https://www.theguardian.com/uk-news/2017/dec/15/mps-call-for-legal-action-over-shocking-hs2-payouts
The report itself is here:
http://www.parliament.uk/business/c...nnual-report-accounts-report-published-17-19/
MPs have called on the government to consider legal action against the former chief executive of the public body building the new high-speed rail network, over £1.76m in redundancy payments made in direct contravention of civil service rules.
HS2 Ltd, which is overseeing the £55bn project, paid £2.76m to 94 individuals, while the statutory redundancy terms should have kept the bill at £1m.
MPs on the public accounts committee said the payouts were “a shocking waste of taxpayers’ money”.
The National Audit Office found that HS2 Ltd’s former chief executive, Simon Kirby, was emailed in April 2016 by a senior civil servant at the Department for Transport expressly disallowing the redundancy payouts proposed.
The email was not forwarded and an HR director subsequently briefed the board and executive committee that the DfT had approved the scheme. An audit later found documents had been altered in an apparent attempt to cover up mistakes.
The report itself is here:
http://www.parliament.uk/business/c...nnual-report-accounts-report-published-17-19/
Unauthorised redundancy payments a shocking waste of taxpayers' money
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
- Read the report summary
- Read the report conclusions and recommendations
- Read the full report: High Speed 2 Annual Report and Accounts
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.
Conclusions and recommendations
1.It is unacceptable that High Speed 2 Limited (HS2 Ltd) ran compulsory and voluntary redundancy schemes which were not authorised and resulted in an irrecoverable loss of £1.76m of taxpayers’ money. As part of its relocation from London to Birmingham, HS2 Ltd ran a both compulsory and voluntary redundancy schemes during 2016–17. The framework document which governs HS2 Ltd states that the company is only allowed to offer statutory redundancy terms. HS2 Ltd sought permission from the Department for Transport (the Department) to offer staff enhanced redundancy packages, which the Department refused in April 2016. Despite this, HS2 Ltd ran the enhanced schemes anyway, committing to payments of £916, 000 to 67 individuals under the compulsory scheme, and £1.84 million to 27 individuals under the voluntary scheme. The Comptroller & Auditor General issued a qualified audit opinion on HS2 Ltd’s accounts as these payments had been made without due authorisation. HS2 Ltd committed to paying £2.76 million, compared to the £1 million it would have paid as part of statutory redundancy. This means that £1.76 million of taxpayers’ money was spent in contravention of the rules governing HS2 Ltd’s finances.
Recommendation: HS2 Ltd should, by the end of January 2018, write to the Committee outlining how it will ensure that all staff recognise that they are dealing with taxpayers’ money and that they are required to comply with the specific rules and regulations governing its use.
2.We are concerned that there appears to be a culture within HS2 Ltd of failing to provide full and accurate information to those responsible for holding it to account. The National Audit Office (NAO) found that the former Chief Executive of HS2 Ltd, Simon Kirby, had been sent an email by the Department on 14 April 2016 expressly disallowing the enhanced redundancy terms proposed by the company. This email was not shared with anyone else in the company, allowing incorrect information to be circulated. Both the HS2 Board and the Executive Committee were subsequently briefed by the then-HR director Peter Gregory that the Department had approved the redundancy scheme, which was factually incorrect. Separately, internal audit found that a presentation on the redundancy scheme from February 2016 had been altered to make it appear to the NAO that the enhanced terms had been raised with the Department then. HS2 Ltd told us that it is currently conducting a review into this matter and early findings suggest that this was the work of a rogue individual (who is no longer with the company) attempting to cover up a mistake.
Recommendation: HS2 Ltd should ensure that all organisations overseeing the work of the company receive full and accurate information, and that proposals or requests to operate outside of the agreed framework document are reported to both the HS2 board and the Department. The Department must ensure that such notifications are fully considered, challenged and a formal response made to the HS2 board. Both organisations should ensure that appropriate sanctions are put in place for any failure to share full and accurate information.
Where a departure has been requested from the normal governance rules by HS2 Ltd, a wholly-owned subsidiary of the Department, the Chief Executive, as Accounting Officer for HS2 Ltd, should confirm in writing that the departure complies with the responsibility for safeguarding public funds, as set out in Managing Public Money.
The Chief Executive must report this to the relevant board committee and must at the same time report it to the main board as an authorised departure from normal governance rules, otherwise no departure may be made under any circumstances.
The former Chief Executive of HS2 Ltd, 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.
3.Despite running an infrastructure scheme worth £55 billion of taxpayers’ money, HS2 Ltd does not have in place the basic controls needed to protect public money. The NAO found serious weaknesses in basic financial controls at HS2 Ltd during its audit of the company’s annual report and accounts. HS2 Ltd needs to make significant improvements to demonstrate probity, value for money and appropriate anti-fraud, bribery and corruption controls. HS2 Ltd is currently experiencing high levels of staff turnover. Although there is a general downward trend in turnover rates, the most recent figures still show that 18% of HS2 Ltd’s employees left in the last twelve months. This makes it difficult for the company to embed a strong control environment.
Recommendation: HS2 Ltd should return to the Committee within 12 months to explain how it has addressed all the concerns relating to its financial controls raised by the Committee and the National Audit Office.
4.HS2 Ltd and the Department still do not appear to understand the risks to the successful delivery of the programme, which is currently forecast to exceed the funding available by £1.8 billion. During our evidence session, the Department was unable to identify the three top risks facing the HS2 programme, explaining that it primarily relied on HS2 Ltd to identify and deal with risks. HS2 Ltd told us that although progress was being made in reducing costs, the forecast cost of phase 2 of the HS2 programme still exceeded funding by a significant amount. It stated that it intends to bring the scope of phase 2a back within the funding envelope by October 2022 and has identified £3.5 billion of savings on phase 2b, although forecast costs still exceed available funding.
Recommendation: HS2 Ltd and the Department should, before the end of January 2018, write to the Committee to explain how they are ensuring that they have a clear shared understanding of, and approach to addressing, the key risks to successful delivery.
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