Friday, February 3, 2012

<b>Pay</b> deal for <b>student loans</b> chief that &quot;avoids 40000 a year in tax <b>...</b>

Student loans chief 'avoids 40,000 a year in tax' through deal approved by ministers

The senior public servant responsible for chasing students for loan repayments has avoided paying thousands of pounds in income tax, it emerged last night.

Ed Lester, chief executive of the Student Loans Company, has been paid his salary through a private company, allowing him to cut an estimated 40,000 a year from his tax bill.

The revelation is a huge embarrassment for the Coalition after it emerged that ministers approved the deal.

Student Loans company boss Ed Lester earns an annual salary of 140,000 a year

Student Loans company boss Ed Lester earns an annual salary of 140,000

It is certain to infuriate students and their families who are forced to take out thousands of pounds in loans to cover tuition fees and living costs at university.

For three-year courses starting this autumn, they face the prospect of taking out loans up to a maximum of 50,000, with interest charges on repayments of 3 per cent above inflation.

Richard Bacon, Conservative MP for South Norfolk, said: ‘Students will be absolutely horrified that the company chasing them to make repayments is run by someone who has managed to get for himself a cosy, special, tax-efficient arrangement which means that he pays many thousands of pounds less than he otherwise would.’

Concerns were also raised last night that other top public officials had been given similar deals. Mr Lester’s arrangements were exposed following an investigation by the Exaro News website and BBC Newsnight.

He is paid a basic salary of 140,000 a year and can qualify for an annual bonus of 14,000 and a cash pension contribution of 28,000, bringing his total pay to 182,000.

He is paid through the recruitment firm which placed him with the Student Loans Company, with the money going to a private company he owns – rather than to him personally. It means he is able pay corporation tax of 21 per cent instead of income tax of up to 50 per cent.

Accountants estimate the deal saves him 40,000 a year in tax.

In addition, Mr Lester, a former chief executive of NHS Direct, receives 550 a week to cover expenses involved in travelling from his home in Buckinghamshire to the SLC’s offices in Glasgow.

The arrangement was signed off by Universities Minister David Willetts, who wrote in a letter it had been ‘agreed by the Chief Secretary to the Treasury’, Danny Alexander.

Mr Alexander has launched a probe to discover how many other public sector staff are paid in the same way.

A spokesman for the Student Loans Company, which collects student loan repayments from graduates jointly with HMRC, said Mr Lester’s pay arrangements had been approved by the Government.

Mr Lester was unavailable for comment.

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