12th Sep 2016 10:49
LONDON (Alliance News) - Rolls-Royce Holdings PLC over the weekend said it had poached the chief executive of HS2 Ltd, the body responsible for the High-Speed Rail 2 project in the UK, raising questions on the future of the massive rail project.
Rolls-Royce, the FTSE 100 engine maker, said on Saturday that Simon Kirby will become its chief operating officer, a position it previously had announced plans to create as part of a wide-ranging restructuring of its business.
After a couple of years peppered with profit warnings, Rolls-Royce charged Warren East, its chief executive appointed in mid-2015, with returning the company to health. He has pledged to simplify Rolls-Royce, increase accountability and the speed of decision-making, and cut costs as the group faces pressures across its aerospace, marine and defence arms.
Kirby will be given responsibility for delivering the restructuring programme at Rolls-Royce. Prior to heading HS2, he was managing director of infrastructure projects for Network Rail Ltd, the body which manages the UK rail network. He also has held positions in the past with defence contractor BAE Systems PLC.
Shares in Rolls-Royce were down 1.7% at 713.50 pence on Monday.
HS2 is the largest infrastructure project in Europe, a GBP56 billion planned high-speed railway which would link London, Birmingham, the East Midlands, Leeds, Sheffield and Manchester. Work on the first phase is due to start next year, with the whole project expected to be completed around 2033.
Kirby's departure has raised the prospect that UK Prime Minister Theresa May may decide to scrap the controversial project. May and Chancellor of the Exchequer Philip Hammond are under pressure to increase spending on UK infrastructure, following the vote for the country to leave the European Union, in order to cushion any economic impact of Brexit.
However, May's government has already delayed a decision on Hinkley Point, the GBP18 billion nuclear power project in Somerset being financed by French energy giant EDF Energy. Business Secretary Greg Clark said the government, only installed a fortnight before the Hinkley Point decision was made, would "consider carefully" the project before giving its backing.
Speaking to BBC Radio 4's Today programme last week, Nigel Wilson, chief executive of life insurer and investment manager Legal & General Group PLC, called on the government to scrap HS2. Wilson said the UK government should pull the plug on "the three Hs" - Hinkley Point, HS2 and the expansion of Heathrow airport.
Instead, he said the government should reallocate this investment to "the three Gs" - green energy, expanding Gatwick airport, and building a great northern railway.
Amid growing questions about the growing cost of HS2, and with Kirby's departure, the questions about the future of the project are likely to increase. His exit also pleased campaigners against the high-speed rail line.
"The departure of Simon Kirby will be a serious blow to those who champion HS2, though many of us are at a complete loss to see just exactly what it is he has done to justify his three-quarter of a million pay packet," said Joe Rukin, campaign manager of the Stop HS2 group. Kirby earned around GBP750,000 a year running the HS2 project.
By Sam Unsted; [email protected]; @SamUAtAlliance
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