What happened to Boris’ ‘tax avoidance crackdown’ at TfL?
When Boris Johnson ran for mayor he told the BBC he wanted “a crackdown on tax dodgers and tax avoiders of all kinds”.
The comment was a deliberate reference to his then-opponent Ken Livingstone’s use of a “personal service company” (PSC) to allegedly limit his tax bill.
Use of PSCs is widespread among self-employed people. However, the practice of also paying long-term employees “off pay-roll” was later revealed to be widespread in national government.
An investigation by MPs found more than 2,000 people employed on PSC contracts in Whitehall. The public accounts committee said use of the the contracts “generates suspicions of complicity in tax avoidance” and “fails to meet the standards expected of public officials”.
Since then new rules have heavily restricted their use in central government. Any Whitehall employee on such a contract for longer than six months must give assurances that they are paying the correct amount of tax and national insurance. Over a hundred employees had their contracts terminated after failing to provide that assurance. Overall the use of the contracts has fallen significantly.
So how has Boris’s own tax avoidance crackdown gone down in London? Not that well according to a new freedom of information request seen by this website. It reveals that under Boris’s chairmanship, Transport for London (TfL) has hugely increased the numbers of people it employs through PSCs in recent years. In fact, under Boris the number of TfL workers employed on the contracts has risen by 41% from 973 in 2011 to 1,375 in 2013. A huge number for what is a local transport organisation.
TfL claim these contracts are only used for “temporary” employees. However a recent written response from the mayor reveal that the vast majority of those paid through PSCs are being paid for longer than 12 months. In contrast to the national downward trend, there are now over a thousand people employed by TfL through a PSC for longer than 12 months.
Many of these have been engaged for fixed periods through agencies on relatively modest wages. However, a significant number are highly-paid employees. According to City Hall, TfL currently employs almost 400 temporary workers at over £100,000 a year and 23 at over £150,000. While the payment of high salaries to long-term employees has been heavily restricted in national government, the same restrictions have not taken place at TfL.
The mayor’s opponents today urged him to get a grip on the problem.
“It is time the mayor got to grips with this issue and instructed TfL to adopt the same rules that apply to civil servants across all government departments and agencies,” leader of the Liberal Democrat London Assembly group Caroline Pidgeon said.
“There is simply no excuse for any senior public sector employees who are on long term contracts being paid off the payroll.”
TfL today declined to say why the number of people employed on the contracts had risen, but claimed their continued use was necessary.
“We have a workforce of over 27,000 staff. The overwhelming majority, including all of our most senior staff, are permanent employees and are paid directly by TfL, they are not paid through Personal Service Companies,” TfL’s human resources director Tricia Riley said.
“Furthermore, we do not contract directly with any PSCs, self employed contractors or umbrella companies. We do have some fixed-term and temporary workers who are engaged through agencies where the pay arrangements are for them to determine in keeping with relevant employment law and other legislation.
“We employ temporary workers for specific short to medium term projects, including engineering and technology projects, to deliver one of the world’s largest programmes of transport capital investment and improved customer service. This includes building Crossrail, modernising Tube services and stations, modernising the road network and making London safer for all road users, including cyclists.”