Speculation continues about the future of the HS2 high-speed rail scheme, with the prime minister said to be concerned by salaries and spending at the company responsible for developing and promoting it, as he considers axing the northern leg to Manchester because of rising costs.
According to reports, Rishi Sunak – worth £730m – has been alarmed by pay at HS2 Ltd. Executives at the arms-length company running the scheme, one unnamed Whitehall official told the Times, “were like kids with the golden credit card”.
So how do HS2 salaries stack up?
The company is officially designated as being in the public sector – ensuring some transparency over pay and exposing its directors as the highest paid public officials. Mark Thurston, HS2’s chief executive – who leaves this week – earned £676,000 in 2022-23, including a £39,000 bonus, and has been by some distance top of the government’s “high earners” list in recent years.
The search for his replacement continues under Sir Jon Thompson, who will in effect run the company as executive chair in the interim. He was paid £85,000 as a part-time chair and his current remuneration while acting up is undisclosed.
HS2’s chief financial officer, Alan Foster, was paid £513,000, which would probably now make him the UK’s third-highest paid public official, after Andrew Haines, the chief executive of Network Rail, which owns and maintains Britain’s 20,000 miles of railway and most of its big stations.
Ruth Todd, chief commercial officer, was paid £313,000, including bonuses.
Salaries were catapulted up in 2014 when the first HS2 chief executive, Alison Munro, paid £115,000, was replaced by Simon Kirby, a former Network Rail infrastructure director, on £750,000.
Sir David Higgins, who had overseen the London Olympics delivery and was then chair of HS2, justified the CEO salary rise as necessary to hire people who could deliver the infrastructure in the new building phase. Kirby quit a year later to join jet engines maker Rolls-Royce.
Last year, 43 HS2 staffers were identified as earning more than £150,000 a year. Rail employees more broadly feature prominently on the government list of public sector high earners: behind Haines, another 73 staffers at Network Rail got £150,000 or more.
Both organisations are defined as a “commercial enterprise in the public sector” and so salaries are unpublicised. Managing directors of the private train operators contracted to run Britain’s trains can typically earn £300,000 or more.
One of the highest earners in rail is believed to be Mary Grant, the chief executive of privately owned rolling stock company Porterbrook, which leases trains to those companies. She earned a reported £750,000 in 2020.
Similarly, while HS2 bosses top the public sector pay list, executives in the private sector can earn considerably more – including those running the construction and civil engineering firms such as Costain or Balfour Beatty, contracted to carry out HS2 works.
Meanwhile, at another major public infrastructure project, building the Thames Tideway sewer, chief executive Andrew Mitchell, a former Crossrail engineer, was paid £2.7m in 2022-23, including bonuses.
An HS2 spokesperson said: “HS2 is Europe’s biggest infrastructure project and it is necessary to employ people with the right level of expertise to deliver it successfully.
“HS2 Ltd is committed to controlling costs and takes its responsibility towards value for money very seriously. Executive salaries are signed off by the Department for Transport and Treasury. Remuneration is also benchmarked against comparable organisations and managed in line with the government’s public sector pay policy.”
The other question levied is whether HS2’s “kids with the golden credit card” have spent more on construction costs, besides their own salaries.
HS2 said it receives an annual government settlement, and is operating within that annual budget.
What that overall budget eventually turns out to be – officially £71bn, but likely about £100bn at current prices – compares not outlandishly to other rail infrastructure spending, spread over the long term.
Network Rail has a five-year budget of £44.1bn from 2024, mainly for maintenance and renewals of the infrastructure. Its TransPennine Route upgrade of the existing railway between Manchester and Leeds – originally forecast to come in at under £3bn – is now budgeted to cost up to £11.5bn.
Soaring infrastructure costs and rail salaries, whether officially in the public or private sector, do not appear unique to HS2.
Before it was reclassified as being in the public sector in 2014, making its spending come under direct Treasury control, Network Rail also ran up a debt of about £40bn – on what was widely known rail’s original credit card – borrowing against the value of rail infrastructure it was building.
Back then, when HS2’s budget looked like swelling to £50bn, Higgins, who had also run Network Rail, argued that money spent on infrastructure was simply an investment: “These are assets – not a cost to the nation,” he said. The argument goes on.
