Elaborate tax avoidance steadily became normalised in the corporate world before seeping into institutions which only exist because we pay our social dues
In his Meltdown Tour of Europe, the American writer Michael Lewis charts how the Greek habit of tax avoidance infected the nation's character and forged its destiny. Reading his tales of five-star hotels that won't print receipts and revenue bosses who block staff from doing their job, it is easy to fondly imagine that it couldn't happen here. Such complacency is punctured by the Guardian's revelation that 25 of Whitehall's own top staff have got their salaries siphoned through companies, which can greatly reduce tax. A heart that cannot pump blood through itself soon fails, and yet here is the heart of public life appearing to connive in thwarting the funds that sustain it.
The new revelations concern the Department of Health, but follow news that the Student Loans Company boss was benefiting from a similar scheme to the tune of £40,000. The difference this time is the scale – who knows how far the practice runs across other departments, councils and quangos? The blushes about the SLC deal were for David Willetts and Danny Alexander, ministers who nodded through the arrangement. This time the headache is Andrew Lansley's. His deputy Simon Burns told Labour's Gareth Thomas that no DH "civil servants" were hired through such wheezes. Whatever the technicalities about who counts as such, this is economy with the truth – pushed to extremes.
Labour, however, ought not mistake a deep cultural problem for a narrow partisan one. The SLC deal, after all, was probed and deemed sound by the former cabinet secretary before a ministerial pen signed on the line. Some of the 25 remuneration arrangements were put in place in Labour's day. Two decades have passed since the BBC was exposed to have been funneling the finances of its then boss, John Birt, through a firm. The reality is that, over 30 years, elaborate tax avoidance steadily became normalised in the corporate world before seeping into institutions which only exist because we pay our social dues.
The fiscal crunch has already turned top tax rises that mainstream politicians had deemed unthinkable into established fact. A cash-strapped public will next insist that notional liabilities get paid. As he reviews top officials' remuneration arrangements, Mr Alexander must bear this in mind. The more immediate questions, however, are for Mr Lansley. His department failed to give Mr Thomas a straight answer. Instead, officials obfuscated – digging into the detail, even as they asked whether they could claim that researching it would be too costly. He needs to get a grip fast. His NHS plans are suspected of sacrificing public good to private profit. He must now explain why his department was so slow to reveal that it employed staff through means which very likely had precisely that effect.