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Shabana Mahmood MP, Labour's Shadow Minister for Higher Education, has written to David Willetts following the Urgent Question which took place in the House of Commons this morning on the pay and tax arrangements for the Chief Executive of the Student Loans Company. Following her letter, she added:
 
"It is deeply concerning that David Willetts was happy for the Chief Executive of the Student Loans Company to be appointed in this manner. That’s why I have written to him to demand answers.
 
"It is clear that the Government still has questions to answer about this issue. We need to know which Ministers signed off these arrangements, and who was aware of the tax and National Insurance arrangements in the contract. We need to know why Ministers thought this to be an acceptable arrangement – especially at a time when the economy is flat-lining, people are being squeezed and David Willetts is tripling tuition fees.
 
"If Ministers have sanctioned a pay deal for a senior official which appears to be designed to make it easy for him to avoid paying tax, it is clear that the Government are totally out of touch on this issue."

Full text of the letter to David Willetts from Shabana Mahmood:

Dear David,
 
I am writing to you regarding the recent revelation that Ed Lester, Chief Executive Officer of the Student Loans Company, was recruited on a contract allowing him to be paid through a private company.  This has meant that he has been able to avoid paying some tax and National Insurance since May 2010, at a time when the economy is flatlining and families up and down the country are being squeezed hard by government economic policies.
 
Further to the Urgent Question which took place in the House of Commons this morning, I believe it is necessary for you to answer the questions below regarding your role in signing off on Ed Lester’s tax deal.
 
I would be grateful if you could answer the following questions:

  1. There has been some confusion about who signed off these arrangements.  Was the structure of Mr Lester’s contract, which allowed him to avoid tax and National Insurance, approved by either yourself, the Chief Secretary to the Treasury, or both of you?
  2. If it was approved by both yourself and the Chief Secretary to the Treasury, when was it approved at the Department for Business, Innovation and Skills, and when was it approved at the Treasury?
  3. Have you approved any other similar arrangements?
  4. Did you ask about the tax and National Insurance implications of employing Mr Lester on this basis?
  5. Did HMRC approve the arrangement after Mr Lester was appointed as Chief Executive in January 2011 or only when he was the interim Chief Executive?  Did you ask whether additional approval was required when the employment was confirmed in January 2011?
  6. Can you tell me how much tax and National Insurance has been avoided by these arrangements?

 I am sure you will understand and appreciate the urgency of these questions.  Therefore I would be grateful if you could respond to this letter as a matter of priority.
 
I look forward to hearing from you.
 
Yours sincerely
 
Shabana Mahmood
Shadow Minister for Higher Education

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