Julia Irvine 25 Oct 2017 03:02pm

HS2 CFO falls on sword over unauthorised payments

HS2 chief financial officer Steve Allen has resigned over nearly £2m of unauthorised redundancy payments that were highlighted in a National Audit Office (NAO) report in July

Allen acknowledged that the company’s executive and board had been “misinformed about the status of critical approvals for redundancies” and said he would leave when HS2’s financial year ends in March next year.

In July, the National Audit Office (NAO) announced it had qualified HS2’s 2016/17 accounts because of enhanced redundancy payments that were made without the necessary approvals.

Of the £2.76m payouts committed under the redundancy scheme, the NAO estimated that £1.76m were not authorised because they were paid out at civil service rates.

It also found that additional enhancements had been made, which included staff due lump sums exceeding the £95,000 civil service maximum being offered “gardening leave”.

The Department of Transport wrote a letter to HS2 in March last year, giving it permission to set up the redundancy scheme, largely because the group was transferring its headquarters to Birmingham.
However, the letter stated that the redundancy terms had to be at statutory levels in compliance with HS2’s established framework agreement with the department.

Under this deal, the department had restricted HS2 redundancy payments but in return had given the company greater flexibility over pay levels so that they could match remuneration packages in the rail industry.

Following the letter, HS2 asked the department again if it could enhance the payments to civil service levels.

According to the NAO, a senior official at the department told an HS2 senior executive that no enhancements would be approved.

“The NAO has seen no 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,” it said.

Despite his resignation, Allen is expected to appear before the House of Commons Public Accounts Committee next week (30 October).

He joined HS2 in October 2015 from Transport for London where he had been managing director of finance and had worked on the funding package for Crossrail.

Previously, he spent time at Schroders, Citigroup and Abbey National where he worked on financing infrastructure projects in the UK, Europe and Asia.