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“Some small institutions asked for a couple of weeks”.—[ Official Report, 20 November 2007; Vol. 467, c. 1102-1110]
The British Bankers Association issued a press release the moment he sat down saying that it
“must correct the statements made by the Chancellor of the Exchequer in his address to the House of Commons today that any bank asked for any extension to the delay in announcing the security breach by HMRC...At no point did the banks request a period of weeks, as the Chancellor stated”.
Who is telling the truth? Is it the banking system or the Chancellor? Is it the e-mails from the NAO or the Chancellor? I guess that the public will decide.
The public will also decide on the third issue that needs addressing today: HMRC’s systemic failure to look after people’s personal information over a number of years. The Prime Minister went to great lengths to deny that failure when he was questioned by my right hon. Friend the Leader of the Opposition at Prime Minister’s questions last week—and we know why. The Prime Minister presided over this department and its predecessors for longer than anyone in the past 100 years, so he knows that if there is evidence of systemic failure, the blame lies with him.
The evidence is compelling. In September 2005, an unencrypted CD-ROM containing the bank details of taxpayers went missing. What did the Treasury say at the time? It said:
“This is a one-off incident...we are urgently reviewing our procedures to make sure this type of incident does not happen again”.
Of course it did happen again. In May, the details of 42,000 families who are claiming tax credits were sent to the wrong people. The Treasury then said
“we have robust procedures in place to protect information provided by”
the public. But of course they did not, because earlier this month the national insurance details of a further 15,000 people were lost on a CD-ROM. The Government then said:
“we have reviewed our arrangements and introduced safeguards to prevent this happening again”.
I am grateful to my hon. Friend the Member for Banbury for bringing to my attention the case of Mr. Leaver, a constituent of his from Bicester. In July, Her Majesty’s inspector of taxes sent two letters apparently intended for Buckinghamshire county council to his home address in Bicester. They contained the names and national insurance numbers of all the employees who had recently left that council. Mr. Leaver phoned Her Majesty’s inspector of taxes and was told, “We are very grateful for your telling us this. We will correct the error.” He
has subsequently received five more letters. My hon. Friend raised this with HMRC, which confirmed that that was the case, and having looked into the matter, it said:
“We did indeed hold an incorrect address for Buckinghamshire County Council.”
Mr. Philip Hammond (Runnymede and Weybridge) (Con): In Oxfordshire.
Mr. Osborne: In Oxfordshire, as my hon. Friend points out.
When the Chancellor orders yet another review and issues yet another promise that something will not happen the public are not convinced. We want him to acknowledge what the head of the Institute of Chartered Accountants said last week: that the catastrophic loss of personal data was not a one-off, but
“an example of wider operational and managerial malaise within HMRC”.
The institute has said that this gone on for most of 2007. Its head said that
“there is a deterioration in service standards at HMRC. It manifests itself in things like postbags being unopened for weeks.”
Mr. Fraser Kemp (Houghton and Washington, East) (Lab): Will the hon. Gentleman guarantee to the House that if he were to achieve the high office to which he aspires, there will be no loss of personal data under his watch?
Mr. Osborne: What I can guarantee is that if I saw evidence of systemic failure in a department for which I was responsible to this House, I would look into that systemic failure and seek to correct it. There is no evidence that either this Chancellor or the previous one did that at all.
Mr. Siôn Simon (Birmingham, Erdington) (Lab): Will the hon. Gentleman give way?
Mr. Osborne: I shall give way to the hon. Gentleman because his question to the Chancellor last week again implied that this was all about the lowly official sitting at a computer. Presumably he was as astonished as I was to find that senior officials were involved in this decision.
Mr. Simon: The hon. Gentleman perhaps misheard or misunderstood the question put by my hon. Friend the Member for Houghton and Washington, East (Mr. Kemp). Given how smug and sanctimonious the hon. Gentleman is being, surely he could give a 100 per cent. guarantee that not one iota of data will be lost under any future Conservative Government in any circumstances. Will he give us a guarantee please?
Mr. Osborne: First, I guarantee that I and anyone who serves in a Conservative Government will examine evidence of systemic failure. I think that I am pretty safe in guaranteeing that if I were Chancellor of the Exchequer, we would not lose the personal details of half the people in the country.
Kali Mountford (Colne Valley) (Lab):
Is not the hon. Gentleman making a bold pledge? Would it not be more gracious for him to examine the records of previous Governments, including those of his party,
and check how many times data have been lost by them, and to review the pledge that he has just been making?
