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That broadly seems to me the position of our Chancellor of the Exchequer. There were faults in HMRC, as acknowledged by the Chancellor in the House on 20 November, in statements to the media since and certainly here today. That has also been acknowledged
by Paul Gray, who was the chair of trustees of HMRC and who immediately fell on his sword when it became apparent that there had been problems in the organisation. Pick holes as the Opposition might—so they should; that is the role of an Opposition in a parliamentary democracy, which we are pleased to enjoy—one must ask whether decisive action has been taken. I think it has. Is the organisation aware of the problem and how it happened? It is quite clear from what has been said, particularly by the Chancellor, that the overall organisation, as it were, is aware of how this happened. The leadership within HMRC and, on the political level, within the Treasury as exemplified by the Chancellor has a plan that commands some support as to what to do to address the problems with which the organisation is faced.
The Chancellor and his team tick all the boxes on that, to use our modern jargon. They have perceived the problem—problems can be hidden in organisations for years, as we all know—taken decisive action and come to a preliminary view, which will be assisted by Kieran Poynter’s report as to how it came about. They have also come to a preliminary view, again to be assisted by the report, on where we go from here and what we do to prevent a reoccurrence.
John Mann (Bassetlaw) (Lab): My hon. Friend is using his previous professional expertise to persuasive effect. I always think that lawyers speaking on issues other than the vested interests of lawyers bring strength to this House. Logically, is there not an additional aspect that needs to be brought into the equation—the role of Parliament? Parliament appoints Select Committees, including the Treasury Committee, which is chaired by a Government Member, and its Sub-Committee, chaired by an Opposition Member, with a precise remit to look at exactly the same issues. The Treasury Sub-Committee, on which I once served—I take as much responsibility as any other Member—looks at the precise workings of this particular agency of Government.
Rob Marris: In this case, flattery will get my hon. Friend everywhere. I broadly agree and he is right about Select Committees and Sub-Committees. He will recall that I said that the Opposition were picking holes and were right to do so, in that that is what Oppositions should be doing in a parliamentary democracy.
Mr. Kemp: I very much agree with my hon. Friend’s call for a rational debate. Does he agree that some of the derogatory press comments about the town of Washington do not contribute to that rational debate? Those comments include some suggesting that the town is full of run-down high-rise tower blocks, of which it has none, and others about the low expectations of the people. It would be better to have a rational debate rather than such comments about a proud and successful town.
Rob Marris:
I certainly agree. Many of my hon. Friend’s constituents work for HMRC on child benefit. Derogatory remarks about the town of Washington or about everyone who works for HMRC—one sometimes gets a flavour of those remarks—are not helpful to a
constructive debate. Clearly there have been problems in HMRC, to state the obvious. If Members of this House and members of the public stopped for a moment and wondered how widespread those problems were, they would see that the results are very serious but the causes are a few people who made mistakes. That makes the issue much more difficult to address, but we are starting to do so. A few people were involved and not everyone who works for HMRC, whether or not they include my hon. Friend’s constituents from the fine town of Washington or elsewhere. We need a measured and constructive debate.
Mr. Graham Stuart: There have been 2,000 security breaches in the organisation. The reason why the House and the Opposition are so determined to hold Ministers to account is that a Minister, the then Chief Secretary, the right hon. Member for East Ham (Mr. Timms), told the House in May:
“HMRC take confidentiality very seriously and have robust procedures in place to protect information provided by claimants.”—[ Official Report, 18 May 2007; Vol. 460, c. 952W.]
That categorical statement was made to this House by a Minister, but what it says is not the case. There have been further breaches, of which the one in question is just the most egregious. It is therefore for Ministers to take responsibility. The weasel words of the hon. Gentleman and his colleagues do not do justice to the seriousness of the issue.
Rob Marris: If the hon. Gentleman will allow me, I will respond to that bluster later in my remarks.
Having talked about process and a constructive debate, we have to be aware of what the hon. Member for Twickenham (Dr. Cable) said in an extremely constructive and helpful speech—I did not agree with every word; Members would not expect me to—about the ease of being wise after the event. The official Opposition must be careful about hindsight, as must we all. I lived in Canada for a number of years and followed the Canadian football league, and I know that there is something called a Monday-morning quarterback. It takes place with 20:20 hindsight, as Sunday’s game is discussed on the Monday and people talk about all the plays that could have been made. That is the benefit of hindsight.
