Margaret versus the mandarins

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Margaret Hodge: Standing Up for MPs' and the public's rights

Watch out for a major speech by Margaret Hodge, chair of the Commons public accounts committee, at Policy Exchange in London this Thursday on the accountability of Whitehall to Parliament.

This is going to be a historic moment for the relationship between MPs and mandarins and I am not expecting the doughty chairman of Parliament’s most powerful committee to pull any punches. I also expect it to ignite a big debate.

 It is also important moment for people who believe that Parliament is just a talking shop. This is because it will show that MPs want action on the way our taxes are spent and even more so on who pays their taxes.

 It is also about the honesty and integrity of Dave Hartnett, the head of the Inland Revenue (HMRC), and his attempt to get away with telling lies to MPs on a deal with one of biggest bankers, Goldman Sachs.

The story of this dispute is published today by Exaro News at http://bit.ly/zHz7pP or on the Exaro News website http:// www.exaronews.com .

 Suffice to say it reveals a massive tussle between Lord O’Donnell, the former Cabinet Secretary and Mrs Hodge over whether civil servants are accountable to MPs or ministers – going to heart of the matter of whether MPs can stand up for us as taxpayers.

 Lord O’Donnell ,who wrote the letter days before he retired ,has accused the Public Accounts Committee of  publicly humiliating a senior law official at the revenue by making him swear on the Bible before giving evidence. He talks of widespread anger in Whitehall and in the legal profession about this.

 But he ignores the reason – that the man’s boss, Dave Hartnett, had misled Parliament over a sweetheart tax deal he negotiated with Goldman Sachs saving them possibly billions in tax. He pretended it was nothing to do with him.

 This is why people should back Margaret Hodge, her committee which includes very equally strong minded MPs like Tories Richard Bacon and Stephen Barclay in standing up for MPs and the public’s rights.

 Thursday will light the blue touch-paper at Policy Exchange. If there are any seats left go and watch and hear. It’s free.

Revealed: Lansley’s simply crazy commissioning guide for your operation

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Lansley's latest complicated NHS Commissioning diagram:Uploaded with help of Political Scrapbook

Commissioning-Intelligence-Model-v13

 Feeling ill and need to see your doctor. Well here’s a bit of draft helpful advice under the Lansley reform measures.  Click on the link above and  get a big surprise. Just a simple commissioning guide so the NHS can smoothly run to help meet David Cameron’s ” NHS is in my DNA ” pledge.
This was sent to me as part of the big response to the NHS London board  diagram of how the NHS will look which I published on Sunday night. I can verify  its contents and it comes from @nhs_supporters and  the respected and informed  Health Service Journal. It makes interesting bedtime reading.
This appears to lay out a few guidelines. By the time they have answered all these questions I suspect you might be dead. Notice that GPs will have to send in monthly accounts and that a lot of computer programmes (more waste on IT) will be employed to work out the mix of services. It sound a nightmare to me.
But I am sure you will be eternally grateful to the huge cut in bureaucracy needed to answer all these points. Have a good time at your doctor’s surgery. Or alternatively why not e-mail Mr Lansley himself on lansleya@parliament.uk and ask him to go through the process with you. He claims to have spent five years thinking all this up. Pity he didn’t bother to tell the voters at the election.

Revealed: Blueprint for Lansley’s bureaucrat free simple NHS (This document is real!)

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Can you understand this document reproduced below?

Simplified Map of how the London NHS will look after Lansley has finished with it

No, thought so.Well this is the all singing, dancing model of the remains of the National Health Service after Andrew Lansley has finished with it. It is being distributed by the NHS Commissioning Board and a copy has come my way.Have you seen such a complicated diagram with different arrangements for accountability and funding? Far from creating fewer bodies it seems to create a plethora of new bureaucratic ones who will  have more complicated relationships than a man with 20 mistresses.

Note where the public and the patient – supposedly the focus of David Cameron’s reforms. They are hidden under three levels of bureaucracy at the bottom of this diagram – obviously the least important people around.

 Note all the new bodies, Public Health England, London Health Education, the NHS Commissioning Body, London;The NHS Trust Development Authority, London; Clinical Senates, Clinical Commissioning Groups,  Patch teams ( I think they put sticking plaster on people when it all falls apart) the Care Quality Commission ( the body whose boss has just quit before being pushed and finds it difficult to monitor one home let alone all the rest) and a role for local authorities who being stripped of cash anyway by Eric Pickles, the communities secretary.

There are also Commissioning Support Services – I think this is the bit where the private sector make their millions from the taxpayers before they take over the running of the hospitals.

