Off Payroll Public Sector Pay Arrangements - Barnet Bloggers Joint Statement

The subject of Town Hall Tax Dodging (a phrase coined by the Rt Hon Eric Pickles MP, Secretary of State for Communities and Local Government) is one of enormous interest to the Barnet bloggers, and we applaud the attention paid to this issue by the parliamentary Public Accounts Committee (chaired by the Rt Hon Margaret Hodge MP) which took place on Monday 16 July 2012. 

 

This investigation of the issue of tax avoidance by individuals in publicly funded posts came about following the disclosure by Westminster journalist David Hencke that Ed Lester, the head of the Student Loan Company, was being paid through a service company, and that there are similar arrangements on a very significant scale throughout the civil service and the wider public sector.

 

One witness before the committee was Carolyn Downs, the Chief Executive of the Local Government Association (LGA). She stated that the LGA had found only 13 examples of off-payroll public sector pay.

We know that this national figure of 13 is an understatement since the draft (i.e. unaudited) Annual Accounts of Barnet Council for 2011-2012 show that there are 14 such arrangements recorded as having been in place during the year for senior officers. 

 

Far from being a practice that is diminishing it is noted that in the previous year's accounts there were only 8 such arrangements.

 

The evidence to the committee was that these arrangements were used in the short-term. We can show that this is not true and that, on the contrary, these arrangements are used routinely for long term appointments.

In Barnet, one ‘interim’ post paid through a private company has lasted for more than three years. An appointment lasting over 3 years cannot be described as short-term. In addition, a Freedom of Information request has revealed that there have been no efforts to replace this individual with a permanent staff member.

Evidence to the committee also suggested that there was virtually no difference between the tax paid under PAYE or via a service company. That is to ignore two factors. If a service company is used certain expenses, such as travelling, can be reclaimed whereas an employee does not get tax relief for home to work travel costs. In addition, service companies are able to pay out their profits as dividends and National Insurance Contributions are not paid on those. The overall contribution to the Exchequer will be less if a service company is employed.

 

We look forward to the day when Barnet Council ensures that all its officers (employees) are treated equally and that all those people who receive their pay from the public purse recognise what Mrs Hodge referred to as a ‘moral duty’ to make their fair contribution to the taxes which contribute to the good of society.

We call on Nick Walkley, the Chief Executive of Barnet Council, to negotiate the return to the payroll of the officers concerned as this will reduce the penalties that will have to be paid as a consequence of the inevitable HM Revenue & Customs PAYE compliance visit.

 

We also look forward to following the evolution of this story in front of the Public Accounts Committee once the summer recess is over.

 

Derek Dishman

John Dix

Vicki Morris

Theresa Musgrove

Roger Tichborne

Self Employed Senior Council Officers - Time Is Up For This Tax Wheeze

The big concern about full time staff being paid as consultants continues to rumble on. This morning the Daily Telegraph reports on consultants being paid £350 and £375 a day for their services. Sounds cheap to me compared to the rates that are being paid to the numerous consultants in Barnet.

Barnet’s own annual accounts for 2010/11 identifies 9 senior officers who are paid as consultants, but that is just the tip of the iceberg. I have seen the invoices to some of these consultants and the fees are quite shocking. A consultant who comes in, does a discrete piece of work and leaves moving on to the next project is one thing. But what we have in Barnet are people who have been working full time for over a year in a designated council post.

Since it was discovered that the head of the Student Loans Company was a self employed consultant, this issue has gained some publicity but the Bloggers of Barnet have been going on about this issue for a very long time and have been completely ignored. Her Majesty’s Revenue & Customs have a very useful tool on their website - Employment Status Indicator - which helps to establish whether someone is an employee or a self employed in the eyes of the tax authorities and it is obvious to me that many of these consultants are technically employees. As well as avoiding tax this situation creates liabilities for Barnet Council which, according to the HMRC website includes the ability of these consultants to claim redundancy and claim for unfair dismissal.

The time has come for Barnet to put its house in order and regularise the employment stays of its many ‘consultants’ and if councillors or the chief executive won’t initiate this process then it is about time that Eric Pickle did.

An open letter to the Secretary of State for Communities and Local Government

Barnet Bloggers are fed up with the lack of transparency at Barnet Council, particularly their attitude to Freedom of Information requests. Set out below is an open letter to the Secretary of State for Communities and Local Government

Dear Mr Pickles,

In June last year, as part of your stated policy of commitment to the principle of ‘localism’ and greater accountability by local authorities to the communities they represent, you issued the following statement:

New era of transparency will bring about a revolution in town hall openness and accountability

“Getting council business out in the open will revolutionise local government. Local people should be able to hold politicians and public bodies to account over how their hard earned cash is being spent and decisions made on their behalf. They can only do that effectively if they have the information they need at their fingertips.

“The public should be able to see where their money goes and what it delivers. The swift and simple changes we are calling for today will unleash an army of armchair auditors and quite rightly make those charged with doling out the pennies stop and think twice about whether they are getting value for money.”