Let us look at the Government’s proposals that now, with hindsight, the official Opposition support. They argue for more houses, transparency in party funding, the benefits of migration and immigration, Islamic finance initiatives, some central control over the botched railways privatisation, police and community support officers, the benefits of flexible working, the NHS being free at the point of use without patient vouchers, passports and all that nonsense, rights for lesbians, gays, bisexuals and transgender people—
John Hemming: Will the hon. Gentleman give way?
Rob Marris: No, I shall carry on. Other such issues include maternity leave, paternity leave and adoption leave, the national minimum wage and, on another Treasury matter, the independence of the Bank of England. They say, “Oh yes, with hindsight, we should have had that policy, but Labour got there first.”
John Hemming:
The hon. Gentleman perhaps misses the point. Yes, the task was delegated, but policies
should have been established and enforced by the Government. Underlying everything, is there not the attitude problem that was highlighted earlier? The attitude problem from the Government is the view that the people are there to serve the Government, rather than the Government to serve the people. Things are done and risks are taken with people’s data for the convenience of the Government and the ease of bureaucracy, when the Government should serve the people.
Rob Marris: That is a fine sentiment, but I do not want to get drawn too far down that track. I caution the hon. Gentleman to be a little careful, because I suspect—I do not know, because I do not attend his advice surgeries—that, like me and every other hon. Member, he has many people coming to those surgeries who want the Government to do things for them. In fact, part of the difficulty that we have with a segment of society is its over-dependence on the Government. The way in which that issue is refracted by politicians—this is too often but not always the case—is by their saying, for example, “We have a problem with obesity, let the school sort it out.” There is sometimes too much of a desire from a segment of the population to have the Government do things for them.
John Mann: I raised the question of hindsight earlier. Did my hon. Friend foresee this problem, as one of the 650 elected Members of Parliament? I did not see it coming, and neither did the Treasury Sub-Committee on which I served, which was chaired by a Conservative Member. Otherwise we would have had the opportunity to call HMRC to account, to visit and question staff, and to delve under the surface of what was happening. Perhaps we should all apologise.
Rob Marris: I am not sure that we should all apologise, but my hon. Friend is right. If we were blessed with such hindsight, we would go to the excellent racecourse in Wolverhampton and put on bets on events for which we knew the outcome. I hope that the Treasury Committee and its Sub-Committee will look into the matter thoroughly.
John Mann: The point is that the Treasury Committee and Sub-Committee are specifically delegated by Parliament to investigate such organisations, so that parliamentarians from different parties can get under the surface of what is happening. Is this not a classic case in which although hindsight is wonderful, if such an investigation had happened in the past few years, the problem might have been identified? Therefore, do we not share a responsibility for failing to have the vision to spot the potential problem?
Rob Marris: I agree that we have a shared responsibility, and some people are prone to think that they could have had the foresight to see what might have happened. I hope that the debate will show the House in a good light and as being prepared to look constructively at difficulties in the running of government, with a positive contribution from at least some Opposition Members. I hope that we can give a few pointers for the Committee—or even the Conservative-led Sub-Committee—when it examines the issue.
John McDonnell (Hayes and Harlington) (Lab): I had not intended to comment on the debate, because it is untimely and precipitous, given that the inquiry has not reported. However, I remind my hon. Friend that, in the debate on the merger that formed HMRC, several of us raised the implications of staff cuts and management issues, including the Lean system. We have also raised the closure of Inland Revenue offices and the impact on services. Those were indicators of possible problems, and I hope that the inquiry will address those wider issues.
Rob Marris: I understand my hon. Friend’s points about staff cuts; he is well informed about such matters through his links with the Public and Commercial Services Union. I understand the concerns about staff cuts, which were also raised by the Select Committee on Work and Pensions, of which I was a member, in the last Parliament. However, from the information of which I am aware—it may be only a small piece of the canvas—it is not staff cuts that have led to the present problems.
