Report of the Comptroller and Auditor General on the 2016-17 Accounts of High Speed Two (HS2) Limited

The Comptroller and Auditor General, Amyas Morse, has today qualified the accounts of High Speed Two (HS2) Limited owing to its running a redundancy scheme at enhanced terms without the necessary approvals.

In March 2016, the company sought formal permission for a redundancy scheme, as it needed to restructure its workforce, partly as a result of a decision to transfer its headquarters to Birmingham. The Department for Transport gave written permission, which included a clear restriction that redundancy terms should be at statutory levels, as per HS2 Ltd’s established framework agreement with the Department.  The Department has restricted HS2 Ltd to statutory redundancy terms intentionally, alongside the provision of greater flexibility in respect of pay levels, in order to provide an overall package appropriate to market conditions in the rail sector.

In response to a further request from HS2 Ltd to enhance redundancy terms to civil service levels, a senior official at the Department instructed a senior executive at HS2 Ltd that no enhancements would be approved. The NAO has not seen any evidence suggesting that this instruction was passed on within the company, and retrospective approval has not been given either by the Department or HM Treasury for the enhanced terms.

Today’s report found that HS2 made commitments of £2.76 million, of which the NAO estimates that £1.76m were not authorised because they related to unapproved enhancements. Redundancy compensation was, as HS2 Ltd had proposed, paid at 1 month’s salary per year’s service. This was broadly in line with the Civil Service Compensation Scheme (CSCS) terms which had been superseded in November 2016, before any redundancies were finalised, and well in excess of the authorised statutory level.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 have also been made well beyond civil service rates – for example, where individuals would be due lump sums in excess of the £95,000 CSCS maximum, they were offered ‘gardening leave’. In substance, this allowed exit packages of more than £95,000 to be paid.

 

19 July 2017

Notes for Editors

  1. Press notices and reports are available from the date of publication on the NAO website. Hard copies can be obtained by using the relevant links on our website.
  2. The National Audit Office scrutinises public spending for Parliament and is independent of government. The Comptroller and Auditor General (C&AG), Sir Amyas Morse KCB, is an Officer of the House of Commons and leads the NAO. The C&AG certifies the accounts of all government departments and many other public sector bodies. He has statutory authority to examine and report to Parliament on whether departments and the bodies they fund have used their resources efficiently, effectively, and with economy. Our studies evaluate the value for money of public spending, nationally and locally. Our recommendations and reports on good practice help government improve public services. Our work led to audited savings of £734 million in 2016.

 

Contact

Angharad Thomas
Direct line: 020 7798 7208 Mobile: 07985 274421 Email: pressoffice@nao.gsi.gov.uk

PN: 43/17