Source · Select Committees · Public Accounts Committee
Recommendation 15
15
Accepted
HS2 Ltd has streamlined governance and strengthened board for enhanced cost control.
Conclusion
On recent development in governance in HS2 Ltd, the company told us it had streamlined executive governance to focus on costs and deliverables, and improved management information significantly, and that it had also recruited two further finance directors and established a new sub-committee for finance and performance. HS2 Ltd said it had significantly strengthened the Board with two recent appointments, and would be making two further non-executive director appointments with a particular focus on cost control. It also said it was also introducing a new ‘chief railway officer’ post from January 2024 to integrate all elements of the new railway. The chief railway officer would report directly to the new chief executive. The new chief executive has not been appointed yet, and HS2 Ltd told us the question of salary was still with Ministers to consider, but a job description and person specification had been agreed.32 31 Department for Transport: NETWORK NORTH: TRANSFORMING BRITISH TRANSPORT, CP 946, October 2023 32 Qq 6–11 14 HS2 and Euston 2 Closing down HS2 Phase 2 Impact of decision to cancel Phase 2
Government Response Summary
The government agrees with the committee's observation, confirming that HS2 Ltd's leadership and capability are critical and detailing ongoing recruitment efforts for new Non-Executive Directors and a CEO to reinforce cost control and governance.
Government Response
Accepted
HM Government
Accepted
2.1 The government agrees with the Committee’s recommendation. Target implementation date: Spring and autumn 2024 2.2 HS2 Ltd’s leadership and its collective capability are critical to the success of HS2. The department commenced a recruitment exercise to identify new Non-Executive Directors in January 2024. Additionally, HS2 Ltd commenced a recruitment exercise to identify a new Chief Executive Officer in February 2024 and is also recruiting to a number of senior executive roles. 2.3 As noted in the Network North command paper of 4 October 2023, HS2 Ltd and the department are committed to: • bearing down on the costs of Phase 1 and only delivering what is essential; • embedding a singular focus on cost control in HS2 Ltd and its supply chain and being prepared to take difficult decisions on contracts, scope and benefits to hold to budget; • reinforcing the leadership of HS2 Ltd, under Sir Jon Thompson, to change the culture on cost control with challenge from the department, HM Treasury and the Infrastructure and Projects Authority; and • providing strengthened governance and control from the government whilst this reset is developed and delivered, with increased oversight and reduced delegation. 2.4 A plan has been developed by the department, HM Treasury and HS2 Ltd to implement the above commitments. The department will provide an update in its forthcoming six-monthly reports to Parliament. 2.5 HS2 Ltd and the department are working together and with the principal suppliers to ensure focus on cost-effective delivery of the remainder of the civil works. The department will provide an update on that work in forthcoming reports to Parliament, subject to commercially sensitive details.