Readers of this blog will not be surprised by the story in today's press that there are armies of people in the public sector being paid via personal service companies, rather than through the payroll. Who'd have thought it? We've already seen that there's nothing illegal about this but I feel this won't stop most people missing the point: it's not about the tax it's about the cost of these people.
Take Nick Johnson. He's head of housing at Hammersmith and Fulham council. You may think that this seems like a pretty boring job and one that could be done by any reasonably competent administrator who knows a bit about housing matters. But if you think that, then you are, like Chris Farlowe, way out of time. No, this cannot possibly be the sort of dullard's sinecure that you might reasonably imagine it to be because (gird yourselves) he has been paid more than £900,000 over 4 years! Or rather, his personal service company, one Davies Johnson Ltd., has.
Wow! This is the job for me. Clearly it must involve incredible risk-taking and entrepreneurial flair. He must have added zillions in value for the burghers of this part of west London. He must know more about housing than you ever thought it possible to know and he must be a dynamic young thruster. Goodness knows how many applicants (or other companies?) he had to fight off to land this top top job.
Well actually, old Nick was a pensioner. Yep, he'd retired as head honcho of Bexley council a while back. Before that, he was head of Bexley social services. Not sure if he ever worked in housing but perhaps this company, Davies Johnson Ltd., is not actually a brass plate affair at all but a major enterprise with years of experience in the housing sector and Nick just happens to be one of its many well qualified employees. OK calm down, I'm only kidding.
There's actually three things wrong with this business and none of them has anything to do with tax. The first is that Nick's cosy corporate arrangement has more to do with the fact that to earn this kind of dosh himself might jeopardise his Bexley pension, so it's avoiding the rules of the pension scheme, as well as (maybe) tax. (Due credit to Private Eye for pointing this our some time ago.) Second, it's just not fair is it? We've discussed before how this personal service company lark could, in theory, work for anyone but dontcha just know it's always the guys at the top who seem to be accommodated in this way; how many of H&F's housing officers, toiling away in the council estates of Shepherd's Bush, have personal service companies I wonder? Truly, to those who have shall be given.
But third and most important by a mile is, how on earth is it necessary to pay someone so much to do this kind of job? I'm not holding our mate Nick solely responsible for the UK's dire financial position but quite obviously there are an awful lot of Nicks around plus even more deputy Nicks and so ad infinitum and it all adds up to a figure not unadjacent to £far-too-much. The plot has been well and truly lost at some point during mad Gordie's reign and the fact that the public sector feels it reasonable to throw money around like this is one of the main reasons we've run out of cash.
Finally, back to the tax-avoiding angle. This is actually the only bit of good news. How so? Well you may remember that we pointed out how paying a company rather than an individual means no employers' national insurance. So well done H&F for saving us all a few bob here! It's just a shame that this widow's mite was offset, many times over, by the undue generosity to a certain Bexley pensioner. Oh, that and the fact that the employers' NI would have gone to the Treasury so those of us not lucky enough to live in 'ammersmith are subsidising those that are. Onwards and upwards!
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