Hackney Council assistant chief executive paid direct to limited company

Hackney Town Hall. Photograph: Hackney Citizen

A Hackney Council assistant chief executive is being paid direct to a limited company, the Hackney Citizen can reveal.

Carl Welham has been filling the role of Interim Assistant Chief Executive of Communications from 2009 until the present time and is paid direct to Carl Welham Communications Ltd.

There was national concern earlier this month when it emerged that the head of the Student Loans Company, Ed Lester, is paid via a company without tax being deducted.

This practice is also not uncommon at local government level.

According to Private Eye magazine (no 1307), Hammersmith & Fulham Council faces the prospect of explaining to HM Revenue and Customs why it regularly ’employs’ expensive consultants indirectly, rather than as employees.

The magazine and also the news site Ventnor Blog highlight Isle of Wight Council, where the director of resources Dave Burbage is paid £155,000 a-year via Dave Burbage Consulting Ltd.

Nationally, a Treasury review is to take place, looking into the extent to which civil servants salaries are paid into tax-efficient private firms.

According to the Guardian newspaper, HM Treasury is looking into whether deals were beneficial to the taxpayer as a whole, taking into account overall lost tax income to government; the review is also considering the morality of public servants being paid in this way.

The newspaper reported yesterday that the public face of the Inland Revenue, the BBC newsreader Moira Stuart, has set up a private firm which allows her to partially avoid the 50% top tax rate.

The Hackney Citizen has asked the council for details of how many other people work in officer posts and are also paid via limited companies, and has requested details of payments to those companies.

A Hackney Council spokesperson said: “Carl Welham is not, and has never been, an employee of Hackney Council.

“He is an interim delivering a service through his company. That service has involved the restructuring of communications, saving the council £1m year on year, and deleting the Assistant Chief Executive post which goes on 31 March 2012.”

A recent council savings monitoring report says that that cuts in the budget will see the size of the communications team move in line with comparable [local] authorities.

Defending the current arrangements regarding the practice of consultants filling senior officer posts, the council spokesperson said: “The council does not pay its employees through private companies.

“As is normal practice across the public sector, the council does employ freelancers and interims through the proper channels, when it is appropriate to do so.

“Although those numbers have decreased over recent years, in times of organisational change, it makes financial sense for the council to use interims as they carry no liabilities for redundancy or severance pay when posts are changed or deleted.

“The council also ensures that when it uses the services of interims, the costs to the council do not exceed that of a salaried member of staff in the same position.

“Anyone who accepts a permanent job with the council becomes an employee and is paid through the normal payroll arrangement. This is not the case with Carl [Welham] or any other interim working at the council.”

There is nothing illegal about staff posts being temporarily filled by consultants or pay arrangements through limited companies.

The Hackney Council spokesperson said that Mr Welham was happy to comment on the matter but was currently unavailable.

Update 5.35pm Thursday 23 February 2012:

In a further statement to the Hackney Citizen, a council spokesperson said: “Like the vast majority of our interim and temporary staff, Carl Welham’s current assignment with the Council has been contracted through the Randstad Managed Services agency.

“The council has no direct contractual relationship with Carl Welham Communications Ltd and never has done.”

The Hackney Citizen is investigating whether Randstad Managed Services makes payments to Carl Welham himself as an individual or direct to his company, Carl Welham Communications Ltd.