In my view this document gives a complete lie to the idea that some how  we are going to have a wonderful bureaucrat free NHS with thousands of new doctors and nurses and patients with a sensational choice for everybody in England to go any hospital they want, regardless of cost.

It more looks like a recipe for chaos, fragmentation, confused accountability and irresponsibility with taxpayer’s cash. This diagram illustrates why it is costing £1.3 billion to do this.

Andrew Lansley becomes excited when he see this wonderful NHS blueprint!

There still a little time left before collective madness sets it. If it wasn’t an insult to the thousands of mentally ill people suffering in this country, I would suggest that Mr Lansley ought to be sectioned under the Mental Health Act for all this mayhem he is about to cause. You can off course tell him he is mad yourself. His direct e-mail in the House of Commons is: lansleya@parliament.uk

Revealed: Whitehall angst and a KPMG U-turn on Lester’s tax affairs

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ImageNew e-mails and financial advice put up today on the Exaro news website (http://exaronews.com) reveal more of the background surrounding the extraordinary decision to grant Ed Lester, the chief executive of the Student Loans Company, an arrangement when he was not taxed or paid his national insurance at source.

It shows that senior civil servants were really uneasy about the deal. In one e-mail, Daniel Jenkins of the Department of Business, Innovation and Skills legal department wrote: “Applying the tests of employment status, I wonder whether it is possible for a CEO to be anything other than an employee/office-holder, given the degree of integration into the company which he presumably needs to carry out his duties.”

In another e-mail Michael Hipkins, then a BIS appointee to the SLC board writes:

“The risk, which nearly the whole interim industry currently runs, is that a contract for ‘supplying an individual’ is deemed to be an employment contract, rather than a commercial contract for services. So it appears there is a risk, and there is a judgement whether the risk is worth running.

“For my part, I note that when the terms of the interim CEO’s remuneration were cleared with Treasury, they raised no objection to the form of the contract, nor that there was an agency acting as intermediary.”

“It looks as if the company would be running no greater a risk than any other company employing interims on consultancy contracts; and the fact that the Treasury raised no objection to the proposed arrangement in the case of the CEO must mitigate that risk further.”

But the angst is nothing to the role of KPMG, the auditors and advisers to the SLC, who gave contrary advice in the space of a month.

 First they said – as subsequently was proved right by Chief Secretary to the Treasury,Danny Alexander’s decision to cancel the deal,- that no office holder could be a  limited company.

 Then they changed their mind saying; HMRC “may agree on a concessionary basis”, under a provision known as the extra-statutory concession, A37, to override the rule that all company office-holders must pay tax and national insurance.

It said that Lester’s pay can then be treated as “income of Penna (who acted as the recruiting agency for Ed Lester) for corporation-tax purposes and not income of EL for income-tax purposes.”

KPMG said that the SLC should make no expenses or bonus payment direct to Lester, but only through Penna to his personal company, otherwise it would invalidate any concession.

Even more interesting  given the developing furore over this issue the memo reveals that KPMG had done this before.

 It said KPMG “have been successful in the past in agreeing with HMRC that the concession can be extended to circumstances similar to the arrangements in place here. However as this is a concession (rather than a statutory provision) there is no guarantee that HMRC will agree that the concession  applies in this case given the agency and personal service company arangements in place.”

The next questions in this saga will be who else has benefitted from this arrangement and what George Osborne, the chancellor, proposes to do to close this loophole in the budget this month. The full story is revealed in four new articles on the Exaro website.

Save FOI: Putting the case to MPs

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 I am giving evidence to Mps on the House of Commons Justice Committee on Tuesday as part of their inquiry into the future of freedom of information. I shall be there alongside three  other journalists – Martin Rosenbaum from  BBC News, Doug Wills, from the Evening Standard, and David Higgerson, from Trinity Mirror Regionals. I shall be there on behalf of the National Union of Journalists, who have put a submission to the committee and as someone who regularly uses FOI for both my blog and for Eaxro News, the investigative news website.

We will be asked a wide range of questions on FOI. If any  journo or blogger has any point that they think should be raised about FOI you can put a comment upon this site. Please keep any comment short and succinct. I don’t promise to be able to raise everything but it would  be good to know of any burning issues which may have escaped me.

The hearing starts at 11.15am and will be broadcast live  on the internet and will also be saved for other broadcasts.

Exclusive: Top nuclear official loses contract as Whitehall panics over tax avoidance

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Office for Nuclear Regulation:First victim of Whitehall cull

The man in charge of  running nuclear regulation has had his contract terminated in the wake of panic across Whitehall following  the disclosure that Ed Lester, chief executive of the Student Loans Company, avoided having tax and national insurance deducted by being paid through a personal service company.

