Leading article: Tax clampdown must start at home

Friday 03 February 2012 01:00

Every so often, observers of our body politic have to pinch themselves. Did they really hear that? Did the minister say that? So it proved yesterday, when the Chief Secretary to the Treasury was dragged to the Commons Chamber to answer an urgent question from Labour on the revelation that the head of the Student Loans Company had his salary paid gross to a private company, enabling him to reduce his tax and national insurance payments.

Said Danny Alexander: "There is no place for tax avoidance in this government." The minister went on to say that in future Ed Lester would be subject to PAYE – the same, you might have thought, as all public servants. Not a bit of it. Mr Alexander added that he had asked the Treasury to review the "appropriateness of allowing public sector appointees to be paid through this mechanism" – a clear hint there could well be others availing themselves of the same ruse.

Successive governments have said they are opposed to tax dodging – as far back as 1993 this paper's sister, The Independent on Sunday, caused a sensation when it broke the story that John Birt, then director-general of the BBC, was being paid as a freelance, enabling him to offset all manner of expenses against his income and reduce his tax liability.

It beggars belief that, despite all those assurances, the Government's own workers are indulging in such schemes. Protestations from the Business Secretary, Vince Cable, that Mr Lester was "an exceptionally useful individual who has helped to turn round that organisation" [the Student Loans Company] are risible.

No one is doubting Mr Lester's qualification for doing his job. What matters is his paying less tax than his colleagues on PAYE. The very existence of this arrangement right under Whitehall's nose only brings into focus the Government's professed drive against the rich hiding their earnings in offshore tax havens. It is made worse for this being a period of austerity when other officials have been losing their jobs.

Mr Alexander is right: there is no place for tax avoidance in this government. But words on their own are not enough. He must also show that he means it.

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