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Treasury minister unwinds student loans chief’s tax arrangements

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An arrangement reported to allow the Student Loans Company's chief executive legally to avoid thousands of pounds in income tax and national insurance contributions will be unwound, a Treasury minister announced in the House of Commons this morning.

Danny Alexander, the Chief Secretary to the Treasury, told MPs that there was ‘no place for tax avoidance in government’. Tax and NICs on Ed Lester’s salary would now be deducted at source, he said.

Yesterday Alexander ordered a review of top civil servants’ tax affairs after an investigation by BBC Newsnight and Exaro News found that HMRC had authorised the Student Loans Company (SLC) to make gross payments to Lester’s personal services company.

‘In the current climate of national austerity and financial hardship, it's hard to imagine a more politically charged story,’ the BBC Newsnight journalist Richard Watson said. ‘One of the most senior public servants in the land, paid by the taxpayer, granted special concessions to be paid gross through his private service company based at his home address.’

The SLC said it ‘followed all government guidelines’ on Lester’s appointment and remuneration. His two year contract as CEO started in February 2011.