The next chief executive of HS2 could be paid more than his predecessor despite overseeing a reduced scheme.
HS2 chief executive Sir Jon Thompson has made a proposal for the new chief executive’s pay and is reportedly awaiting government approval. Construction news‘sister title, New Road Engineer.
Asked about the status of recruiting a successor, Thompson told the House of Commons Public Accounts Committee that he wanted to change the pay structure for the highly paid role.
“The only outstanding issue is the salary issue, which is currently with ministers,” he said.
“My recommendation is that we change the reward structure so that it is much more incentivized to meet the schedule and deliver the lowest possible cost, so it will be a lower base than [for departed CEO Mark] Thurston, but there will be more opportunities to earn a higher salary if you meet all the necessary targets on time and cost.”
He said he hoped it would be signed early in the new year.
Thurston, who had led HS2 since 2017 and in July announced his plan to step down, earned £676,763, including a £40,000 bonus, in 2022-23, according to the project’s annual report. He was from the UK highest paid official for several years before with departure in September.
Last month it was announced that HS2 would be drastically scaled back with phase two, from Birmingham to Manchester, scrapped and the delivery of Euston station no longer funded by public money. Another part of the second phase, from Birmingham to Leeds, was abandoned in 2021.
At the Conservative Party Conference in October, Prime Minister Rishi Sunak criticized the “mismanagement” of HS2, criticizing the doubling of its costs and repeated delays.
It emerged last week that HS2 Ltd believes the first phase of the scheme, from London to Birmingham, it will be £3 billion more expensive than the Department for Transport (DfT) estimate. – saying it will cost taxpayers between £49bn and £57bn.
Thompson told the committee that most of the blame for the increase lay in the supply chain, saying 89% of the cost increase since March was due to civil major works contracts. NCE reported
“The government’s decision to leave a cost-plus contract, where there are very few incentives or penalties around it, gives me no real leverage for these contractors to do better on schedule and on cost because [can only] they receive a marginal reduction in their quota. If they spend 100 percent more than what was originally agreed upon, they only get a 1 percent cut of their fee,” he said.
“The decisions were made for all the right reasons, I guess, in 2019, but the incentives and penalties don’t give me much leverage.”
An updated business case for the first phase of HS2 will be published by the middle of next year, at which point the DfT and the project body will need to agree future cost estimates, the committee said.
HS2 Ltd is also planning to establish a new role of chief railway officer director, in a bid to keep up with the programme’s timetables and costs.
