Tag Archives: Treasury

Revealed: The £271 billion “rape” of the National Insurance Fund that deprived 50s women of their state pension

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Guy Opperman – the current pension minister who says it is too expensive to pay the 50s women.

CROSS POSTED ON BYLINE.COM

The fact that 50s women  were robbed of their pensions  by raising the pension age is undeniable. But the biggest argument against putting this right has been the cost – a fact perpetually used by the present pensions minister, Guy Oppenman, who quotes the £70 billion plus figure.

Recently I discovered that successive governments had taken a decision  NOT to top up the fund as originally proposed by William Beveridge when the welfare state was set up in 1948.

What I did not know was how much money was lost. Now thanks to an extraordinary paper prepared for the National Pensioners Convention by a social security expert Tony Lynes,and still on the web, I now know. And it is staggering. You can read it here.

The paper written 12 years ago by a man I personally knew as a fount of all knowledge on the benefit system  when I was social services correspondent on the Guardian. He sadly died, aged 85, in a car accident in 2014. There is an appreciation of him in The Guardian here.

His calculation from beyond the grave is that for every year that the government decided not to contribute to the fund it was deprived of £11.3 billion. As he says: “Restoring the supplement at its pre-1981 level would bring an extra £11.3 billion a year into the Fund, enough to meet the gross cost of a £109 per week basic pension.”

We now know that virtually no money was paid into the fund by the Treasury for around 24 years from 1990 to 2014. I calculate – and this will be a conservative estimate – because it doesn’t count the reduced contributions post 1981 – that an amazing £271 billion  yes billion  extra would have been in the fund.

This would pay  more than three times over the money due to the women – and even allowed higher  state pensions for everybody else now.

Why this didn’t happen is because politicians of all three major parties took a decision not to do this. They took the decision knowing that their Parliamentary and ministerial pension pot would mean they would be some of the wealthiest pensioners in the land when they came to retire. And the taxpayer would foot their bills.

They decided the pain should fall on the electorate instead. In 1995 they knew  all the arguments about people living longer and that money paid out in state pensions would go up.

They  could have changed the rules and informed the Government Actuary  Department that they would deliberately build up a surplus in the fund – so it could pay out as people lived longer without changing the pension age.

Instead they chose the cheapest  route – raise the pension age so they won’t have to subsidise the fund- but try and keep mum so the women wouldn’t realise what they were doing.

The villains are the late Lady Thatcher, John Moore, Kenneth Clarke, Sir John Major, Tony Blair, Gordon Brown, Steve Webb and Guy Opperman. There are many others who stood by and did nothing. That is why 50s women have been left in this situation today.

 

 

Revealed: The Treasury mandarin who said losing £1bn for the taxpayer was value for money

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john kingman, second Permanent secretary at The Treasury Pic Credit: worldellows.yale.edu

john kingman, second Permanent secretary at The Treasury Pic Credit: worldellows.yale.edu

CROSS POSTED FROM  BYLINE.COM WHERE SOME OF MY WHITEHALL AND WESTMINSTER SCOOPS WILL NOW APPEAR FIRST AS PART OF A NEW CROWDFUNDING DEAL TO WIDEN THE SCOPE OF THIS BLOG

There has been enormous outrage about the £1bn loss to the taxpayer caused by the sale of the first tranche of Royal Bank of Scotland shares. An article in The Guardian on August 4 reported not only expected criticism from Labour but concern from a banking analyst that the share price of RBS was too low to justify the sale.

What was only briefly mentioned was that the second most powerful mandarin in the Treasury had also given the go ahead. You might expect him to bow and scrape to the Chancellor but actually he has more powers than you might think and he needn’t have followed his instructions.

If an accounting officer believes that a government minister is about to make a decision that will lead to a big loss to the taxpayer he can refuse to approve the action.

These actions are not taken lightly – one of the most recent examples being the refusal by Richard Heaton (soon to become Permanent Secretary at MoJ) who requested one, on value for money grounds, on 26 June over extra funding for the Kids company charity. He was overruled by ministers who have now seen to have made a big mistake as recent coverage reveals.

John Kingman could have done the same thing. He would face being overruled by George Osborne but it would have caused a furore and triggered an eventual Whitehall investigation.

John Kingman Letter Instead as this letter above shows he has positively embraced the sale.

“ I am satisfied that a sale at this time would offer good value for money for the taxpayer and meets all other requirements in accordance with the principles of Managing Public Money,” he wrote to George Osborne.

