Finance Secretary Swinney challenged as FOI reveals Ex Council Chief paid tax efficient salary by Scottish Govt quango. CLAIMS made by Finance Secretary John Swinney in written answers to MSPs “the Scottish Government does not pay salaries with reasons of tax efficiency in mind” have been called into question after freedom of information enquiries revealed David Hume, the former Chief Executive of Scottish Borders Council who left the local authority under less then clear circumstances, has recently been paid a salary by a Scottish Government quango via a limited company, leading to allegations of TAX AVOIDANCE deals being played out in Scotland’s public sector.
The payments made to Mr Hume via a limited company are for contracts with Children's Hearings Scotland (CHS), a Scottish Government backed quango set up to deal with children who commit offences or who have welfare and protection needs require particular help and care.
Freedom of Information enquiries made by campaigners in the Borders to Children's Hearings Scotland revealed David Hume received £7,190 for three months work, an amount paid by the Scottish Government through what staff at CHS described as “an organisation called Enlighten”.
However, further enquiries made by journalists who were passed the foi responses have revealed “Enlighten” is actually a limited company identified as ENLIGHTEN : DAVID HUME CONSULTING LTD, based at"Glen Orchy” 15 Glenorchy Road, North Berwick, East Lothian.
David Hume is currently listed as the sole Director of Enlighten, according to a search on the CompanyCheck website which also revealed “Enlighten” had been registered on 15/12/2011, just over a week after Children's Hearings Scotland admitted Mr Hume had begin providing services to them. The full FOI response from CHS is available online : HERE
An expert on freedom of information who viewed the disclosures by Children's Hearings Scotland said he was of the opinion an effort had been made to withhold any references to Mr Hume being paid via a limited company.
He said : “In the current climate of sharp debate over the payment of publicly funded salaries for employees & consultants via limited companies, Children's Hearings Scotland appear to have taken it upon themselves to avoid revealing the organisation called Enlighten was actually a limited company formed by Mr Hume himself. This is not a very honest application of freedom of information.”
From riches to consultant : David Hume recently took home £318K exit package from former top post at Scottish Borders Council. The row over payments of publicly funded salaries to consultants like Mr Hume, via limited companies comes on top of recent reports Mr Hume, who took an extended period of sick leave from his Council post received a staggering THREE HUNDRED & EIGHTEEN THOUSAND POUNDS in a pay-off linked to his application for voluntary from the scandal hit south of Scotland authority which has been criticised for its massive debt mountain of TWO HUNDRED & SIXTY TWO MILLION POUNDS, equivalent to a debt of £2,403 plus for every person currently living in the Scottish Borders.
Speaking further on Mr Hume’s work for Children's Hearings Scotland, Sara Brodie, Performance Officer for CH,S said in the freedom of information response : “Mr Hume’s role is to support the National Convener in negotiations with local authorities to agree Area Support Team structures, roles and responsibilities and to draft and negotiate partnership agreements.”
“Mr Hume is engaged as and when required by the National Convener. Mr Hume has provided this support since December 2011. As a recently retired local authority Chief Executive, Mr Hume has specialist knowledge of the current local authority landscape, which is required to support the National Convener in her negotiations with local authorities.”
Apparently mindful of the controversy over consultants receiving their salaries & fees via limited companies, a scheme now generally accepted as that of tax avoidance, CHS officials refused to reveal the daily rate paid to Mr Hume.
CHS further admitted : “Mr Hume works on a consultancy basis in a competitive environment and as such we are satisfied that Mr Hume has commercial interests in relation to the disclosure of this information. We believe that releasing the daily rate paid to Mr Hume would prejudice his ability to compete effectively in tendering exercises against competitors whose charges are not widely known.”
“As this exemption is conditional we have applied the ‘public interest test’. This means we have, in all the circumstances of this case, considered if the public interest in disclosing the information outweighs the public interest in applying the exemption. We have found that, on balance, the public interest lies in favour of upholding the exemption. We recognise that there is a general public interest in ensuring that there is effective oversight of expenditure of public funds and to ensure that the public is obtaining value for money. However, we believe that this interest has been met by disclosure of the total fees paid to Mr Hume. “
A “purchase order” for services obtained from Mr Hume was also released by CHS staff, only after campaigners demanded a review of the initial decision to refuse the release of any further information on Mr Hume’s activities at Children's Hearings Scotland. The “purchase order” released by CHS staff and available to view online HERE lists the amount paid to Mr Hume as £7,190 but curiously omits any references to the funds being paid to Hume’s private limited company. Terms & Conditions of CHS contracts were also released, available to view HERE
Commenting on the refusal of Children's Hearings Scotland to disclose further information relating to Mr Hume, a legal insider today said it was ludicrous that any details of payments of public funds and especially payments of a tax efficient nature via limited companies should be withheld from taxpayers.
In the wake of the revelations of tax efficient payments to Mr Hume, attention has now turned to denials of such payments from the Scottish Government, where recently, Scotland’s Finance Secretary John Swinney was asked by Drew Smith MSP (Glasgow) (Scottish Labour): “To ask the Scottish Executive whether it has paid a salary to any (a) civil servant, (b) official, (c) consultant or (d) contractor via a (i) private company or (b) other arrangement for reasons of tax efficiency.”
Mr Swinney said in a written response published by the Scottish Parliament : “The Scottish Government does not pay salaries with reasons of tax efficiency in mind.”
In a further response to a question put by Hugh Henry, Mr Swinney went onto claim: “In all instances, the Scottish Government expects those who work on public sector business to do so within the tax system, whether that is through the Scottish Government payroll or the payroll of a parent company that the Scottish Government has a contractual arrangement with.”
However, campaigners investigating tax avoidance schemes in Scotland have today indicated they believe there is a significant network of consultants working for Scottish Government entities who are being paid salaries, fees & expenses via limited companies.
Further investigations by journalists have today revealed Mr Hume as at least one other directorship, with a company called: SCOTREGEN LIMITED, Fairfield House, Ibrox Business Park, Broomloan Place, Glasgow. Mr Hume, who is listed on the Scotregen website as a “public policy specialist” was appointed director on 24/5/2012. The list of directors of Scotregen contain the names of individuals, some of whom have multiple directorships in additional companies. One director appears to have up to FORTY TWO different directorships.
Scotregen Ltd claims its overall objective is to improve the health and wellbeing of residents in Scotland’s disadvantaged communities. The company has sponsors such as the Scottish Government, Highlands & Islands Enterprise and Edinburgh City Council.
Mr Hume could not be reached for comment, and no one from the Scottish Government was available to issue any explanation about the revelations of payouts to Mr Hume or others in similar circumstances..