Treasury chief secretary Danny Alexander has ordered a review into the salary arrangements for “all senior consultancy appointments” after the revelation Ed Lester, chief executive at the Student Loans Company (SLC), was paid through a consultancy firm in order to reduce tax on his salary package.

At least two further senior officials are known to be paid via private companies, at the Office for Nuclear Regulation. The two officials – believed to be COO Paul Brown and finance director Jon Seddon – were appointed on an interim basis in November 2008 and February 2010.

Lester was initially employed as interim chief executive in May 2011, receiving pay through his “personal-service company” so that he paid a lower rate of tax on his £182,000 salary package.

When Lester became permanent chief executive in January 2011 the arrangements continued, with approval from Alexander. However Alexander only approved the overall pay and “was not made aware of any potential tax benefit to an individual,” said a Treasury spokesperson.
The Treasury has now written to all departments asking them to carry out “an urgent internal audit” to be completed by March 2012 “to ensure that all senior consultancy appointments provide value for money in this regard,” said the spokesperson.

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Written by Suzannah Brecknell, CSW