Student Loans Company chief to stand down

Mr Lester will leave his £182,000 job when his contract expires early next year, the publicly funded body has confirmed.

His departure follows revelations in February over his salary, which was paid to a private services company based at his home address, rather than through the PAYE system.

This deal allowed him to cut his income tax bill and was agreed by tax authorities and the government.

Ministers argued that the deal saved taxpayers’ money because it eliminated the need to pay an £80,000 headhunting fee, but the story caused outrage and led to a review of public sector pay.

More than 2,400 cases of public sector workers being employed indirectly rather than having tax deducted at source through PAYE were identified by the review.

Since January, 350 such contracts have been ended and tighter rules have now been introduced.

A spokeswoman for the SLC said: “Ed Lester’s two-year contract ends on 31 January 2013.

“The process to recruit his replacement is under way now to ensure that there is a smooth handover.”

Ed Smith, chair of the SLC, said that his “planned departure” had “always been a matter of public record”.

“It is in no way linked to the tax arrangements in his contract agreed by BIS [the Department for Business, Innovation and Skills], HM Treasury, HM Revenue and Customs and the head of the civil service,” he said.

Mr Lester would not be commenting, the SLC added, and his replacement would be paid through PAYE, as Mr Lester has been since February.

Mr Lester’s pay arrangement was disclosed in an HM Revenue and Customs letter obtained under the Freedom of Information Act by the ExaroNews website and the BBC programme Newsnight.

Following the revelations and the review, every government department published a list of “off-payroll” appointees earning more than £58,200 a year.

jack.grove@tsleducation.com