Quango that rehired ex-boss after giving her £134,000 payoff could face huge fine
A CHILD protection quango may have broken civil service rules by hiring a senior official on an ‘ off- payroll’ deal of almost £1,000-a-day.
Deputy children’s commissioner Sue Berelowitz received a £134,000 redundancy payoff last month but was hired by the Office of the Children’s Commissioner (OCC) the next day as a consultant.
Treasury officials signed off her six-figure payment – which was never put before ministers – but it is thought that they were unaware both of the decision to rehire her and the controversial way her payments were structured.
Miss Berelowitz, 61, will run an inquiry into sex abuse and be paid £960 a day under a controversial arrangement that could cut her tax payments. She will be paid through a private company, Sue Berelowitz Consulting Ltd, instead of earning a salary. The Treasury is investigating the decision to rehire her and it is expected to consider whether the arrangement breaks official guidance on off- payroll appointments.
If it is found to have broken the rules, the OCC could be fined hundreds of thousands of pounds – money that would come from funds provided by the taxpayer.
News of the inquiry will heap further pressure on the OCC to attempt to claw back the redundancy payment and not rehire Miss Berelowitz.
Hiring consultants through personal service companies is frowned upon because it allows public sector employees to pay corporation tax at 20 per cent instead of higher rates of income tax.
New rules on off-payroll appointments were set up in May 2012 after it emerged that up to 2,000 civil servants were using the arrangement. They state that senior officials should not be hired off-payroll except in ‘exceptional circumstances’ and then only for up to six months. In March, the Ministry of Defence was fined £1million for fail- ing to follow the rules, and the Department of Health nearly half a million pounds.
The Treasury investigation is looking at whether the OCC arrangement is good value for money. A Treasury spokesman said: ‘ It’s wrong for someone to take redundancy then be immediately re-hired as an external consultant. The redundancy occurred during the pre-election purdah period; the circumstances will be investigated.’
David Cameron joined the chorus of disapproval over the redundancy pay-out, with a No10 spokesman saying the Prime Minister supported the Treasury’s stance.
‘The Treasury said they did not think that was right and we believe the Treasury is looking at what may or may not be possible with regards to those payments,’ said the spokesman.
As well as potentially reducing Miss Berelowitz’s personal tax payments, the arrangement will mean the OCC will not be required to pay National Insurance contributions. There is no suggestion Miss Berelowitz is not paying the tax she is required to by law.
MPs are furious about the deal. Bernard Jenkin, the former chairman of the Public Administration Select Committee, said: ‘ On the face of it this requires a considerable explanation. I cannot imagine how it can be justified.’
Miss Berelowitz is a controversial figure because of her response to the scandal of child sexual abuse being ignored by the authorities in towns such as Rochdale, Oldham and Rotherham. She said the fact that many of those carrying out the abuse were men of Pakistani and Bagladeshi origin was irrelevant.
The Office of the Children’s Commissioner has defended the decision to hire her as a consultant saying it was ‘allowable’ because of her ‘particular expertise’.
A spokesman said the Treasury was not consulted about the decision to pay Miss Berelowitz off-payroll. But he said the inquiry she is running is of ‘huge importance’ and therefore fitted the ‘ exceptional circumstances’ criteria. He said the redundancy would save the organisation £175,000 a year.