Paul Brown, interim chief operating officer of the newly formed Office for Nuclear Regulation,has been told that his contract will not be renewed next month provoking  extraordinary anger among professional organisations representing freelances.They fear the whole situation is getting out of hand and that there could be a witch hunt in Whitehall against anyone who has a personal company.

The full story is published on the investigative news website http://www.exaronews.com .But the essence of the dispute is that Whitehall panic – generated by the decision of Danny Alexander, Chief Secretary to the Treasury,checking 4000 senior civil servants pay arrangements could lead to the wrong people being asked to go.

The difference between Ed Lester’s arrangement, now moved to PAYE for his £182,000 post, and Paul Brown’s post, is that Ed Lester seemed to have only one job and was getting paid holidays and a £28,000 pension contribution,normally associated with a full-time post.

Paul Brown’s company,Operations Improvements Ltd, seems to be a tailor-made vehicle to offer his services for a string of jobs including previous posts at the Health and Safety Executive and the Forensic Science Service. His Linked-In site also shows he does mentoring and emergency work as a director.

The irony of all this is that Ed Lester who has had to accept a PAYE arrangement has kept his job while Mr Brown seems to have become the first senior man in Whitehall to lose his.

PCG, the organisation which represents some 20,000 freelance contractors and professionals, also has a WordPress blog where Chris Bryce,chairman of PCG, outlines the arguments for  not treating everyone the same.The blog is at http://www.insidepcg.wordpress.com  for those who want to read it.

Paul Brown is barred by his existing contract from speaking about this, but friends tell me he is furious about the decision.

Last night (Friday) it became clear that a second senior official, Jon Seddon, the finance director of the nuclear agency, had also had his contract terminated.

Hacking scandal:Trevor,You don’t have to bribe people to get scoops

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The Sun's Trevor Kavanagh: Defender of the Press? Pic courtesy : digitalhen

Trevor Kavanagh, the Sun’s most vociferous associate editor, has launched an extraordinary attack on the police operations which led to the arrest of a number of very senior Sun journalists. Using language I normally associate with my former employer, The Guardian, he condemns the police for disproportionate action and speaks of a police state and witch hunts against News International. (See http://bit.ly/we4MKo )

 My heart bleeds for him in one sense. Yes, you are right, it doesn’t take dawn raids and 20 police officers to arrest one unfortunate Sun hack. As far as I know they are not the equivalent of armed drugs gang. I am sure you wrote lots of articles in the Sun condemning the tactics of the Scotland Yard’s  former  assistant commissioner, John Yates, when he used the same approach against Lord Levy and Blair’s Downing Street staff in the ” Cash for Honours ” investigation. (this needed investigating but some of the tactics were disproportionate.)

Where I do quarrel with him is his implication that somehow allegations of bribing police officers ( which I gather is the reason for all this) is an essential tool of journalism to expose scandals to save Britain from turning into a corrupt cesspit.

It isn’t. If you think so it sends out all the wrong messages and puts journalism in the dock – and encourages a culture where money is the main motive and moral outrage irrelevant.

Without meaning to be pompous, I have just managed to get by in a long journalist career without paying anyone ( other than professional journalists who are making a living from passing on information) and still produced the odd exclusive.

I may appear to be naive at times but nobody needed paying to expose the ” cash for questions” scandal in the 1990s nor that Peter Mandelson had taken an undeclared £373,000 home loan from a  fellow minister.

Nor did any money change hands in the latest scandal of Ed Lester, the student loans company chief, and his tax affairs – just one  morally outraged source, a few beers, and a well targeted freedom of information request.

Of course, not all leaks are based on moral outrage. Base motives and deadly sins could be involved. By removing money from the equation – it gets rid of one motive and also stops people ” over egging” the information to make more cash.

My main disagreement with you is there has been something wrong in the practice of journalism and it does need cleaning up. I haven’t a clue whether these journalists  are guilty or innocent – or in doing their jobs have been corrupted by a culture that ended up being corrupt itself.

But I think you are being a little too disingenuous to suggest the fabric of investigative journalism is about to collapse because of these actions. There are many other practices  – not least the current financial collapse of newspapers – that are much more deadly.

Victory: Ed Lester now started paying full tax

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Following the exposure by the joint  Exaro News and BBC Newsnight investigation  Ed Lester, head of the Student Loans Company, is  now having  his tax and national insurance deducted at source.

 The deal backdated to February 1 will mean he will be on the pay roll until his contract ends in February 2013. The change will mean that he will have to pay full National Insurance contributions. The SLC – which has avoided paying NI will have to pay £17,000 to the tax authorities  this coming year.  Calculations by accountancy specialists means that on his £182,00o salary (including £14,000 bonus and £28,000 pension ) he will be possibly have to pay £26,000 in tax which he could have avoided by placing the contract through his personal service company, Placepass, based at his home on an island in River  Thames  at Marlow, Buckinghamshire.

