GOLD CARD cover-up: Ministers blame head of the Civil Service for blocking exposure of abuse

1. August 2011; Fury over taxpayer GOLD CARD cover-up: Ministers blame head of the Civil Service for blocking exposure of abuse

a. Cabinet Secretary Sir Gus O’Donnell is being blamed by key members of the Government for blocking moves to reveal the true extent of spending on the cards, which are given to officials to pay for their ‘expenses’. Ministers fear a cloak of secrecy is being used to conceal widespread abuse of £1?billion plus of public money spent on the cards every year. Some officials have already been caught using them for personal items such as hamburgers or supermarket shopping trips – but the real number of culprits is suspected to be far higher. About 140,000 Government Procurement Cards (GPC) are in circulation, and any bills lower than £1,000 a month are not routinely audited.

b. Now, amid growing public anger over the revelations, Whitehall finance mandarins have issued secret advice warning Ministers against publishing information that exposes exactly how much has been spent using the cards since their introduction in 1997. The advice says the Cabinet Office opposes the release of backdated information, including the identity of cardholders, as it would be a ‘poor use of resources’. Claiming the backing of Downing Street in opposing wider publication, the guidance declares that £235,000-a-year Sir Gus is personally resistant to the idea. The row coincides with the release today of bank statements revealing how officials at the Commons racked up a £1.5?million bill on taxpayer-funded credit cards over the past three years. The list of nearly 4,000 purchases, released under Freedom of Information rules, includes £3,700 on The Claridges hotel in New Delhi.

c. The Coalition’s drive to persuade the Civil Service to be more open about its credit-card spending is being spearheaded by Cabinet Office Minister Francis Maude, but Mr Cameron’s influential strategy director Steve Hilton is believed to be a strong advocate of the ‘transparency agenda’. Most of the credit-card disclosures have been driven by open-government campaigners, although some Cabinet Ministers, such as Communities Secretary Eric Pickles, have voluntarily released details of their department’s spending.

d. Mr Maude has now brokered a compromise deal under which Government departments will next month publish a list of items purchased using the cards. But to the anger of some senior Coalition members, the list will cover only items costing more than £500 bought in the current financial year. And it will not identify cardholders. Last night, one Minister who has lobbied behind the scenes for full disclosure said: ‘We have been banging our heads against a brick wall trying to get all this information out there. ‘We are convinced there has been an abuse of this perk on the scale of the MPs’ expenses scandal, but the Cabinet Office has resisted at every turn. And it has been made clear to us that Sir Gus is not on our side.’ And a Whitehall insider said: ‘For too long officials have treated this perk like a Gold Card on the taxpayer.’

e. In recent months The Mail on Sunday has revealed a series of eye-catching and exotic purchases made by civil servants and local government officials on taxpayer-funded cards, including £25?million spent last year on first-class flights, exclusive restaurants and shopping sprees. And last week this newspaper disclosed how officials working for a Government policing quango had used the cards to buy items including exotic lingerie and beehives, racking up bills of more than £3?million a year.

f. Sir Gus – known by his staff as ‘GOD’, after his initials – is a long-serving high-flyer who has been head of the Civil Service for nearly six years. The 58-year-old joined the Treasury as an economist in 1979, serving as Press secretary to Chancellor Nigel Lawson and later to Prime Minister John Major. He was Permanent Secretary at the Treasury when Gordon Brown was Chancellor, before being promoted to serve Tony Blair, Mr Brown and now David Cameron as Cabinet Secretary. He is planning to leave his post before the end of the current Parliament.

g. When the Cabinet Office was approached about the Ministers’ claims that Sir Gus is opposed to the wider publication of the credit-card statements, a spokesman said: ‘This is untrue. The Cabinet Secretary has not resisted the release of this information.’ When asked if that meant the Cabinet Secretary was in favour of the release of all backdated information, the spokesman said: ‘The Government’s position is clear: we intend to publish GPC transactions and the first set will be published shortly.’ Sources close to Mr Maude said: ‘We are pushing for maximum transparency, both for now and for what happened under Labour.’ Downing Street said: ‘As part of the Government’s commitment to transparency, we are working with card providers to provide a consistent method of reporting GPC spending data for transactions above £500, so this is available for publication from the end of September 2011.’

