HS2 finance chief resigns after nearly £2m in redundancy payouts ‘unapproved by DfT'

Steve Allen to leave government-owned company building new rail link after auditors slam unauthorised redundancy payments


PA

By Richard Johnstone

25 Oct 2017

An artist's impression of the HS2 station at Euston. Photo: Grimshaw Architects/PA Wire

The head of finance at the Department for Transport agency delivering the High Speed 2 rail link is to leave the company at the end of the financial year after auditors criticised the body for making unauthorised redundancy payments.

Steve Allen is to leave HS2 Ltd next March after the National Audit Office highlighted an estimated £1.76m had been paid in unauthorised redundancy payoffs.

In July, auditor general Amyas Morse qualified his opinion on HS2 Ltd’s 2016-17 accounts after finding that £1.76m of £2.76m paid in redundancy were “unapproved enhancements”.


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According to the audit report, the company sought formal permission to run a redundancy scheme, as it needed to restructure its workforce, partly as a result of a decision to transfer its headquarters to Birmingham in March 2016.

The Department for Transport gave written permission for a scheme, but stated redundancy terms should only be set at statutory levels, not in line with the Civil Service Compensation Scheme. This was in order to provide a package appropriate to the rail sector.

According to the NAO, a senior official at the DfT instructed a senior executive at HS2 Ltd that no enhancements would be approved after a further request was made by HS2 Ltd to enhance redundancy terms to civil service levels.

Despite this, the NAO found that HS2 had made commitments of £2.76m, of which £1.76m-worth were not authorised because they related to unapproved enhancements. Compensation levels were set at one month’s salary per year of service, in line with the 2010 Civil Service Compensation Scheme and “well in excess of the authorised statutory level”, according to the NAO.

Announcing his departure, Allen said the unauthorised payments were the result of “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,” he added.

“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.”

Announcing Allen’s departure HS2 Ltd’s chief executive said the company had faced “a number of issues that needed to be addressed, particularly around our administrative controls and mechanisms on redundancies agreed by the company”.

He said that Allen had been “absolutely critical” in rectifying those issues, but said he respected his decision to leave. “His honourable decision will enable me to build the executive team for the next phase of the project.”

The £56bn HS2 scheme will build a line from London to Birmingham, which is due for completion in 2026 and will then be extended to Manchester and Leeds in 2032-33. The budget is based on 2015 costings, and includes rolling stock. 

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