Lester & Alexander - cock-up and now conspiracy?

As a senior level interim I have become transfixed by the 'car crash' that is the Lester case. The Municipal Journal has reported:

"Senior local government officials face a potential Treasury probe into their personal tax affairs following revelations that the head of the Student Loans Company (SLC) avoided paying tax on his salary, under arrangements agreed within Whitehall.

Ed Lester was not added to the SLC payroll when given a two-year contract in January 2011, and was paid through a private firm - a loophole which saved him an estimated £40,000 a year on his tax bill.

His £182,000 pay package will now be taxed 'at source' meaning tax and National Insurance will in future be deducted, ministers say.

The discovery of Mr Lester's payment methods, following a BBC Newsnight and Exaro News investigation, has prompted the chief secretary to the Treasury, Danny Alexander, to launch an investigation into senior public sector employees' pay." 

This is particularly interesting on a number of levels. First, because of course it was Danny Alexander himself who signed-off the terms of the Lester agreement. Could it be that Alexander is launching an inquiry (not into engaging interims in Whitehall it seems, but 'senior public sector employees' pay' - interims are by their very status private sector providers!!) because it's a way of diverting attention from his specific role in one case? 

Second, why should 'public sector employees' pay' be investigated when Lester was an interim and then a permanent official on a fixed-term contract? Any investigation needs to satisfy itself of the probity when engaging interims of course, but why investigate public sector employees' pay? Is this a fishing expedition? If so perhaps,perversely, we ought to welcome it. If he investigates properly, he'll find a small three figure number of senior LG employees earning over £100,000 a year and 10,000 employees in the NHS earning over that sum (watch Lansley step in when that happens).

Third, it might have been a quite legitimate arrangement to save the government department that procured him from certain costs when engaged as an interim, but Lester, like most interims, should have been quite aware of the shift in his engagement status when he moved into the fixed term role - and so would his client/employer. So this case needs to be properly understood because the SLC might have been saving their Government department money through the original arrangement, as well as Lester, but at the same time avoiding providing HMRC with its due, i.e. it's as much SLC's fault as Lester's (not that I have a great deal of sympathy for the latter).

The MJ goes on to report, "A Treasury spokesperson told The MJ: 'We have not worked out the precise scope of the investigation. That decision is ongoing. We need to consider what extent this could cover local government.

'We are considering the issue of whether there is anything we can do in relation to local government, but we don't have the same remit there. We can't dictate to them in the same way we can central government.

'There will be natural limits to what we do in regards local government but that does not mean we can’t consider what we can do.'

So, scope creep? Opportunistically, it might be claimed,  the government that allowed Lester to operate as an interim when actually an official try to expand the matter to fold in local government. (Has Eric 'neutron' Pickles muscled in here, e.g. "Hi Danny, Eric here. Listen youth, why don't we have a poke around in LG on the back-of this Lester case?). 


Transparency of relationship when public services engage external support is essential, yet in this case I get a sense that Government is attempting to find a way to demonise the public sector again, whilst yet again failing to 'investigate' and act on the preposterous salaries and bonuses paid to barely competent senior figures in banks owned by the nation, i.e. public sector employees. 

In conclusion, the MJ tells us, "Mr Alexander, who signs off all civil service salaries above £142,500, told the Commons yesterday, he was 'not aware…of any tax benefit to the individual [Mr Lester] concerned’ when approving the salary level, which he claimed he had 'reduced significantly'. 

I think Alexander's senior civil servant could be investigated for not having briefed his SoS properly. The tax benefits to all parties should have been obvious. Maybe the benefits were accepted as being to the SLC's benefit as well as Lester's and they decided to 'sod the HMRC' and its share - figuratively speaking, of course!