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Tue May 18 2021

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Auditor raps HS2 for generous redundancy packages

20 Jul 17 HS2 Ltd has been paying exposed for paying out more in redundancy payments than the government has authorities it to.

Laid-off HS2 staff benefitted from 'gardening leave'
Laid-off HS2 staff benefitted from 'gardening leave'

The Department for Transport gave HS2 clear instructions that anyone laid off would only get the statutory minimum redundancy packages. However, the HS2 board took it upon itself to shell out the kind of inflated public sector packages that civil servants enjoy.

The comptroller and auditor general, Amyas Morse, has qualified the accounts of HS2 Ltd Limited for 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 (DfT) gave written permission, which included a clear restriction that redundancy terms should be at statutory levels, as per HS2 Ltd’s established framework agreement.  The DfT specifically restricted HS2 Ltd to statutory redundancy terms.

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In response to a further request from HS2 Ltd to enhance redundancy terms to civil service levels, a senior DfT civil servant instructed a senior executive at HS2 Ltd that no enhancements would be approved. The National Audit Office 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 DfT or the Treasury for the enhanced terms.

The NAO’s report found that HS2 made commitments of £2.76m, 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 one month’s salary per year’s service. This was broadly in line with the Civil Service Compensation Scheme (CSCS) terms that had been superseded in November 2016, before any redundancies were finalised, and well in excess of the authorised statutory level.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 were also 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.

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