He could also be charged benefits in kind on his Glasgow flat which the government is funding as part of a £550 a week expenses package.

This is the statement from the Student Loans Company:

“We are taking forward the changes to Ed Lester’s contract, following the announcement by Universities Minister, David Willetts on 2 February 2012.

“Ed Lester will be a Student Loans Company employee with effect from 1 February 2012 and tax and NI will be deducted at source. His salary and bonus arrangements will be consistent with his previous contract.”

One down, how many more to go, when the investigation by Danny Alexander, chief secretary to the Treasury, starts to bite.

Did the former Cabinet Secretary unwittingly sanction “tax avoidance”?

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Gus O'Donnell: Tax avoiders friend in Whitehall? Pic Courtesy: Daily Telegraph

The huge  row following the disclosure  of the tax  ” avoidance” arrangements for Ed Lester, chief executive of the Students Loans Company, has concentrated on how government ministers approved the arrangement.

Not highlighted was the role of the then Cabinet Secretary, Gus O’Donnell, recently retired on an index linked pension and getting £300 a day for every day he turns up as a newly ennobled peer.

Documents released to me under the Freedom of Information Act reveal that Gus O’Donnell when he heard Lester was not going to be on the pay roll of the Student Loans Company rightly demanded an ” urgent clarification “. He also insisted on an explanation about the ” costs to the Exchequer” of the arrangement. He was then sent a detailed document which showed that if he was paid through an agency it would cost less than if he was on the staff. Details of  the document are published tonight on the Exaronews website (www.exaronews.com)  and also detailed in a story by Rajeev Syal on the Guardian website(http://bit.ly/yWOy7H ).

Basically it is a scam explanation – revealing huge fees (£83,000) to be paid to Penna Consulting, the management firm, who acted as middlemen to pass money on to  his private company – if he was taken on the pay roll. It also suggested that his expenses of £550 a week for a flat and fare would have to be grossed up to cover his personal tax bill if he was on the staff.

Meanwhile the savings side if he was not on the pay roll included a whopping £17,000 to the SLC for avoiding paying the employers national insurance contribution.

 Any cursory glance at these figures by anybody reasonably intelligent would suggest that these were sham calculations and could have been knocked down, particularly the big fee to the agency. Yet the e-mails show Gus was ” content”.

Frankly this is as bad as Danny Alexander, chief secretary to the Treasury, not realising the tax implications of the deal. Here one of the most highly paid people in Whitehall and head of the civil service appears to be oblivious of what he is sanctioning. What does this say of the ability of people at the top or are they so used to paying out such big fees (taxpayers money) that they don’t notice?

I have tried to contact Lord O’Donnell for an explanation but he has not returned my calls. And the Cabinet Office is now sheltering around the fact that Danny Alexander has ordered a review to stop answering questions – even though some of the points I have raised have nothing to do with the review. Senior civil servants seem rather good at covering their tracks – it is probably a key part of their training.

Update: Whitehall tax avoidance – more evidence on the way

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Since this blog  revealing the Exaro News (http://www.exaronews.com) and BBC Newsnight investigation into the tax arrangement ministers approved for  Ed Lester, chief executive of the Student Loans Company, I have received a number of calls and e-mails suggesting this practice is more widespread than  just Whitehall. Danny Alexander, chief secretary to the Treasury, has rightly ordered a Whitehall wide review to find out the scale of the arrangements, which he appears to have unwittingly endorsed. It looks like Mr Lester  will have to pay tax in the way everybody does when they hold down a full-time equivalent job – through PAYE.

Some 2500 people has so far viewed this blog on top of millions who would have seen it on TV, on the radio  and read it  in newspapers from the The Guardian to the Daily Telegraph and Daily Mail.

 I am now gathering more information to continue this investigation and would like to thank a number of people who have already contacted me. However if you know of a similar practice where you work  you can contact me direct on my e-mail david.hencke@gmail.com. All information will be treated in confidence and all sources – like the original tip-off – that led to the exposure – will be protected under the journalist’s code of practice.

Also if you know of consultancy firms  who make big charges for supplying these people  to the government and the public sector and then help them arrange how to avoid paying their full tax, let me know. Their fees are coming out of your taxes.

 Help stamp out people ripping you off by using your taxes from your hard-earned cash – by avoiding pay their fair share of tax – and stop HM Revenue and Customs having one rule for the workers and kid glove treatment for those with the money to exploit every loophole possible.