Damning report on loss of private data

Jun 26 2008 by William Green, The Journal

GORDON Brown was last night under fire after institutional deficiencies were blamed for the loss of 25 million personal records from a North East office of HM Revenue and Customs.

Campaigners, MPs and unions said devastating Government failures led to Britain’s worst-ever data loss from HM Custom and Revenue’s offices in Washington last October – and landed taxpayers with a £155m bill to sort out the mess.

A Government-ordered report by consultant Kieran Poynter found the loss of two computer discs containing names, addresses and bank details of every child benefit claimant was entirely avoidable and raised serious questions of governance and accountability at HMRC.

The scandal emerged after the CDs were sent by a junior HMRC official by non-traceable internal courier – against regulations – to the National Audit Office in London, which was carrying out checks on the £10bn-a-year benefit.

Mr Poynter said a botched system of management introduced when the Inland Revenue and Customs and Excise merged in 2005 was an issue.

Inadequate data security rules, confusion about who was in charge, lack of staff knowledge about procedures, poor leadership, training and communication were contributory factors.

Cost concerns about providing information to the National Audit Office, inadequate encryption and a failure to raise the alarm over the loss fast enough were other problems, along with low morale – although Mr Poynter insisted staff cuts had not increased the information security risk.

More than 30 HMRC officials were implicated, but he said none should be held responsible as they received little or no information security training.

The individuals involved have been given limited immunity from disciplinary action and two were given immunity from prosecution.

Newcastle Central MP Jim Cousins, a member of the Commons Treasury committee, said: “It is a disturbing story of low morale and poor leadership at HMRC.”

TUC regional secretary Kevin Rowan said no one should be surprised with HMRC staff warning of low morale and the wrong approach to the merger – and growing workloads amid job cuts.

Chancellor Alistair Darling apologised unreservedly and assured MPs that HMRC procedures were being tightened up, with all 45 of Mr Poynter’s recommendations accepted and £155m over the next three years to improve security.

But his Conservative shadow George Osborne said it was a “truly devastating account of incompetence and systemic failure at the heart of this Government” and destroyed claims that the breach was caused by a junior official breaking the rules.