2. Oh! and about the men in tights in Westminster

a. Parliament’s ‘Men in Tights’ have racked up a £1.5?million bill on official credit cards to pay for items including French lessons, iTunes downloads and dress hire. Luxury hotels, long-haul flights and restaurants also feature in a new list of ‘procurement card’ spending released by Commons authorities. They reveal senior House officials used the cards to pay for: A £3,701.05 bill for the exclusive The Claridges hotel in New Delhi. Almost £2,000 of car hire from the Bermuda Motor Car Renting company. French lessons costing nearly £190. A Moss Bros bill for £392.73. The officials, who wear elaborate 19th Century court dress on Commons occasions, even lived up to their nickname in one case by flashing the taxpayer-funded cards to buy a pair of tights. The cards were used to cover more than £200 of spending at Tesco, a £76.65 item billed to Decanter Magazine and an £885 food blender. There was also evidence that staff were using them to withdraw more than £500 in cash, which is forbidden for procurement cards used by Government departments. Last night it was unclear if the same rules applied to the Commons cards.

b. A Commons spokesman said the bulk of the £1.5?million spending over three years was on behalf of MPs on official business either in the UK or abroad. But the House authorities faced challenges to justify some of the purchases. Tory MP Aidan Burley said: ‘No one begrudges Commons officials spending money on items essential to their work. But I fail to see how that includes language lessons or living it up in luxury hotels. ‘Asking the taxpayer to pay for that sort of expenditure can never be justified.’ Just like Government departments, the Commons issues the special payment cards to senior staff, including Select Committee clerks who look after MPs. About 230 cards are in use. According to House managers, the system allows staff ‘to pay for relatively low-value items in a cheap, secure, and quick way. ‘The use of the cards reduces the House’s processing costs and enables suppliers to be paid more quickly, delivering savings. ‘The cards are held by a limited number of staff and have strict controls for the authorisation of all transactions. All cards have an individual transaction limit and a monthly transaction limit.’

c. Staff are strictly advised that they can be used only for ‘business purposes and never for personal expenditure other than in exceptional circumstances where private expenditure is incidental to official business’. Any spending in that category must be reimbursed by the card user, say managers. But even though Commons auditors are supposed to exercise strict controls over authorising all transactions, details of the bills brought surprise last night. As well as minor items such as £4.99 at Snappy Snaps in July last year, a £3.02 Burger King bill from May last year and £8 last November on a spare set of keys, officials spent thousands settling up at exclusive hotels around the world. The biggest single entry on the list of bills for the 12 months to May is £3,700 for the luxurious Claridges hotel in New Delhi. The hotel, the flagship of an Indian chain not connected to Claridge’s hotel in Mayfair, offers club rooms from £200 a night or luxury suites from £290. Commons sources last night said the hotel had been used by MPs on a visit to the Indian capital in March. In the same month, a Commons card took care of a £1,705 account at a Ritz-Carlton hotel, although officials were unable to say whether this was the Ritz in Piccadilly or one of the chain’s overseas locations.

d. Commons officials faced questions over purchases not obviously relevant to MPs’ work. A Thermomix blender and processor ‘combo’ was bought for £885 last February, while £450 went on a bill from Majestic Wine. Other payments included £1,280 to the Cotswold Water Park in July last year, £10.78 at a Giraffe family restaurant a year ago and £7.21 in May last year at Nando’s. Language lessons were paid for on the Commons card, including £189.70 worth of tuition at London’s French Institute. Last night, a Commons spokesman could not say whether the lessons were for MPs or parliamentary officials. She was also unable to shed any light on the purchase of the food mixer or the wine bill. But she could explain iTunes transactions ranging from just 47p to £21.57. Officials had been acquiring software as part of a trial on using iPads in the Commons. She also stressed that the annual credit-card bill would be reviewed as part of wider plans by to cut expenditure by 17 per cent by 2014-15. In the 12 months to May, the Commons credit-card bill came to £414,000, down on the £608,000 spent in 2009-10. One MP last night explained how on Commons committee trips overseas, parliamentarians were always relieved to see accompanying officials ‘put out the Commons plastic’. ‘If we’ve been staying at a big hotel, it’s always a relief to see the clerk settle the bill with the Commons card,’ one said.

e. But Matthew Elliott, of the TaxPayers’ Alliance, said: ‘When a House of Commons official gets out their company credit card, they need to think about whether they could justify the expenditure to an ordinary taxpayer. ‘Only the very rich on their holidays stay in the sort of hotel MPs used in India, so it is absolutely unjustified that officials should do so when they go on work trips.

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