The Department for Transport has been urged to consider taking action against former HS2 chief executive Simon Kirby after the company let £1.76m be paid out through an enhanced redundancy scheme that DfT had “expressly disallowed”.
The Public Accounts Committee today published the recommendations of its inquiry into these payouts, concluding that the “shocking waste of taxpayers' money” was down to HS2’s weak internal processes, “excessively high” staff turnover and weak relationship with DfT.
MPs on the committee called on the company to strengthen its financial controls, and ensure that in future “full and accurate information” is provided to those holding it to account and sanctions are in place to address failures.
HS2 – the DfT-owned company delivering the £55.7bn rail link between London, Manchester and Leeds, via Birmingham – chose to run a redundancy scheme in 2016 after deciding to move its headquarters to Birmingham. It requested to be allowed to use enhanced terms in line with the 2010 Civil Service Compensation Scheme.
Kirby, who was the highest paid civil servant in Whitehall last year, received an email in April 2016 from David Prout, then-director general of DfT’s HS2 Group, telling him that the company was only allowed to offer statutory redundancy terms.
But this email was not shared with anyone else in the company – and then-HR director Peter Gregory later incorrectly briefed the HS2 board and executive committee that DfT had approved the enhanced scheme. HS2 went on to pay £2.76m to 94 individuals, when a statutory scheme would have only totalled £1m. The £1.76m in excess cannot be recovered.
Kirby left the company in December 2016 and has since denied any wrongdoing, claiming the decision to make the enhanced payments wasn’t made until after he left. HS2’s head of finance, Steve Allen, resigned over the debacle in October.
The PAC said: “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.”
Bernadette Kelly, DfT’s permanent secretary, told MPs on the committee in October that she would seek legal advice on the matter and update them on the courses of action available to the department.
In its report today, the PAC said it remains 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”.
The committee gave HS2 until the end of next month to provide written evidence to MPs on how it intends to ensure staff comply with the rules and regulations that govern them. It is also seeking greater assurances from the company and DfT that they “understand the risks to the successful delivery of the programme”, which is forecast to exceed its funding by £1.8bn.
A DfT spokesperson said: “We have made clear to HS2 Ltd in the strongest terms that we expect them to always meet their obligations and responsibilities to the taxpayer. The progress of HS2 should not come at the expense of proper control over public money.
“HS2 Ltd’s chair Sir David Higgins is confident that the company, under new chief executive Mark Thurston, will not let this happen again.
“We have accepted the recommendations of the GIAA [Government Internal Audit Agency] report in full. HS2 Ltd and DfT are taking serious and proportionate action to implement all of the report’s recommendations by early 2018.”