New HS2 CEO could get higher pay

The next HS2 chief executive could be paid more than their predecessor despite overseeing a scaled-down scheme.

HS2 executive chair Sir Jon Thompson has made a proposal for the new CEO’s salary and is awaiting government approval, reports Construction News’ sister title, New Civil Engineer.

Asked about the status of recruitment for a successor, Thompson told the House of Commons Public Accounts Committee that he wanted to change the remuneration structure for the highly paid role.

“The only outstanding issue is the question of salary, which is currently with ministers,” he said.

“My recommendation 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, so it will be a lower base than [for departed CEO Mark] Thurston but there will be more opportunity to earn a higher salary if you meet all the necessary targets on schedule and cost.”

He said he expected it to be signed off 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 the UK’s highest-paid civil servant for several years before departing in September.

Last month it was announced that HS2 would be drastically scaled down with phase two – from Birmingham to Manchester – scrapped and the delivery of Euston station no longer funded by public money. Another part of phase two – from Birmingham to Leeds – was abandoned in 2021.

At the Conservative Party Conference in October, prime minister Rishi Sunak slammed HS2’s “mismanagement”, criticising the doubling of its costs and repeated delays.

Last week it emerged that HS2 Ltd believes phase one of the scheme, from London to Birmingham, will be £3bn more expensive than the Department for Transport (DfT) estimate – stating it is set to cost taxpayers between £49bn and £57bn.

Thompson told the committee that most of the blame for the increase lay with the supply chain, saying 89 per cent of the cost increase since March was due to main-works civils contracts, NCE reported.

“The government decision to let a cost-plus contract, where there are very few incentives or penalties around them, does not provide me with any real levers for those contractors to do better in relation to schedule and cost because they [can only] receive a marginal reduction in their fee. If they spend 100 per cent more than what was originally agreed, they only get a 1 per cent reduction in their fee,” he said.

“The decisions were made for all the right reasons, I assume, back in 2019, but the incentives and the penalties do not provide me with very much leverage.”

An updated business case for HS2’s first phase is due to be released in the middle of next year, by which time the DfT and the project body will need to agree on future cost estimates, the committee heard.

HS2 Ltd is also set to establish a new director role of chief railway officer, in a bid to keep on top of programme schedules and costs.

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