The union representing high-level civil servants has recently said that there needs to be a reduction in the deals occurring in Whitehall that reduce the amount of tax senior civil servants are paying.
This statement was made by the head of the union and he has stated that this practise is widespread in the government, especially in parts of it that are more commercially orientated.
The government previously issued assurances that money was not being paid in ways that can avoid tax but recent documents that were sent to the Guardian newspaper showed that around 25 staff employed in the civil service were having their salaries paid through limited companies.
This is a process that is most likely taking place to reduce the amount of tax these people have to pay. These figures showed that as well as an expense account around, £250,000 a year was being paid to these people on average.
Jonathan Baume from the First Division Association has commented, “We understand that this process cannot continue and we are working to become more transparent. It is obviously a very politically sensitive issue and if we are quite honest the current system is not working properly.
One of the only ways to solve the problems is for the government to raise the salaries of these civil servants. These deals are often established so that the amount of money these civil servants are being paid is disguised.”
Mr Baume issued these statements on BBC Radio 4 and he also stated, “We need to get a better idea of what is going on in these various departments and in the bodies that are related to them”.
The department responsible for the 25 people said that the people paid were not civil servants; this is despite them seeming to be working for the department for several years. They have however, commented that the pay is going to be reviewed in the near future by the Treasury.
A source from Whitehall has commented, “These arrangements are not something that can be defended but this is only a small example of what is happening in Whitehall. This is nothing but a scratch on the surface of what is really going on.”
The various staff who received the suspicious payouts were working in areas such as finance, strategy, medicine, and policy. The information was revealed by e-mails that were given to the Guardian and they actually discuss how damaging it might be if they were revealed to the public. The e-mails discuss how the department was looking for ways to avoid revealing the nature of the pay.
Last December, shadow Cabinet Office Minister, Gareth Thomas asked whether any staff in the health department were being paid through limited companies. In answer to the question, Simon Burns, the health minister stated that no civil servants were being paid in this manner. Mr Burns also commented, “It is against policy for civil servants to have their pay made to limited companies.
This does not however apply to people who are not civil servants. We have no intention about misleading anyone about pay and would be happy to make clarifications to anyone who seeks them.”
Mr Thomas commented, “The statement from the Department of Health is not enough and it is essential that Parliament are given correct answers about pay issues. I will be continuing to look at various tax arrangements that have been set up to reduce the tax liability of people involved with the civil service. The country is going through a time of financial crisis and it is important that everyone pays their fair share of tax.”