Exclusive: How Teflon Theresa dismembered “Two Brains” over London Met University

David Willetts: Two dismembered brains? Pic courtesy: The Guardian

Update: Three hours after Exaro News revealed the delay, London Metropolitan University announced it was scrapping the scheme altogether. A statement said it was going  to call in fresh consultants and  start again. It has abandoned the tendering exercise. David Willetts has truly lost everything over this.

The  furore over the threatened deportation of thousands of overseas students studying at London Metropolitan University is well-known. What is not so well-known is the political battle between two prominent ministers, Theresa May, the home secretary, and David Willetts, the universities minister – known as ” two brains” because of his formidable intelligence, over the heart and soul of Tory policy.

The train crash happened at the London Met because two different Tory policies collided with each other. Theresa is a champion of curbing illegal immigration. David Willetts is a champion of university privatisation. Successful and profitable privatisation however depends on attracting more- not less – immigration to the UK in the form of overseas students. The London Met, as we shall see below, was his pet project.

The two ministers were at loggerheads before this started and so far Theresa has outwitted  brainy Willetts.

Theresa May: Pic courtesy: The Guardian

The clue is revealed  in the court case that London Metropolitan brought to try to overturn the ban on recruiting overseas students. Here it is revealed it was Theresa May not the UK Borders Agency that ordered the ban. It was a political not an operational decision. Here I am indebted to Andrew McGettigan whose critical education site is well worth following. ( See     http://andrewmcgettigan.org/2012/09/24/update-on-london-metropolitan/  )

Now why was this decision so damning to Willetts? Well it was taken almost on the day London Met was to decide which private bidder – from BT Global, Capita and Indian firm Wipro – would take over running the university and win a £74m five year contract. Not only was this the biggest contract for a university in the UK but if successful  the private company could offer to run other universities, making the contract worth a staggering £500m. Full details are in my articles in Exaro News (http://www.exaronews.com)

Now Willetts and George Osborne had staked a lot on this and it was smashed overnight. Willetts is closely connected to Malcolm Gillies, vice-chancellor of the university. His former special adviser Jonathan Woodhead, is now  a £75,000 a year executive reporting directly to the vice-chancellor. Both Willetts and Gillies are strong advocates of what they call ” shared services” which allow a private company to take over the running of everything at a university with the exception of the teaching and the vc’s office.

George Osborne had been helpful by creating a hardly noticed change to VAT legislation this year -exempting private companies bidding for shared ownership schemes from being liable for VAT. At a stroke this cut their bid price by 20 percent.

But the uncertainty surrounding whether London Metropolitan University will get back its special status to recruit overseas students means that no private company is likely to touch the deal as they won’t know the size of the university or whether the university can survive at all without overseas students. And even though the university is appealing there is no date set for the judicial review.

So at a stroke Willetts’ pet privatisation scheme has been put on hold. Indeed altogether not a good year for Willetts. A separate plan to introduce a bill extending the rights of private universities to award degrees has been shelved for a year and he was the person who appointed Ed Lester, head of the student loans company, to his job under a ” tax avoidance” scheme that has now been vetoed,increasing Mr Lester’s tax bill.

Willetts has also in Tory terms been outclassed by the more radical and dangerous Michael Gove. Indeed if Willetts was a state school, his performance to date would mean he would be hived off to the private sector after failing his Ofsted.

Student Loans Chief Ed Lester’s personal company bites the dust

An idyllic scene at Temple Mill Island, which used to be the home of Ed Lester's personal service company.

Student Loans Company chief executive, Ed Lester, is closing down his personal service company after the furore over the revelations of his tax arrangements.

 A notice in today’s London Gazette reveals he and his partner Dolores Hawkins have applied to Companies House to have the firm called Placepass struck off the register.

Full details of the story are on the website http://www.exaronews.com  but suffice to say the company has been around for 14 years during the time Mr Lester worked for the Office for Government Commerce, NHS Direct and Motability and has had various home addresses from Cambridge to London Docklands.

The firm was used  as a ” tax efficient” way for the chief executive  to funnel his £182,000 pay and pension package and his £28,000 in expenses from the Student Loans Company. It was based at his home on Temple Mills island on the River Thames at Marlow, Buckinghamshire. The island is a gated community.

