Tax arrangements exposed by Exaro will be scrapped, Alexander tells Parliament
By Alison Winward and David Hencke | 2 February 2012
MPs lined up to challenge ministers in an emergency debate today in Parliament over a special tax deal for a top civil servant. Revelations over the contract – published by Exaro yesterday – triggered a lively debate in the House of Commons.
An investigation by Exaro, in conjunction with BBC2’s Newsnight, yesterday revealed how the contract for Ed Lester, chief executive of the Student Loans Company (SLC), allows him to reduce his tax bill by thousands of pounds.
Danny Alexander, chief secretary to the Treasury, announced to MPs today that the government was scrapping the tax arrangements. He said: “The Student Loans Company will, for the remainder of the contract in question, change the arrangements, and deduct tax and national insurance at source.
“Across government, if any appointments are found, whether agreed by this or the previous government, which do not provide value for money, I have urged departments to seek to unwind them as quickly as possible, and as quickly as is compatible with securing good value for public money.”
After our disclosures, the speaker of the House of Commons, John Bercow, granted permission for an ‘urgent question’ on the issue following a request by Nick Brown, the backbench MP and former Labour chief whip. Alexander was summoned to Parliament to answer questions on the issue.
The ‘urgent question’ demanded “a statement on the government’s policy on the use of tax-avoidance devices by government departments and public servants.” It led to a 45-minute debate in Parliament, with MPs demanding to know who approved Lester’s tax arrangements.
Whitehall documents obtained by Exaro show that Alexander and David Willetts, Conservative universities minister, agreed to Lester’s contract.
However, Alexander says that he was unaware of any potential tax benefit to Lester and ordered an urgent Whitehall-wide review of the issue. Alexander repeated this point several times to MPs today.
The SLC told Exaro that its position was that Lester’s tax arrangements were a matter for him and HMRC, but that he declined to comment.
Before the debate on Brown’s ‘urgent question’ began, Vince Cable, the business secretary, was also challenged in Parliament about Lester’s contract because his department oversees the state-owned SLC and negotiated the deal.
Cable told MPs today that Lester was “an exceptionally useful individual who has helped to turn round that organisation.
“The arrangements under which the negotiations took place involved substantial value for money for the taxpayer, and a tax cut by the individual. We shall pursue matters of public concern on the tax issues.”
Willetts, a junior minister at the Department for Business, Innovation and Skills (BIS), approved the contract.
The department issued a statement to Exaro, saying that it had followed proper procedures, adding: “Details of the arrangements were transparent throughout.”