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25 Jun 2008 : Column 1433

Lord Hunt of Kings Heath: My Lords, there are some real advantages to individual voter registration, but there are also some practical consequences, which is why we are examining the matter. However, I agree with my noble friend that greater focus needs to be given to the question of specific areas with particular problems. The Rowntree report raises the issue of “clan politics”, to which I think my noble friend is referring. I agree that we need, with the Electoral Commission and the police, to consider the matter.

Lord Goodhart: My Lords, during the debates on the 2006 Act, the Government said that they would consider what to do about individual registration. They are still considering what to do. Do they not realise that a very effective system has operated well in Northern Ireland and that it would be easy simply to import that system into the rest of the United Kingdom?

Lord Hunt of Kings Heath: My Lords, I do not apologise for giving this careful consideration. We have said that we see the merits of individual voter registration. However, I point out to the noble Lord that, although he is right about Northern Ireland, one of the impacts there was a reduction in the level of registration when the system was introduced. That is one of the concerns that we need to address if we are going to move to individual voter registration. Surely we all want more people in this country to take part in the democratic process. Anything that we can do to encourage that has to be welcomed.

Earl Ferrers: My Lords, would it not be even simpler not to import the idea into this country?

Lord Hunt of Kings Heath: My Lords, the noble Earl presumably refers to individual voter registration in Northern Ireland. No, we should learn from the experience in Northern Ireland. The system has clearly worked well, but there is concern about the reduction in the number of people who have registered. We will obviously consider that carefully. However, I say to the noble Earl that the changes made as a result of the 2006 Act have already brought enhancements to the checks against fraud.

Fuel Prices

3.23 pm

Lord Teverson asked Her Majesty’s Government:

Lord Bach: My Lords, the United Kingdom has been discussing high oil prices with the G8 in several international fora. The G8 energy ministers’ meeting in early June concluded that oil prices at current levels are against the interests of both producers and consumers; there is a need for increased investment in oil production to keep markets well supplied as demand rises; we need vigorously to pursue energy efficiency and diversify away from fossil fuels by increasing use of low-carbon energy. We will be raising the issue at July’s G8 summit in Japan.

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Lord Teverson: My Lords, I thank the Minister for that reply. While we would probably think that an oil price of up to $100 a barrel might be healthy, I presume the Minister would agree that where the price is moving to at the moment means that we risk both inflation and recession in the global economy. Does he expect to get an agreed policy out of the meeting in Japan next month or does he agree with Kevin Rudd, the Prime Minister of Australia, that we should apply a blowtorch to OPEC?

Lord Bach: My Lords, what we hope to get out of the G8 is very much what the Prime Minister, along with others, got out of the Jeddah meeting last weekend: a recognition that current oil prices and their volatility are detrimental to the global economy, in particular for developing countries; an agreement that higher levels of investment are required throughout the oil supply chain; and that producers and consumers should take forward a programme of work to improve the long-term functioning of the oil market.

Lord Forsyth of Drumlean: My Lords, if the Prime Minister is concerned about fuel prices and their effect on consumers and the economy, instead of making a journey to Saudi Arabia or Japan, would it not be better to make a journey next door to No. 11 Downing Street and ask the Chancellor to cut the duty which he is taking on these inflated prices?

Lord Bach: My Lords, of course the Government recognise the impact of oil prices on motorists at the moment, and the Chancellor will look closely at that and other factors when considering whether to go ahead with the planned 2p per litre fuel duty increase. But I should say, and I would be interested to know whether the opposition parties agree, that Government policy remains that fuel duty should continue to rise at least in line with inflation as the UK seeks to reduce polluting emissions from fossil fuels and to support public services.

The Countess of Mar: My Lords, the noble Lord has just touched on the issue I want to raise. Is he aware that the Government are producing conflicting messages? On the one hand we are trying to get the price of oil reduced so that we can do more trade, while on the other hand people are being exhorted to use their vehicles less and thus use less oil. What is the message? Are we to use our vehicles less or is the world to reduce the price of oil so that we can use more of it?

Lord Bach: My Lords, there is no conflict. Our position on international energy markets is not in conflict with our climate change goals. The transition to a low carbon economy needs to be managed, and economic slowdown will not help that. Current energy prices are a risk to the low carbon economy, not a spur, especially if they cause a global economic slowdown. I remind the House that the result of oil prices as high as they are at the moment affects developing countries much more than anyone else.

Lord Davies of Coity: My Lords, with regard to the statement just made by my noble friend, is it not correct to say that there is a difficulty and that what the Government are trying to do is strike a balance between the economy and the environment?

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Lord Bach: My Lords, all governments have to balance various interests. However, I want to make it clear that there is nothing particularly green about the current high level of oil prices. It is not the way to make the world go green; that needs to be done in a much more managed way than is the case at present.

Lord Lawson of Blaby: My Lords, to allay the confusion over the Government’s current policy, will the Minister confirm the statement made to the Financial Times by the noble Lord, Lord Turner, chairman of the Climate Change Committee to be established under the Climate Change Bill, that an integral part of their climate change policy is to have still higher carbon-based energy prices?

Lord Bach: My Lords, I do not know the words quoted by the very distinguished noble Lord, Lord Lawson, although I know where he comes from on this issue. We think that the price of oil worldwide at the present time is much too high, and that is where we remain.