Mr. Osborne: I do not think that the hon. Lady can seriously point to an incident where any previous Government, Conservative or Labour, managed to lose 25 million people’s names, addresses and national insurance numbers. This Government managed to lose the name, address and date of birth of every child in the country. As far back as 2002, the Prime Minister’s performance and innovation unit talked about
“the lack of public trust in the way that the public sector handles personal information and the security of that information”.
Yet that warning and subsequent ones by the Information Commissioner and Select Committees of this House and the House of Lords have been ignored.
The Chancellor will no doubt tell us about the fact that the chairman of PricewaterhouseCoopers has been asked to conduct yet another review of HMRC’s security procedures. Will he confirm that we are still awaiting the results of the previous one? Does he remember something called the Crosby review? It was set up last year to explain how HMRC’s tax credits system had been defrauded of £1.7 billion. Parliament was promised the report this summer, and I know that Labour Members were eagerly awaiting its arrival so that they could read it during their summer break. The Chief Secretary to the Treasury disappointed us, saying that it would arrive later in the summer, but we are now approaching December and there is still no sign of it.
We have been told that plans are afoot in the Treasury—perhaps the Chancellor will confirm this— [Interruption.] The answers come scurrying from the Government officials; at least this message did not get lost in the post. We have been told that plans are afoot in the Treasury to merge different HMRC databases into one single super database starting in April next year. Will the Chancellor confirm that, starting in April, everyone’s tax records will be merged with everyone’s benefit records? How can anyone be sure that such a super database containing the details of every person in the country will be any safer than the databases that it replaces?
Has the time not come to consider whether HMRC should continue in its role as a benefits agency? I suspect that this issue might find sympathy with some Labour Members, because every MP knows that HMRC has proved itself incapable of administering tax credits effectively. It has now proved itself unable to administer child benefit competently. A tax-collecting department is not best suited to being a tax-spending department. This situation is a legacy of the previous Chancellor’s obsessive desire to carve out for himself an empire in Whitehall. Now that the emperor has been shown to have no clothes, that empire should be dismantled. The administration of benefits should return to the Department for Work and Pensions where it belongs.
Finally, the Chancellor must acknowledge the growing public concern about this Government’s insatiable appetite for holding more and more personal data on their citizens. In a rare display of independent thought, he once said:
“Identity cards are unnecessary and will create more difficulties than they will solve...I do not want my whole life reduced to a magnetic strip on a plastic card. Those who advocate ID cards should think long and hard before continuing to do so”.
Surely an incident such as the loss of half the country’s data would make him think long and hard.
Now is the time to scrap the flawed plans for ID cards and a national identity register. Given that the Government have shown themselves to be completely incapable of looking after the data they already hold on us, how can they possibly ask for any more? I know that the Government increasingly look like a Monty Python sketch, but should they not take a leaf out of Monty Python’s book and just say, “ID cards are no more. They have ceased to be. They are an ex-project”? The sooner the Government wake up to that fact and stop wasting our money on this doomed white elephant, the better.
The Government have failed in their first duty—to protect the public. The Chancellor has presided over a Department that has lost the personal details of every child in the country, yet instead of an anxious public being kept informed, we have to wait for the Opposition to call him to Parliament to explain what is going on and why the version of events that he gave us last week is contradicted by the published evidence from the National Audit Office.
Since he took office, this Chancellor has lurched from one disaster to another—from the bank run, to the disastrous pre-Budget report, to the capital gains tax plans that seemed to change week by week. But the biggest disaster of all is surely this loss of the country’s personal data. As someone once said, accident-prone Ministers are not accident-prone by accident. This Chancellor will never regain a reputation for competence; let us see if he can cling on to a reputation for being honest about his mistakes.
1.41 pm
The Chancellor of the Exchequer (Mr. Alistair Darling): I beg to move, To leave out from “House” to the end of the Question, and to add instead thereof:
“approves of the decisive action taken by the Government when it became aware of the data loss by HM Revenue and Customs, including the collaborative work undertaken in association with the UK Payments Association, the British Bankers Association and the Building Societies Association and through them individual banks, building societies and other financial institutions which enabled them to put in place appropriate safeguards and monitor any irregular activity; welcomes the decision of the Chancellor of the Exchequer to initiate an urgent investigation by the Metropolitan Police and his appointment of Mr Kieran Poynter to conduct an independent review of HM Revenue and Customs’ data handling procedures; acknowledges the steps which have already been taken to improve the department’s data transfer processes; and notes the Chancellor’s assurance that he will keep the House fully informed of further developments.”
