Announcing his departure, Allen said: ‘The weaknesses highlighted by the NAO report resulted in both the HS2 executive and board being misinformed about the status of critical approvals for redundancies. Those assurances were given by teams for which I was responsible and, obviously, I regret that.

‘So, whilst we are now putting in place the measures to strengthen financial governance systems and to provide robust financial stewardship for the company, I believe it will be appropriate for me to move on.’

In July the NAO qualified HS2’s accounts, saying it had made unauthorised redundancy payments and had poor financial controls. In March 2016, the company sought formal permission for a redundancy scheme, as it needed to restructure its workforce, partly as a result of a decision to transfer its headquarters to Birmingham. The DfT gave written permission, which included a clear restriction that redundancy terms should be at statutory levels, as per HS2’s established framework agreement with the department.

In response to a further request from HS2 to enhance redundancy terms to civil service levels, a senior official at the department instructed a senior executive at HS2 that no enhancements would be approved. In its report, the NAO has not seen any evidence suggesting that this instruction was passed on within the company, and retrospective approval has not been given either by the department or the Treasury for the enhanced terms.

Despite this, HS2 made commitments of £2.76m, of which the NAO estimated that £1.76m were not authorised because they related to unapproved enhancements.

Redundancy compensation was, as HS2 Ltd had proposed, paid at one month’s salary per years’ service. This was broadly in line with the Civil Service compensation scheme (CSCS) terms which had been superseded in November 2016, before any redundancies were finalised, and was well in excess of the authorised statutory level.

Additional enhancements in the voluntary element of the scheme had also been made well beyond civil service rates – for example, where individuals would be due lump sums in excess of the £95,000 CSCS maximum, they were offered ‘gardening leave’. In substance, this allowed exit packages of more than £95,000 to be paid.

Amyas Morse, head of the NAO, said: ‘The sequence of events I describe suggests a weakness in HS2 Ltd’s control environment, and provides an example of ineffective communication both between the company and the department, and within the company.

‘Whilst deriving from a single redundancy scheme, these findings highlight the need for improvements in the company’s general control environment, where the company has itself acknowledged areas of weakness.’

Mark Thurston, HS2 chief executive, said: ‘When I joined the organisation earlier this year we faced a number of issues that needed to be addressed, particularly around our administrative controls and mechanisms on redundancies agreed by the company, as highlighted by the recent NAO report into HS2’s annual accounts.

‘Steve has been absolutely critical in identifying the ways to rectify those issues and make sure they do not happen again.

‘But, having done that, I respect Steve’s decision that now is the right time for him to move on. I would like to thank him for all he has done for the company in this formative period. His honourable decision will enable me to build the executive team for the next phase of the project.’

Both Thurston and Allen are due in front of the public accounts committee (PAC) in a session timetabled for the afternoon of 30 October, as part of an inquiry into the circumstances of the redundancy payments.

Report of the comptroller and auditor general on the 2016-17 accounts of High Speed Two (HS2) Ltd is here.

Report by Pat Sweet