John McDonnell: It is inappropriate to pre-empt the inquiry, but any inquiry should extend beyond the narrow issue. We know, from HMRC’s staff survey, that morale is at its lowest in its history, or in that of the predecessor organisations.
Mr. Deputy Speaker (Sir Alan Haselhurst): Order. Before the hon. Gentleman resumes his speech, may I point out that the Chair is encouraged to place time limits on speeches when a sufficiency of Members indicate a wish to speak? On this occasion, the evidence before Mr. Speaker suggested that no Labour Members wished to speak in the debate. No time limit was therefore imposed. I ask the hon. Gentleman to respect the difficulty that the Chair had in judging the situation and be aware that others wish to contribute to the debate.
Rob Marris: I am grateful for that very helpful guidance. I have reached the final section of my remarks, which I shall try to keep brief, and I shall not take any more interventions.
As politicians, we have difficulty in coming to grips with the fast-changing world of information technology. I do not say that every hon. Member has that difficulty, but I struggle with it, and from talking to colleagues, I know that they do so as well. Part of the problem is the average age of Members. Much of the information technology around us has come on to the scene while we have been adults. Most Members can deal with e-mails, texting and spreadsheets, but we struggle with the process—the epistemology and methodology. The previous Government struggled with that, and so have this Government in the past 10 years. So have computer suppliers, such as EDS, which has a rubbish record, as I discovered when I served on the Work and Pensions Committee.
The idea that technological transformation will make an organisation more efficient only works if it is accompanied by business transformation. We have struggled with that as a concept. We also have difficulties with the
desire for privacy on the one hand—understandably so, as 25 million citizens have had their privacy potentially invaded by the loss of the discs—and on the other by an experience that I suspect we have all had at one time or another of phoning an organisation and, after being kept on hold and told to press various buttons, being asked for information that one has supplied on previous occasions. One often wishes that the organisation had kept that information. The Government have tried the “ask once, use many times” approach that has been adopted by other large organisations, but it is difficult to balance that with the need for privacy. That balancing act is not always got right, and it is something that the House has never really discussed. We talk about whether IT initiatives have cost more than expected or have produced the desired outcomes, but we do not deal with their more philosophical, business transformation aspects.
It takes a problem such as the one that we are debating today to highlight the difficulty that I have described. The House needs to pay more attention to the broader, philosophical background to which the right hon. Member for Charnwood adverted in his speech. We need to deal with the immediate problem, but we should also take a step back so that we can see where our society, in which the Government are a leading player, is going in respect of IT systems and privacy. People may wish that they did not have to give the same information many times, but they also have an overwhelming and understandable desire for privacy when information is held by organisations.
3.11 pm
Mr. John Redwood (Wokingham) (Con): I rise to support the wise words of my right hon. Friend the Member for Charnwood (Mr. Dorrell), and the words of my hon. Friend the shadow Chancellor. My right hon. Friend was right to say that, above all, we are debating a cultural issue. It is a matter of grave concern that HMRC does not regard looking after data as its fundamental duty, and that it does not consider that the customers or taxpayers whom it serves have every right to expect the highest possible standards when it comes to protecting the very important and extensive personal data that they are forced to give to the state, on pain of prison, so that taxes can be calculated and levied.
We are discussing accountability. We have held this debate because we think that the Chancellor of the Exchequer did not tell us enough when he first made a statement to the House—let alone today—and that he did not explain all the details that he knew at that time. The doctrine of ministerial accountability has moved on in recent years, and I welcome that. Twenty years ago, a Minister who had presided over such a major disaster would have offered to resign automatically. There would have been no question about that, but I do not think that it is fair or right for a Minister to resign if a junior official goes against the rules or makes an egregious error about which the Minister can know nothing and whose outcome he or she certainly does not seek. If we were looking in this debate at a single error made by a junior official about which the Chancellor knew nothing, there would be no question to answer under the new doctrine of accountability.
However, the contention of my hon. Friend the shadow Chancellor is that we are looking not at one error but at a series of them. Some have said that there have been 2,000 errors of a similar kind, although not all on the scale of the most recent one, but my hon. Friend has contended that it is part of the culture, and therefore possibly a fault of the policy, that such things are happening at all.
