Tax avoidance is OK for civil servants (but not the rest of us)
It’s funny isn’t it. Tax avoidance used to be OK (tax evasion is the illegal one) and then it became morally reprehensible. Now, it seems, tax avoidance is flavour of the month again, but only if you are civil service top brass.
Recent reports that the head of the Student Loans Company, Ed Lester, was receiving his six figure salary in the form of untaxed payments into a limited company drew outrage, and Chief Secretary to the Treasury, Danny Alexander, was quick to stamp out the practice, assure us this was a rarity, and an unusual case because Lester was a contractor before becoming an employee. He urged Whitehall departments to unwind similar schemes as quickly as possible, telling the Guardian: "When we all have to pull in the same direction to tackle the country's financial problems it is essential we all pay our full and fair share."
Yesterday, however, the paper revealed a further 25 such head honcho types, this time in the Department of Health, were also using limited companies to (probably) sidestep PAYE and national insurance. The Guardian’s investigation revealed that the single largest non-salary salary payment was £273,375 and that nineteen of the staff are paid more than £100,000. In the majority of payments, the fees were paid to companies with the same address as the home address of the staff member. The Department of Health claims the 25 were not civil servants, or technically even staff, though many have been employed for many years and hold very senior positions. The arrangements, which were first questioned back in December, will now be subject to review by the Treasury.
Today, the head of the senior civil service union, Jonathan Baume, has come out challenging the practice of tax avoidance, while also saying these people just need to be paid more.
Baume, the general secretary of the First Division Association, told BBC Radio 4's Today programme: "We now need to be very transparent, very clear that this cannot continue, but at the same time grasp the very difficult political nettle which is to address pay at the senior levels of the civil service. Frankly, it's a shambles. Ministers are going to have to raise the salaries."
He added: "Under the last Labour government there was a big push to bring people into the senior levels of government, from in particular the private sector … in certain cases because the market rate was so much greater than the salary that would have been offered in the civil service, various deals were being done and some of these are now being exposed."
So, what he’s saying is that, really, we only have ourselves to blame. If we had only paid the poor little blighters the going rate in the first place, they wouldn’t have had to worry about avoiding tax. Yeah, right.