This is a very serious matter, and I am sorry that the shadow Chancellor has chosen to make it an occasion for political knockabout. [ Interruption. ] It is extremely serious when so many records go missing. There are no excuses for it, and yet again I reiterate not only my profound regret at what has happened but my apologies to the millions of people in this country who have been caused anxiety and distress. It is because I want to ensure that we not only find out exactly what happened
but ensure that it never happens again that I appointed Kieran Poynter, the senior partner and chair of PricewaterhouseCoopers, to conduct an inquiry and report. I will come back to that shortly.
Mr. Graham Stuart (Beverley and Holderness) (Con): Will the Chancellor give way?
Mr. Darling: No, not just now.
It is absolutely essential that we deal with the facts and the evidence, and we will have an interim report containing those in three weeks’ time.
Before I deal with the points made by the hon. Member for Tatton (Mr. Osborne), let me update the House on the current position. The Metropolitan police inquiry is continuing, as are searches. As this is a continuing police inquiry I do not want to say anything further on that, but the police inform me that they still have no evidence or intelligence that these data have fallen into the wrong hands and no evidence of fraud or criminal activity. The majority of accounts into which child benefit payments are made are with a small number of banks. The banks have now been able to check back to 18 October, and there are no reports, so I am told, of any activity suggesting increased fraud attempts deriving from this incident. However, Revenue and Customs will continue to ask for updates from major banks and building societies at least once a day.
Mr. Desmond Swayne (New Forest, West) (Con) rose—
Mr. Darling: Revenue and Customs also made changes to security processes and procedures for bulk data transfers, and such transfers will now take place only if they are absolutely necessary, written authorisation has been provided by senior Customs managers, and clear instruction has been given regarding the appropriate standard of protection for transfer.
Mr. Darling: As I said, Kieran Poynter, the chairman and senior partner of PricewaterhouseCoopers has started his inquiry, and I shall return to that shortly. [Hon. Members: “Give way!”] I shall certainly give way to the hon. Member for New Forest, West (Mr. Swayne), unless he has lost interest in the subject.
Mr. Swayne: Twenty-five million records of children’s names and addresses have disappeared. Given the amount of data that the Government are collecting, no doubt including whether the children have been bad or good, and that it is six weeks before Christmas, it is blindingly obvious who has taken them.
Mr. Darling: I think that members of the public would hope that the House and the hon. Gentleman take this matter seriously. I am very sorry that he has chosen to strike that attitude.
Mr. Stephen Dorrell (Charnwood) (Con): On what evidence does the Chancellor base his statement that he does not believe that the discs have left Government property?
Mr. Darling:
The information that I have comes from the police and from Revenue and Customs. As I said, the inquiry is continuing. When it has concluded and I
have the interim report from Kieran Poynter, which I have asked to have by 14 December, I will report to the House thereafter.
Mr. John Redwood (Wokingham) (Con) rose—
Mr. Darling: I want to make some progress.
Let me deal with three matters that the shadow Chancellor raised before I turn to what he said about my statement and his other points. First, I said in my statement last week that we informed the banks—through the Association for Payment Clearing Services, which acts for them—on the Friday that we had this problem and needed their help. Work was carried on over the weekend to uplift the accounts so that they could be monitored. On the Monday morning, when I was reaching a decision about when I would report to the House, I asked what the banks’ view was. A number of banks said that they wanted more time—
Mr. Darling: I am not prepared to say that without those banks’ consent, but their request was based on perfectly good operational requirements. Nobody is blaming the banks; they simply wanted the time to put in place the necessary protections. It was clear to me that, as I said last week, a balance had to be struck between my need to tell the House and the public and the need to ensure that the banks were properly prepared.
The hon. Gentleman made a suggestion about dismantling something. I am not sure whether he is calling for the dismantling of Revenue and Customs or wants to transfer the benefits element out of it. The issue here, unless Kieran Poynter’s inquiry points elsewhere, is not so much where the child benefit centre is located in terms of responsibility—of course, it was part of the Department for Work and Pensions and, before that, the Department of Social Security—as ensuring that there are robust procedures in relation to the handling of data and, crucially, that the procedures are followed to the last detail.
In relation to identity cards, yes, I did indeed say what the hon. Gentleman said. However, as somebody once said, when the facts change, I change my mind. What has changed over the past few years is that a great deal of information is held about each and every one of us by Government Departments, by the private sector, and by the health service. The whole point of ID cards is to strengthen security so that we can be confident that information that is held on us, whether in the public sector or the private sector, is not released to third parties without our consent. That is the merit that ID cards can bring, and that is why I have changed my mind. Frankly, a lot has happened in the past 10 or 15 years in terms of the sheer quantity of information held.
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