Ed Lester’s decision is interesting . The story of his tax arrangements  is already causing alarm among thousands of other people working for government departments, agencies ,the NHS and local government. The chancellor, George Osborne, is also looking at changing the tax laws covering this in tomorrow’s budget. It will be complicated and people need to watch for the small print in the Budget statement to find out what will happen.

Exclusive: Whitehall tax avoidance “scam” revealed

Flashy Student Loan Co HQ where Ed Lester works without being taxed at source. Pic courtesy BBC

Civil servants could be able to avoid legally paying tens of thousands of tax while working in Whitehall. An investigation by Exaro News and BBC Newsnight based on documents obtained by me through a Freedom of Information request has revealed an extraordinary personal tax deal negotiated by the Student Loan Company for its £182,000 a year Whitehall boss, Ed Lester. The deal is £140,000 salary,£14,000  bonus, £28,000 pension and £28,000 expenses for flight and Glasgow flat.

Documents released by the SLC and the Department of Business,Innovation and Skills reveal that Mr Lester, chief executive,pays no tax or national insurance at source but instead the SLC pay a consulting firm called Penna who pass the gross cash to a personal service company run by Mr Lester and a partner. This arrangement was approved by HM Revenue and Customs and the deal was signed off by David Willetts, the universities minister, and Danny Alexander, chief secretary to the Treasury.

As a result instead of paying tax at the top rate of 50 per cent – the company is likely to only have to pay corporation tax at the government’s new lower small company rate of 21 per cent and minimal national insurance. Mr Lester has declined to discuss the matter with Newsnight or Exaro News.

Full and extensive details are revealed in a series of articles on the Exaro News website (http://www.exaronews.com) – behind a pay wall but if you register  it is free for a week – or you can see the film about it on BBC Newsnight.

The investigation has forced Mr Alexander into ordering a  Whitehall wide inquiry to find out how many civil servants are benefitting from the same secret deals.  The reason is that ministers  DONT’ KNOW  and it looks like in Mr Willetts’ case DON’T CARE.  Alexander personally examined each top pay contract and now admits he missed the tax implications of this particular deal.

Whatever his inquiry reveals this arrangement looks to me on a par with all the recent scandals involving banker’s bonuses and Sir Fred the Shred’s stripped honours. Basically you as a taxpayer are paying the state to negotiate a deal for a very highly paid  official to avoid tax. This can’t be fair, right or decent to millions of low paid public and private sector workers who are paying a big whack in tax and can’t set up personal service companies – effectively to avoid paying tax. It also has the added insult that the man who has got this deal is pursuing every single student in the UK to make sure they pay every penny back of their student loan.

Going Downhill fast: The Liberal Democrats bankrolled by RBS

Nick Clegg-party in dire straits and bankrolled by the Royal Bank of Scotland

In the week when student protest over tuition fees reaches a climax, public support and money for the Liberal Democrats is collapsing all the time. And it is now even more in hock to one of the banks that provoked the financial crisis in the first place

In article in the Tribune  this week http://bit.ly/eC4Xb5 I point out that the party has had a bad time in recent local council  by-elections  getting as few as 10, 45 and 98 votes in some cases. It is also in an appalling financial  situation getting less money in the last quarter than UKIP and  relying on a big donation from the taxpayer via the Electoral Commission  to keep afloat. Only after the 2005 election were the figures worse. 

 A closer look at the party loan book reveals a delicious further irony – the party is actually being bank rolled on a £1m indefinite loan from the discredited Royal Bank of Scotland – the bank of Fred ” the Shred” Goodwin- which itself is being bailed out by the taxpayer and subject to a still secret report from the Financial Services Authority.

 Given Vincent Cable’s high-profile attacks on the banks for the poor lending, the business secretary is much more cautious in lending his party money than RBS. He gave a £10,000 interest free loan to the party on April 13 but demanded his money back, insisting it was repaid on May 25. He was one of only two donors post the election who wanted their money back pronto, the other more understandably being Susan Kramer, defeated by Zac Goldsmith in Richmond.

As for local elections performance the best guide is on this website http://bit.ly/fWKVmT . Although it shows a small overall gain of four for the Liberal Democrats, this can be accounted for entirely by their performance on general election day,May 6, where they made a few gains. Since then, apart from taking one seat from the Tories and a couple from Independents in Cornwall, they have slumped.

And all of this is before the cuts and tax rises have to bite and student fees go through the roof.

No wonder Vince Cable wanted his money back. He’ll need it for his retirement.