As part of your programme of action to make local authorities more accountable you have created an obligation for them to disclose details of expenditure and have expressed the intention to compel councils to allow citizen journalists to film, photograph and tweet reports of council meetings.

In conjunction with these new directives, you have expressed the wish that residents use existing legislation in order to scrutinise the processes of local government, including, most importantly, the rights given in the Freedom of Information Act of 2000.

All of these suggestions are commendable, and should indeed further extend the powers of scrutiny to local communities.

It is deeply regrettable, therefore, that here in the London Borough of Barnet, rather than embrace a policy of greater transparency, the Conservative administration is making every effort to resist any obligation to be more accountable to its electorate, and is, in direct opposition to your wishes, obstructing the efforts of the armchair auditors that you so applaud.

In a speech at the CIPFA conference in July this year you made the following remark:

I was shocked by a recent case in Barnet. The council had hired a private security firm, MetPro, which included “keeping an eye” on local bloggers - at a cost of over a million pounds. The contract had been awarded without a tendering exercise, without a written contract, and no proper invoicing. An internal audit showed there “serious deficiencies in current procurement arrangements”, and there were no guarantees that against a repeat of such practices.

Irony of ironies - this misuse of public money was uncovered thanks to the determination of local bloggers and activists, including Barnet Eye, Mr Mustard, and Mrs Angry (as she had every right to be.) Exactly the same people MetPro snooped upon.

I've got news for Barnet. Live blogging from council meetings. Microjournalism. Call it what you like. It's here to stay. In fact this citizen samizdat - local people reporting on their local council's triumphs and shortcomings - is the perfect counterblast to town hall Pravdas.

As you know, Mr Pickles, here in Barnet bloggers have had to fight for the right to film council meetings, and we have made huge efforts to uncover the ‘deficiencies’ which lay at the heart of the MetPro affair, as well as bringing to the attention of the community a number of other serious issues of concern to all residents.

Earlier this year, in defiance of the move to greater transparency and accountability, and to a more meaningful engagement with citizens, we have seen Barnet’s Conservative administration attack the local constitution, restricting the right of elected councillors to speak at meetings, and worst of all, censoring the local Residents Forums so that absolutely no discussion of any council ‘policy’ may now be raised, nor any issue alluded to within a six month period be submitted for inclusion. These and other draconian and undemocratic regulations are read out in detail at every Forum, and their imposition has caused enormous anger and resentment amongst residents.

Even more worrying, perhaps, is that the culture of secrecy and fear of transparency which is so endemic in this local authority has now extended to the council’s flagrant abuse of the Freedom of Information Act.

Barnet bloggers and armchair auditors – and other residents – who have submitted FOI requests to Barnet Council are increasingly having their enquiries obstructed or needlessly delayed, particularly enquiries on issues of political or financial sensitivity.

Two FOI requests submitted by residents in regard to the MetPro affair, for example, were only answered a few days ago, on 16th September, after an inexplicable delay of several months.

One request had been made in early April, the other in early May. As you will know, the statutory period within which responses must be made is 20 days.

Another request made in relation to potential declarations of interest between senior officers of the council and a major private company was ignored for months and then obstructed on a pretext, despite a current outsourcing tender process for a package of services worth a staggering £750 million in total, in which this influential company is now one of those shortlisted.

In Barnet there is no open declaration of interests, gifts, or hospitality given to senior officers, and one response given to an FOI request by a blogger in regard to such declarations was sent with the identities of donors withheld, invalidating the information and again obstructing the purpose of the enquiry.

The FOI request in regard to the tendering company was reported to the external auditors at a meeting in July: despite an assurance that the issue would be investigated by them under the terms of their remit, we are not aware of any progress in their enquiry.

After struggling to hold the authority to account for FOI responses which were withheld, delayed, or misleading, one Barnet blogger has recently been sent, in reply to a perfectly valid question regarding a hugely over budget IT system, a response refusing to address his request for information, on the grounds that it is ‘vexatious’ and because of the alleged number of previous enquiries.

In Barnet, bloggers, armchair auditors and residents are obliged to resort to making an increasingly large number of FOI requests in response to an obstinate refusal by the authority to comply with the intentions of your stated commitment to greater openness, accountability and transparency, and in order to place the necessary information in the public domain, in a medium easily accessible to all.

Despite the demonstrably inadequate state of preparation revealed by the MetPro audit report, and despite the concerns of so many backbench Conservative councillors, a highly controversial programme of massive outsourcing is being promoted by Barnet’s senior management team and council leadership as the keystone policy of the ‘easycouncil’, One Barnet agenda. There could hardly be a time in which a need for openness and accountability could be more pressing. Public confidence in the governance of this borough is, however, at an all time low, and we, as residents and citizen journalists therefore ask that you, in defence of your stated policy of localism, investigate the obstructive and anti-democratic practices employed by this authority in a sustained attempt to prevent proper scrutiny of its actions and decisions.

Yours sincerely,

Derek Dishman
John Dix
Vicki Morris
Theresa Musgrove
Roger Tichborne