PAC: HS2 lacks basic financial controls

18 Dec 17

High Speed Rail 2’s £1.76m of unauthorised redundancy payments could have been avoided with tighter financial control, the Public Accounts Committee has said.

A PAC report said HS2 lacked “basic financial controls”, which results in heightened risk of fraud and financial errors and dubbed the controversial redundancy payments a “shocking waste of taxpayers’ money”.

“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,” the group of MPs concluded.

The PAC report added: “This situation is exacerbated by an excessively high rate of staff turnover.”

It also highlighted that both the Department for Transport and HS2 need to address the issues as “a matter of urgency” to ensure the government owned company meets the expected standards.

“We remain concerned that the relationship between the Department for Transport and HS2 was not robust enough to prevent this and that ultimately Simon Kirby, the then-chief executive of HS2, has not been held to account for his actions,” the PAC added.

It pointed out and there is no way to recover the sums, which were able to proceed because of weak internal processes.

In July, HS2 Ltd ignored orders from the Department for Transport and wasted millions of public money on an excessively generous redundancy scheme, a report by the National Audit Office said.  

The NAO report found the company had made redundancy commitments of £2.76m to 94 individuals, of which an estimated £1.76m comprised unapproved enhancements.

HS2 CFO Steve Allen resigned in October after a report from the NAO revelations. He said in a statement: “The weaknesses highlighted by the NAO report resulted in 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 for and, obviously, I regret that.”

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