Ministers at the Department for Transport are being advised to change the pay structure for the next chief executive of overbudget rail programme HS2 ahead of the start of a recruitment campaign, members of parliament have been told.
HS2 executive chair Sir Jon Thompson told a Public Accounts Committee session he had recommended introducing a package that was geared more to performance than base salary for the DfT-owned company’s next boss – in contrast to that of recently-departed chief exec Mark Thurston.
Thurston regularly topped the list of government’s highest earners during his six years in charge of HS2 Ltd. Transparency data showed his salary was bracketed at £640,000-£644,999 as of September last year.
The HS2 programme has been dramatically scaled back with the cancellation of phases connecting Crewe, Manchester and Leeds with the core line from London to the West Midlands – and the removal of the redevelopment of Euston Station from HS2 Ltd’s remit.
HS2 Ltd’s current estimated cost of delivering phase 1 of the railway is £49bn-£57bn, in 2019 prices. The DfT’s cost assessment is lower, at £45bn-£54bn – however that figure is still more than £9bn above the allocated funding for the project, according to perm sec Dame Bernadette Kelly.
At yesterday’s PAC session HS2 Ltd executive chair Thompson – who is a former Ministry of Defence and HM Revenue and Customs permanent secretary – told MPs he expected the recruitment process for the company’s next chief exec to begin early next year.
“A job description has been agreed,” he said. “We’ve hired a relevant headhunter to do all the work.
“The only outstanding issue is the question of the salary, which is currently with ministers. My recommendation to ministers is that we change the reward structure so that it’s much more heavily incentivised towards meeting the schedule and delivering to the lowest possible cost.”
Thompson said his advice to ministers was that the next chief exec should get a lower base salary than Thurston but “more opportunity to earn a higher salary if you meet all targets on schedule and cost”.
“That is currently under consideration by ministers,” he said. “Once that’s agreed we will be ready to go. I would think that would probably be the first month of 2024.”
Thompson said HS2 Ltd is also introducing a new “chief railway officer” post in what he said was a learning from London’s late-running and massively overbudget Crossrail project.
“One of the lessons to be learned from Crossrail is that you need to have a single controlling mind for the programme overall, rather than working through individual lines,” he said.
“You need to have someone who integrates the whole thing and thinks about the railway from in-service to now, and how to get there both as quickly as possible and as cheaply as possible. So we’re introducing that from January.”
Elsewhere in yesterday’s session Thompson revealed that he had been given less than 24 hours’ notice of prime minister Rishi Sunak’s decision to cancel the phases of HS2 connecting Staffordshire with Crewe and Manchester last month.
He added that HS2 Ltd had no involvement with the Network North plans that were launched at the Conservative Party conference as part of Sunak’s alternative vision for spending the £36bn in savings expected from scrapping HS2’s northern expansion.
Kelly told MPs that DfT had been asked by No.10 to start looking at “options for stopping work on parts of HS2” in late August, as well as on “alternative transport investments”.
She said work on the future of HS2 had ranged from “full continuation to full cancellation” and that officials had worked “very closely” with No.10 and HM Treasury on the request.
Sunak announced the scrapping of phases 2a and 2b of HS2 on October 4. Many of the Network North local transport proposals accompanying the announcement were previously-existing plans.