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Controversial contractors 'not systemic'

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The use of personal service contracts is ‘not systemic’ in local government with just 13 identified nationally, the LGA’s chief executive has said.

Giving evidence to MPs on Monday, Carolyn Downs said regional employers had identified only a handful of such arrangements. But she defended the use of the contracts in some circumstances.

The small number of contracts identified by the LGA relating to employees earning more than £50,000 “would not, under any circumstances, give the impression that this was systemic in local government”, Ms Downs told the public accounts committee. A trawl of off pay roll arrangements for interim senior appointments on a consultancy or agency basis had found just 13 examples, she told the committee.

The use of personal service contracts has become controversial since it was revealed in February that the chief executive of the Student Loans Company was paid via a personal service company.

Amidst fears such arrangements would allow taxes to go unpaid, the Treasury launched a review of their use in the public sector, although it did not cover local government.

Ms Downs said councils had received Freedom of Information requests about the contracts and said the lack of stories suggested there was not a serious problem in local government. “If this was completely awash in the system we’d be inundated with that in the press,” she said.

Of the 13 identified by the LGA, she said none had been in post for longer than a year and most for less than six months.

Questioned about the LGA’s own arrangements, Ms Down’s said there had been two people on personal service contracts “earlier this year” but said there was now no one in a permanent position employed in such a way.

However, she said the LGA’s associates might be employed in such a way because they were employed for their expertise but worked “irregular hours” or on specific projects.

Ms Downs defended the use of contacts in some circumstances, arguing the sudden departure of a chief executive could require the hiring of an interim.

She also argued the contracts would be used when government grants for time-limited projects ruled out financing any terminations of contracts.

“Local government has a responsibility to ensure the best value for the tax payer,” she said. If such a grant arrangement existed “then local government would definitely use people on contracts because that is the best value for the tax payer”.

However, the level of transparency required of councils, including statements on pay and employment policies and publication of all spending over £200, meant councils use of such contracts were already heavily scrutinised, she told MPs.

“That level of accountability and transparency means we have systems in place,” she said.

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