HS2 Ltd accepts it made 'serious error' over unauthorised redundancy payments
The company building the HS2 high-speed rail line agreed £1.76 million in unauthorised redundancy payments, the public spending watchdog said.
HS2 Ltd ignored orders from the Department for Transport (DfT) that its redundancy scheme should be restricted to statutory levels , according to the National Audit Office (NAO) report into the company's 2016/17 accounts.
Simon Kirby, now chief operating officer at aerospace giant Rolls-Royce, was chief executive of the rail firm when it made a further request in April 2016 to give staff enhanced payments.
A senior DfT official instructed an executive at HS2 Ltd that no such agreements would be approved, but there is no evidence suggesting this message was passed on within the company, the NAO found.
Mr Kirby reportedly earned an annual salary of £750,000 for HS2 Ltd.
Redundancy compensation worth one month's salary per year's service was agreed with outgoing staff to coincide with the company moving its headquarters from London to Birmingham. The statutory standard is roughly one week's pay per year depending on age and length of employment.
Some staff were even offered paid leave to top-up their exit packages above the £95,000 civil service compensation scheme limit.
The NAO concluded that the issue "suggests a weakness in HS2 Ltd's control environment" and is an example of "ineffective communication both between the company and the Department, and within the company".
HS2 Ltd has been advised it has a legal obligation to honour the payments agreed, according to the watchdog.
The DfT said in a statement it is taking the matter "very seriously" and has made clear to HS2 Ltd "in the strongest terms" that it expects it to always meet its obligations and responsibilities to taxpayers.
It went on: " We are grateful to the NAO for identifying these issues. HS2 has come a long way in a relatively short time - the NAO acknowledge this - but that progress should not come at the expense of proper control over taxpayers' money and we are taking action to ensure that it doesn't."
HS2 Ltd chairman S ir David Higgins accepted that the company had made "a serious error".
He continued: " HS2 is on track and has achieved a lot in its short lifespan.
"It has been able to do so because of our ability to have the right people in the right jobs at the right time.
"But while that was the reason for these payments it is clear that we got the process wrong and we are now putting the right systems in place to make sure that does not happen again."
Phase 1 of the £ 55.7 billion high-speed railway will open between London and Birmingham in December 2026, with a second Y-shaped phase launching in two stages.
Phase 2a from the West Midlands to Crewe will begin in 2027, followed by Phase 2b from Crewe to Manchester, and Birmingham to Leeds, in 2033.