Friday. 28 October 2016

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Letters detailing ‘Whitehall war with MPs’ revealed

Exaro publishes extraordinary correspondence between O’Donnell and Hodge

We already have a constitutional position that civil servants are responsible to ministers, not Parliament

Lord O’Donnell, former cabinet secretary

Whitehall’s clash with MPs over how they grill civil servants in Parliament is set out in letters revealed in full by Exaro today. Margaret Hodge, chairwoman of the House of Commons public accounts committee, is due to give a speech tomorrow about the constitutional stand-off at Policy Exchange, the centre-right think-tank.

She will complain about anonymous briefings by senior civil servants aimed, she believes, at dismantling her committee.

Exaro revealed last Friday how Whitehall mandarins have declared war on MPs over Parliament’s efforts to hold civil servants to account. Hodge told Exaro last week: “Accountability by civil servants to MPs is a major constitutional issue between Whitehall and Parliament. I would agree that Whitehall seems to have declared war on Parliament.”

Sir Gus (now Lord) O’Donnell, in his last days as cabinet secretary and head of the UK’s civil service, wrote to Hodge in December to say that civil servants should not be accountable to Parliament.

He wrote: “To maintain their impartiality, it is essential that civil servants remain accountable to ministers, who are in turn accountable to Parliament.”

Hodge replied to O’Donnell by robustly rejecting this.

O’Donnell told Exaro: “We already have a constitutional position that civil servants are responsible to ministers, not Parliament. It is in the code of conduct for civil servants. Margaret Hodge is entitled to her views, and we can debate it.”

The row was triggered by the committee’s grilling of Anthony Inglese, general counsel of HM Revenue & Customs (HMRC), over the decision to  exempt Goldman Sachs, the investment bank, from paying up to £10 million in tax.

Hodge wrote to O’Donnell: “As you are aware, £25 billion is outstanding in unresolved tax bills and the role of HMRC governance is critical in explaining why this substantial sum remains unresolved.

“As a direct result of the committee’s inquiry, major systematic failures in the governance of HMRC and the way it handles tax disputes with large companies were uncovered.”

The clash is set to be intensified by Hodge’s plans to examine contracts that allow senior civil servants to minimise their tax, following Exaro’s exposure of the deal for Ed Lester, chief executive of the Student Loans Company. Under his contract, Lester was paid through a personal-service company rather than as an employee.

The House of Commons yesterday held a second lengthy debate on the issue of civil servants working through personal-service companies.

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