Really?  Now John Kingman is one of the cleverest mandarins in Whitehall. He hates holidays, lives in Leicester Square and one former colleague describes him in these words: “His arrogance is only marginally ahead of his considerable intelligence, whereas with most ambitious men of his ilk the gap is rather larger.” A profile in 2009 by political editor George Parker in the Financial Times says it all.

He writes “If he can achieve the goal of unwinding the taxpayer’s stake ( in RBS) at a profit, his route to the top of the civil service is clear, even if some question whether he has the patience to manage such a huge, traditional organisation. “

Well at the moment he hasn’t – he has acquiesced in a £1 billion tax loss. And I am not the only one who has noticed this.

The National Audit Office, Parliament’s financial watchdog, which reports on state asset sales, confirmed to me “We are watching the situation”.

They will have to make a report on this. This will lead him to have to appear before the House of Commons public accounts committee to justify why he approved what was done.

No doubt the government would like Parliament to take its time – perhaps not report until the entire sale is over – but that won’t be until 2020.

I say the huge loss to the taxpayer should not go unchallenged for years. Bring it on now!

Tax Avoidance:Treasury ” We screwed Up”,BBC ” Nothing is wrong.”

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Treasury mandarin Sir Nick Macpherson- admitting catalogue of errors Pic Courtesy: BBC

Yesterday Parliament’s Public Accounts Committee had the Treasury, the BBC, Revenue and Customs and local government before them. Subject: How have so many publicly paid figures got away with tax avoidance.

You could not draw more of a distinction between the evidence given by Whitehall and the BBC on the  same issue. There are are detailed reports by me and Mark Conrad on the Exaro news website ( http://www.exaronews.com) about the hearing.

Suffice to say Sir Nick Macpherson, permanent secretary to the Treasury, put his hands up. He admitted ” a catalogue of errors” had led Student Loans Company chief, Ed Lester, to get a £182,000 a year  job with the government and avoid having tax and national insurance deducted at source. Indeed Howard Orme, the financial director of the Department for Business, Innovation and Skills, admitted he originally wanted £260,000 a year to do the job.

The disclosure that 2400 Whitehall staff have personal contracts shocked Sir Nick. He was forthright: “The Treasury had been asking the wrong questions. We were concentrating on value for money and not on the tax implications. We should have looked have looked at the figures more carefully.”

Contrast this with the BBC’s chief financial officer,Zarin Patel, who despite disclosing that the BBC employs a third of staff – some 25,000 – as freelances and admitting that 148 of the 467 journalist talent are paid through personal service companies, thought there was no tax avoidance at all.

Patel said: “There is no difference to the HMRC whatever way this is done.” In other words it doesn’t matter.

Not a view shared by the committee, Margaret Hodge, the chair, pointing out there was nothing worse than ” a person paid by the taxpayer avoiding tax.”

Patel’s complacency was also shattered later when HM Revenue and Customs chief, Lin Homer, revealed the paucity of checks on these people who have personal service companies. She disclosed that over three years the number of checks had been 25,12 and 23 respectively. One MP  even wondered whether this should be made public because it would only encourage more tax avoidance and evasion. This is now going up to 230 – but with 3,000 non journalists at the BBC on personal service contracts alone – how much difference will this make. More grist to the case presented by Mark Serwotka, general secretary of the Public and Commercial Services Union, that the Revenue is indeed well understaffed to do its job.

More interest for Freedom of Information freaks – it emerged that the information I got through  the freedom of information request  which blew the whole story – is now to be used as a case study by Whitehall of how something can go wrong ( or at last I hope so!).

The London borough of Barnet also emerged in its true colours . Evidently it had not replied to a request from the Local Government Association to disclose how many senior staff were on personal service contracts – the number according to the redoubtable Mrs Angry @brokenbarnet is 13. But Mps appear to be on the case – they will need to be vigilant, Barnet has a habit of not co-operating with anyone who wants information.

The hearing was a success. The next stage will be to ensure there is proper action to get these wheezes stamped out, the sooner, the better. And of course end the BBC’s complacency over this issue.

