Senior official furious over axe, and angrily rejects comparison with SLC chief executive

By David Hencke and Frederika Whitehead | 24 February 2012

Top nuclear regulator fired for being paid ‘off payroll’Britain’s leading nuclear regulator has been sacked after he was identified as being paid through a private company rather than via the staff payroll.

Paul Brown, chief operating officer at the Office for Nuclear Regulation (ONR), has had his contract terminated.

It comes as ministers panic in the wake of the disclosures by Exaro about the tax arrangements of Ed Lester, chief executive of the Student Loans Company (SLC).

The decision has provoked a strong reaction from the professional organisation that represents freelancers and contractors, known as PCG. It is concerned that there is a witch-hunt, with contracts that are not the same as Lester’s being wrongly targeted.

The ONR, an agency of the Health and Safety Executive (HSE), is responsible for the regulation of the UK’s nuclear industry. Brown, in post since November 2008, was one of two members of the agency’s executive team named as being paid through private companies “in lieu of a salary”. The contract of Brown’s colleague is also understood to have been ended.

Exaro has learnt that Brown’s contract was due to be renewed next month, but has this week been unexpectedly “terminated”.

The Department for Work and Pensions (DWP), which is responsible for the HSE and ONR, is understood to have made the decision.

It comes at a crucial time for the nuclear industry, which is set to be greatly expanded by the government. The ONR must also oversee new safeguards being drawn up after the Fukushima meltdown triggered by the earthquake in Japan last year.

Friends of Brown told Exaro that he is furious about being axed because, he argues, his company works for other organisations and so his contract is not comparable to Lester’s. Brown says that he is a freelance consultant.

On his Linked-In page, he writes that he provides “interim-management services to clients in both the public- and private-sector,” and, “manages business improvements either directly or by assembling a team of associates… [He] can provide director cover at short-notice, and coaching and mentoring support for managers.”

His company reported an income of more than £145,000 in the financial year to March 2011. He was previously the HSE’s interim programme director and interim operations director, and an interim director of the Forensic Science Service.

An investigation by Exaro, in conjunction with BBC2’s Newsnight, revealed three weeks ago how Lester was being paid through a personal-service company and off the SLC payroll.

Danny Alexander, chief secretary to the Treasury, immediately after learning about our revelations, wrote to fellow cabinet ministers to order a Whitehall-wide review to find out how many public officials were not paying tax at source. Our story prompted an emergency parliamentary debate the day after publication.

Alexander announced that Lester would have to go on the payroll forthwith, and have tax and national insurance deducted at source.

He later widened the scope of the inquiry beyond Whitehall as it became clear that the practice to minimise tax on earnings had become widespread among senior public officials. One government agency’s chief executive had even actively encouraged staff to strike similar deals, Exaro revealed.

Meanwhile, the Chancellor, George Osborne, is understood to be planning a crackdown in his next Budget on ‘one-man companies’, which allow civil servants to save thousands of pounds in tax.

Chris Bryce, chairman of PCG, said in the wake of the Lester furore: “It is fundamentally inaccurate to brand all one-person limited companies as employees attempting to avoid tax. The prime minister himself has praised freelance workers, and said they make a valuable contribution to the nation’s economy.”

“We must ensure we do not create an orchestrated witch-hunt against the nation’s smallest businesses that will damage public- and private-sector growth in the UK.”

Jon Seddon, the ONR’s finance director and head of corporate services since early 2010, was also identified as being paid through a private company.

The ONR has since last month repeatedly failed to respond to questions from Exaro about the two officials’ contracts. It failed to say whether their arrangements were the same as Lester’s, which provided £28,000 pension contributions a year and entitled him to paid holiday even though he was not on the staff.

The belated and only public comment from the DWP on the issue was: “These arrangements were entered into for the first interim [Brown] in November 2008 and the second [Seddon] in February 2010.

“The decisions to do so were taken in the preceding weeks in each case to fill quickly temporary senior-staff positions needed in the nuclear regulatory area of HSE.

“The cost of the posts is recovered from the nuclear industry. The individuals concerned were not available for employment except through payment to limited companies.”

This week, on the issue of Brown’s sacking, the ONR’s spokesman said that it could not answer any questions and passed the responsibility to the DWP.

The DWP tried to pass the buck back to the ONR. Neither had commented in time for publication.

Today, some hours after publication, the ONR issued a statement confirming Exaro’s story about Brown’s departure, adding that Seddon’s contract had been terminated immediately. It said: “The decisions were made by HSE management in the context of the review of contractors paid via personal-service companies.”

Brown said that his contractual obligations prevented him from commenting.

Additional reporting by Alison Winward.

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