Spending Review: Caveat Emptor- Buyer Beware



Today the Chancellor, George Osborne, launched the autumn spending review.

From the statement you might guess that he has climbed down over welfare spending cuts by abolishing his plan to cut tax credits, climbed down over big cuts to police budgets and acted to save the mental health budget and save the NHS from further cuts. All terribly good news along with more money for defence equipment, the security services, already announced.

But if you look at the figures he still planning  the same  huge level of cuts  but apparently with no pain.

For a start we are going to have no changes to the tax credits – yet there is going to be a change to the new universal credit which will replace a whole series of benefits. So the government will still be cutting the welfare bill by £12 billion. No details yet but it will be sneaked through when the figures are announced much later, hitting another group. And he is proposing to sell 20 per cent of the Department of work and Pensions estate- selling off  Jobcentres and benefit offices.

The NHS is getting more money but will have to make £22 billion of efficiency savings and provide a 7 day a week service. How? No details.

The police may not get their budget cut but the budget is not protected against inflation which is expected to start rising – so there is a hidden cuts inside this announcement.

And  the government claimed it had protected the science budget – but within hours engineers were announcing that a major demonstration project into carbon capture – which could save some coal fired power stations from closure – had been cancelled.

And both the extra money for defence and spending by HM Revenue and Customs – on equipment and tackling tax evasion- is going to be financed by axing thousands of civilian jobs in defence and closing down almost all local tax offices.

And while there is a £600m fund for mental health inside the NHS many voluntary organisations looking after the mentally ill and handicapped will be hit by the huge cut in local government funding.

There is more privatisation on the way – the rest of air traffic control, ordnance Survey and the Land Registry.

So what looks like a series of good announcements are often little more than smoke and mirrors. And in this budget it will depend more than most on the small print hidden in government announcements. Journalists are often fooled into first believing the initial message only to find it starts to unravel over the next few weeks when the policy bites. This is a Caveat Emptor Spending Review- buyer beware.


Exclusive: The East Coast rail bosses tax avoidance scheme that hit the buffers

East Coast trains at Kings Cross. Pic courtesy:;  www.rail.co.uk

East Coast trains at Kings Cross. Pic courtesy:; http://www.rail.co.uk

A blunder by the Department of Transport has allowed two top state rail bosses to repeat a tax avoidance scheme which should have been outlawed in Whitehall following the exposure of Ed Lester, the former head of the Student Loans Company.

The deal allowed the highly paid chief executive, Michael Holden, and his finance director, David Walker, to avoid having tax  and national insurance deducted at source from the state-owned Directly Operated Railways, which is responsible for the East Coast mainline. They are now on the pay roll and are currently paid £244,000 and £171,000 a year respectively. Originally it appears the money was paid into their two personal service companies run with their wives.

A  full report in Exaro News today names the two top officials cited in a written Parliamentary statement from Danny Alexander, Chief Secretary to the Treasury last week which revealed that 128 civil servants had been caught on ” off pay roll” contracts that should be have been full-time employees, Some 125 former civil servants who quit have now been reported to Revenue and Customs.

 But the Treasury has put the blame on the other three on two ministries, Transport and the Department of Environment, Food and Rural Affairs and has fined both ministries over £500,000 between them for the lapse which they should have put an end after six months.

Michael Holden. chief executive of  state-owned Directly Operated Railways

Michael Holden. chief executive of state owned Directly Operated Railways

 Michael Holden appears to be all round railway buff,competitive  swimmer, fell walker, and an advocate of the beauties of Surrey living in Woking. As non executive chairman of East Coast Rail ( which I can praise for a good service to disabled people) a member of the travelling public recently asked him to pose for a picture on their mobile.

He describes himself on his Twitter account as: “A bit grumpy, mostly old, but all man, busy with railways, being dad and lots of other stuff. Looking for that elusive work-life balance thingy.”

On his Linked-In page, he says: “I lead the UK government’s business unit capable of running rail franchises when no tendered franchise can be put in place.” He runs a personal-service company, Coledale Consulting. He describes it as: “Railway-management consultancy specialising in strategic advice to railway companies. Clients include infrastructure providers, train operating groups and companies, and client side including government. UK, Ireland, Sweden.”

David Walker appears to be  a less flamboyant and is not on Twitter. He has interesting links with Romanian as well British railways..

The third case uncovered by the Treasury was at the Animal Health and Veterinary Laboratories Agency (AHVLA), which hired Claire Evans off payroll as director of corporate services in October 2012.

Her annual salary last year was between £140,000 and £145,000.

Again, the Treasury said that the AHVLA was too slow to put Evans on the payroll. 

The biggest offender for off pay roll contracts is Vince Cable’s department of business,innovation and skills and its agencies – accounting for almost half the 125.