HS2 financial controls
Turning to the main topics of the sessions, Labour MP Caroline Flint asked if HS2 Ltd had improved its financial control of the project.
In reply, Ms Kelly said she had been assured by HS2 Ltd that financial controls were in place to prevent an unauthorised redundancies scheme from being run again. She noted that the body had acted on all of PAC’s recommendations, but that financial controls for the overall project were not in place.
Ms Flint asked how the Government and HS2 Ltd could have a more honest, trust-based relationship.
Controls, frameworks and accountabilities needed to be clear, Ms Kelly said, adding these had all been updated. An on-going relationship of trust was built through an effective dialogue with senior executives and the chair.
Ms Flint asked which departmental representatives attending the respective boards.
Responding, Ms Kelly said High Speed Rail Director General Clive Maxwell attended both the client and the shareholder boards.
Ms Flint asked if the decision to postpone legislation for Phase 2 by a year was a sign that the project would not come in on budget.
DfT was clear the HS2 Ltd should deliver the project within the overall funding envelope of £55.7bn, Ms Kelly said.
She hailed the issuing of the notice to proceed as a major milestone, which would be accompanied alongside a new business case when it was published in June 2019. Changes to this and the timing of the Phase 2 Hybrid Bill would not affect the overall deadline for the project.
Ms Flint asked if any delay would push the cost of the projects up.
In reply, Ms Kelly said the interaction between schedule and costs in the project were not always straight forward.
The Chair asked DfT could keep a grip on the costs of the project.
Responding, Ms Kelly said HS2 Ltd was charged to stay within the funding envelop and added that she was not prepared to countenance the project going over on spending.
Conservative MP Sir Geoffrey Clifton-Brown asked how DfT could be confident that the final timetable for HS2 still stood.
In reply, Ms Kelly said the city centre to city centre nature of the project made it uniquely challenging, adding that the Department was simply managing unique milestones and that she was holding HS2 Ltd to the cost and schedule set for the project.
Ms Flint asked how delays did not affect the schedule or costs of the project.
Responding, Ms Kelly said the decision to issue the notice to proceed in July 2019 would not affect the overall deadline of the project. She noted work had already begun around London Euston and in central Birmingham.
HS2 redundancy payments
Sir Geoffrey asked why former HS2 Chief Executive Simon Kirby had been able to spend £1.6m on unauthorised redundancy payments.
In reply, Ms Kelly said Mr Kirby had been told by DfT not to seek approval for the payments, noting he had since left the company. All staff had been put through an induction session on the importance of managing public money and a new leadership time had been put in place.
She was confident the new Chief Executive, Mark Thurston, would not breach the controlled environment in the same way that his predecessor had.
The Permanent Secretary said that DfT would take use appropriate sanctions and disciplinary measures against anyone could breach.
Any holder of public office could be removed if they broke the rules, she told the Committee.
Ms Kelly said those officials who had previously breached the rules had left HS2 Ltd.
She refuted a suggestion from Sir Geoffrey that Mr Kirby had got away “scot free” with the incident.
The redundancies scheme should never have happened, Ms Kelly said.