That is why I asked the Chancellor of the Exchequer whether, in light of recent events, he had made changes to the procedure and policies that govern the handling of data. He answered that he had made one change. The hon. Member for Twickenham (Dr. Cable) and others did not think that that was sufficient, but the implication of the Chancellor’s reply is interesting, as it suggests that he felt that the existing system was not adequate and needed to be changed. In addition, the Chancellor has appointed a committee of inquiry to see whether the system as a whole needs changing and improving, which suggests that the problem did not arise through one official making a mistake but through a systemic failure inherent in the policy.
The most important error to have occurred has not received enough attention. In March, a similar volume of information was sent in a similar manner. Fortunately, the discs did not go missing, but that event should have alerted the previous Chancellor of the Exchequer to the seriousness of the possible problems that such sloppy data handling could cause. If anyone is culpable, therefore, it is the former Chancellor and his junior Minister responsible for these matters, as they did not respond when things went wrong. Could they have responded? Did they know? We now learn that a senior manager in HMRC was well aware of the error in March, and it does not speak well for the leadership provided by the then Chancellor and other Ministers that that official did not pass on the information to the Chancellor’s private office—or, if he did pass it on, that the former Chancellor and the responsible Minister did not understand its significance, and therefore did not take action.
That brings me back to the question of culture. No one on the Opposition Benches with experience of running Departments or big companies—I have had the privilege of doing both—believes that a single person can possibly know every decision, read every e-mail, or be copied into every transaction. That is why I accept that errors will occasionally be made that are not the wish of the person at the top. Since such errors are not inherent in the policy or culture laid down by that person, I believe that he or she should be forgiven. However, the culture at HMRC did come from the top and it seemed to say, “We do not regard the sanctity of personal data as crucial. We do not think that should be your No. 1 duty.”
I suspect that if we could see more of the relevant e-mail traffic and memos we would discover that Ministers wanted the merger of Revenue and Customs to give rise to a more aggressive Inland Revenue that got more money out of more people, more quickly. Since the merger, I certainly have received many more complaints from constituents, very often to the effect that HMRC has extracted money on rather bogus arguments, or incorrectly. It has then had to return that money. I suspect that the cultural shift that the then Chancellor orchestrated and sent down the line was that he wanted the new merged organisation to be much better at
collecting more money from people and companies. If that is the culture being promoted, it is not easily compatible with one that is customer friendly. In a customer-friendly culture, staff would be told, “Your No. 1 priority should be to treat customers well, and that means that you must look after their data.”
Others have said that what has happened demonstrates that the Government cannot be trusted with the wider range of data collected for ID cards. Naturally, I agree: the public are now extremely suspicious of the Government’s ability to handle data and of their trustworthiness in dealing with that information. In the days ahead, Treasury Ministers who want to rescue their ailing position on data handling must demonstrate that they have learned the lessons and that they have put in place a system that will not allow such errors to happen again. However, the evidence from the Chancellor and other Ministers on the Treasury Bench today gives us no sign that we are about to reach that happy situation.
We have been told that one change has been made to the relevant procedure—something to do with the internal post at HMRC. We have heard nothing about encryption, or about reducing the amount of data that can be moved, either on a disc or in some other manner. We have heard nothing about introducing personal couriers to transport such sensitive data, or about reopening discussions with the NAO about how much data are needed and on what basis. My understanding of audit procedure is that it is done by sample, so why on earth were the records of 25 million people sent through the post? Could not a proper sample have been made? We have heard no explanation from Ministers as to why auditors cannot go to the data, rather than the other way around.
It is pathetic that so many days after the scandal was first reported we have not had a straightforward statement from someone on the Treasury Bench about how elementary protections and precautions for data handling and transmission have been put in place. Such defences would be expected in any medium-sized company, let alone a large one. We also need to know why the Chancellor has been so dilatory in coming to the House, and so reluctant to have information dragged out of him. It is apparently fine to share with the world, through the postal system, the unprotected records of 25 million people, but when it comes to data that this House needs—such as where the £25 billion used for Northern Rock, has come from and the asset protection that has been put in place—we are not allowed to have it. When it comes to information on what action the Chancellor plans to take to deal with the data-handling shambles, we are not allowed it even after a full debate and a statement.
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