid at one month’s salary per year’s service. This was broadly in line with the Civil Service Compensation Scheme (CSCS) which had been superseded in November 2016, before any redundancies were finalised, and well in excess of the authorised statutory level.

Additional enhancements in the voluntary element of the scheme were also found to have been made well beyond civil service rates – where some senior staff were due lump sums in excess of the £95,000 CSCS maximum, they were offered ‘gardening leave’. In essence, the NAO said this allowed exit packages of more than £95,000 to be paid.

HS2 Ltd’s chief executive, Mark Thurston, said: “When I joined the organisation earlier this year we faced a number of issues that needed to be addressed, particularly around our administrative controls and mechanisms on redundancies agreed by the company, as highlighted by the recent NAO report into High Speed Two (HS2) Ltd’s annual accounts.

“Steve has been absolutely critical in identifying the ways to rectify those issues and make sure they do not happen again.

“But, having done that, I respect Steve’s decision that now is the right time for him to move on. I would like to thank him for all he has done for the company in this formative period. His honourable decision will enable me to build the executive team for the next phase of the project.

Mr Allen said in a statement: “HS2 is a hugely important project for the future of Britain and it has been a great privilege to have been part of the process of putting in place the foundation stones for its successful delivery.

“The weaknesses highlighted by the NAO report resulted in both the HS2 Executive and Board being misinformed about the status of critical approvals for redundancies. Those assurances were given by teams for which I was responsible and, obviously, I regret that.

“So, whilst we are now putting in place the measures to strengthen financial governance systems and to provide robust financial stewardship for the company, I believe it will be appropriate for me to move on.”