RPO firm in allegations of conflict of interest with Treasury minister

A treasury minister has come under fire in connection with claims of an “untenable” potential conflict of interest involving a £15bn government contract with a talent outsourcing firm.

The Observer reported over the weekend that treasury minister Lucy Frazer’s husband, David Leigh, is CEO of outsourcing firm AMS (formerly Alexander Mann Solutions).

Frazer (pictured above with Chancellor Rishi Sunak) moved to the Treasury in September and disclosed the relationship in the latest list of ministerial interests.

The firm has a seven-year public sector resourcing contract with Crown Commercial Service, an executive agency of the Cabinet Office, overseeing the supply of temporary government workers through 351 agencies, including workers to the Treasury, the Observer reported.

It emerged last year the firm had supplied six workers to HM Revenue & Customs (HMRC) or the government-owned Revenue and Customs Digital Technology Services Ltd, who were on tax avoidance schemes known as disguised remuneration. These schemes typically involve a loan that is unlikely to ever be repaid and avoids income tax and insurance.

The Observer quoted Sarah Olney, the Liberal Democrat MP and a member of the loan charge all-party parliamentary group, as saying: “It is extraordinary that the financial secretary to the Treasury was appointed to this role, when her husband is the boss of the company that holds a £15bn framework contract to supply temporary workers, including to the Treasury and to HMRC.

“It is hugely embarrassing that contractors have been recruited via the public sector resourcing process who have used disguised remuneration arrangements while working for HMRC. HMRC says its suppliers must ensure the tax compliance of workers. So, what action have they taken in this situation? There should be an investigation into all of this, including the clear and untenable conflict of interest that clearly exists.”

Leigh was appointed CEO of AMS in November 2019. The firm earns a proportion of the revenues from its multibillion-pound government contract.

In a previous list of ministerial interests published in May when Frazer was solicitor general, it was stated: “The attorney general’s office has put in place arrangements to ensure that the solicitor general is not involved in issues relating to that framework and that no conflict arises.”

Disguised remuneration schemes are controversial because of the pursuit by HMRC of 50,000 workers who use the scheme for about £3bn in unpaid taxes.

The schemes were sold as complying with tax laws to a range of workers, included nurses and social workers. Tens of thousands of people still face the loan charge. HMRC introduced the loan charge legislation in 2016 so it could pursue the unpaid taxes.

In a press statement, AMS said: “AMS does not condone any tax avoidance schemes and contingent workers are required to comply with all applicable tax laws.” 

When asked about any umbrella arrangements that may have been involved, a spokesman from Brunswick Group, speaking on behalf of AMS, accused Recruiter of going “on a fishing expedition”, and questioned whether the suggestion was being made that HMRC and AMS were “colluding” on an illegal situation.

Steve Packham, spokesperson for the Loan Charge Action Group, told The Observer: “It beggars belief that at the same time that many contractors face life-changing bills due to the loan charge, contractors using the same kind of schemes were being recruited to HMRC through the contract overseen by AMS, whose CEO is the husband of the new financial secretary to the Treasury. It’s yet another extraordinary part of the ongoing loan charge scandal.

“HMRC are all too happy to take action against individual workers, what action have they taken against their own suppliers and agencies, who they say must ensure tax compliance for all supplied workers?”

The government said: “The minister has complied with the requirements set out in the ministerial code to the satisfaction of the independent adviser. This interest was declared as far back as 2019 and was considered by the independent adviser on ministers’ interests. The contract in question is managed independently by HMRC and was awarded prior to the appointment of the minister – and prior to her husband’s employment with the company in question. Arrangements are in place to ensure there is no conflict of interest and the minister has made no decisions relating to the contract in question since taking up the role.”

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