Reported to HMRC:The £100,000 a year Treasury minister too poor to pay an intern

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David Gauke MP, the Treasury minister who wants his intern to work for free for at least six months

Today the website graduatefog reports that David Gauke has been reported to HM Revenue and Customs for being in breach of the minimum wage legislation for offering an unpaid ” training post” in his constituency. As readers of this blog know this is not the first time he has had advertised for a six month unpaid vacancy. So perhaps HMRC should take other recent appointments into consideration.+
Since this blog appeared Mr Gauke has attacked as ” morally repugnant” people who pay cash to builders, cleaners etc. if they beleive it is part of tax avoidance. But presumably this does not arise for his interns – as they work for free anyway.

After a Budget that gave  tax cuts for the rich and pay freezes and job losses for the poor, step forward, David Gauke, Exchequer Secretary to the Treasury, forced to answer questions on the pasty tax U turn today. He is the man who will oversee the tax cuts in the new finance bill and has overall responsibility for HM Revenue.and Customs. He is also in charge of policing the minimum wage when unscrupulous employers avoid paying staff ( you couldn’t make this up)

His big contribution to help Britain  moving is to offer one new personal job at his constituency office in Rickmansworth, Herts. There is only one problem. You need to either have rich parents ( who will give you an allowance) or a lot of inherited wealth.  There is no pay and you must be Tory inclined( and obviously believe working for free is a good Tory policy)

The advert is here. http://bit.ly/AlHBho

As a minimum condition you must work for him for  nothing for six months  if not a year or more and you better have at your own expense, learnt advance computer skills ( doesn’t sound that Mr Gauke is computer savvy).
As it says: “Duties will include administration, basic correspondence, diary management, fundraising, campaigning and related tasks. The intern will also have the opportunity to work one day a week in the Westminster office.”

Now I understand as his constituent that Mr Gauke is very hard up. He only has an income of just over £100,000 a year – with his £98,750 salary and he claims from the taxpayer a London living allowance of £3379.15 a year ( desperate problem for MPs having to pay for higher London prices except for the taxpayer paid subsidised food in Parliament)

Funnily enough his expenses paid by the taypayer for the last financial year come to almost the same £98,680.93 as his salary including some £78,000 on staff ( presumably in Westminster rather than Rickmansworth), another £9000+ on accommodation and £10,000+ on administration. So the poor man only has £200,000 going through his accounts.

Then there are his two homes to maintain by Tory standards well below any mansion tax level. But  poor man,since this terrible crackdown on  Mps expenses he has had to lose  such a lot.  He did grab £15,000 a year  in mortgage interest payments ,a  quarterly £687 maintenance charge and car parking fees- all paid  from the  taxpayer on his Westminster Bridge Road apartment in London which he paid  £285,000 in 2007.  Mind you he has had a £30,000 rise in his income since the coalition came to power.

Incidently none of this latest expenses information is on his personal website – which  on this issue doesn’t appear to have been updated since 2009. No doubt this will be done free of charge by his new employee.

What one might have expected from a government with one million young people on the dole – is that Mr Gauke might have just gone down to the Watford or Hemel Hempstead dole office- and given a leg up to some Tory inclined youngster on the dole. Or he might  like many other Mps in his party just decide to pay a minimum wage to one of the newly unemployed graduates. But obviously paying £6 an hour would send him and his wife to the bankruptcy courts. For Mr Gauke, it is not Greed is Good  but Exploitation is Excellent.

Perhaps as a resident of Berkhamsted in his constituency we should launch an appeal for the cash stricken Treasury minister or send food parcels to his new recruit so he can at least survive on an egg sandwich.

Internaware  who campaign at @internaware against exploiting interns are not impressed. Gus Baker said: “Revenue and Customs have set up a hit squad to enforce the minimum wage for interns and yet the minister in charge is refusing to pay the people in his own office.

“David Gauke… is also putting an opportunity out of the reach of the vast majority of young people who can’t afford to work for free.

“At a time of high youth unemployment when young people desperately need to demonstrate experience on their CVs, this is completely irresponsible.”

Mr Gauke is very comfortable with this. He told BBC News which followed this up : “It’s advertising for a post for volunteers. Lots of people want to do it. It’s good experience.

“It involves visiting my local Conservative Association, getting some experience of Westminster.

“I think that’s perfectly reasonable and those that have had the experience of working there have enjoyed it and found it very good experience.”

Anyway for those who want to tell him what they think his e-mail at Parliament is gauked@parliament.uk  and the constituency office address for food parcels is Scotsbridge House
Scots Hill, Croxley Green,Rickmansworth Hertfordshire WD3 3BB.

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.