Lord Avebury: My Lords, when the Government get to the July G8 summit, will they consider a proposal to the other G8 states for a collective agreement on the reduction of oil consumption worldwide in line with the reductions in CO2 that have already been agreed? If the markets believed we meant business on this, would not that have a marked effect on world prices?

Lord Bach: My Lords, one of the effects of the very high oil price is that it encourages methods not to use oil to the same extent as it is being used now. One of the current effects is that people are being much more careful in the way in which they use fuel.

Lord Bilimoria: My Lords, what proportion of these extortionate oil prices does the Minister think is made up by speculation? Does he believe that there is an oil price bubble and will it burst?

Lord Bach: My Lords, we do not believe that speculation is the most important driver of these increases. The most important drivers are changes in the underlying balance of the market. In other words, demand for oil is rising faster than supply and the market lacks spare capacity. The decline in the value of the dollar is another important factor in driving dollar-denominated prices. One should not forget geopolitical tensions in oil-producing countries either. We do not think speculation plays the most important part.


3.31 pm

Baroness Royall of Blaisdon: My Lords, with the leave of the House, we will have two Statements repeated this afternoon. In a moment, my noble friend Lord McKenzie of Luton will repeat a Statement entitled “HM Revenue and Customs”, and at a convenient point around 7 pm, my noble friend Lord Davies of Oldham will repeat the second Statement entitled “Pitt Report on Flooding”. The statutory instruments scheduled

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for the dinner break will follow straight on from the second Statement, and the Committee stage of the Education and Skills Bill will resume as soon as the debates on the instruments are finished.

If the House will indulge me further, I have been conscious of late of the commotion after Question Time which makes it very difficult for whoever is speaking to be heard. Therefore, I take this opportunity respectfully to remind noble Lords of Standing Order 20, which states that Members,

The Companion to the Standing Orders indicates that this rule applies to Members not moving about the Chamber while a Question is being put from the Woolsack and to leaving the Chamber quietly at the end of Question Time.

Revenue and Customs

3.32 pm

The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord McKenzie of Luton): My Lords, I have a full House. With the leave of the House, I shall now repeat a Statement made in another place on the final report by Kieran Poynter, chairman of PricewaterhouseCoopers, into the loss of child benefit records at HM Revenue and Customs last year. The Statement is as follows:

“I should tell the House that the Independent Police Complaints Commission, which conducted its own investigation into the loss, is publishing its report today. The IPCC found no evidence of misconduct or criminality by any member of staff at HMRC. The Cabinet Secretary has also published today his wider cross-government work to improve data handling. The Poynter and IPCC reports are available in the Vote Office and the Library of the House. I am grateful to Kieran Poynter and his team and the IPCC for their extensive work. Both have provided a very full and detailed account of what happened.

“Improving information security is a challenge that every organisation is facing. In recent years, we have seen problems in both the public and private sectors as organisations struggle to keep pace with the development of technology in data storage and transfer. The public are entitled to expect government departments to ensure that their personal details are kept safe, and it is therefore essential that we do everything we can do to minimise the chances of this sort of loss happening again.

“I deliberately gave Mr Poynter wide-ranging terms of reference, not just because of the seriousness of this loss but also because, as I said in my Statement of 20 November, I was concerned about previous losses of data by HMRC. In my Statements to the House on 20 November and 17 December, I set out the circumstances surrounding the events that led to the loss of the child benefit data and the immediate action taken. My priorities then were to locate the missing disks and to ensure that adequate safeguards were in place to monitor bank and building society accounts of those who could have been affected.

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“Despite extensive searches by HMRC and the police, the disks have not been found, but I can tell the House that I am advised that there is no evidence of any fraudulent activity as a result of the loss.

“HMRC took a series of immediate steps at that time, including a complete ban on the transfer of bulk data without adequate security protection, measures to prevent the downloading of data without the necessary safeguards, and the immediate disabling of the ability to download data from all desktop and laptop computers within the organisation.

“Mr Kieran Poynter’s report is in two parts. The first deals with the circumstances giving rise to the loss. The second part deals with his wider findings and recommendations. He examined in detail the circumstances surrounding the earlier transfer of data in March 2007, to which I referred in my Statements to the House. He found that in March, because the HMRC staff then involved were unaware of the relevant guidance, which in itself lacked clarity, they did not escalate the request to the appropriate level of seniority before releasing data to the NAO. As a result, no senior HMRC official was asked to permit the NAO to take the data off-site to conduct its analysis and no such official knew that this was envisaged.

“Mr Poynter has concluded that these events in March last year then created a precedent which allowed a similar transfer to take place in October without the appropriate level of authorisation or adequate consideration of the security risks of releasing such a large amount of personal information. He says that senior managers were unaware that the data had been moved from HMRC premises in March and October until the loss of data was subsequently reported to them.

“He concludes that the data loss incident arose following a sequence of communications failures between junior HMRC officials and between them and the National Audit Office. However, he finds that the loss was entirely avoidable and the fact that it could have happened points to serious institutional deficiencies at HMRC.

“First, information security simply was not the management priority it should have been. Secondly, management structures and governance were unnecessarily complex and did not establish clear lines of accountability. Moreover, he points to a lack of clarity in communications and the failure to involve senior HMRC staff as being contributing factors in both cases.

“Mr Poynter makes clear in his report that both these failings have now been addressed. He acknowledges the progress the department has made since last November. HMRC is a complex organisation, operating from some 900 sites and sending out more than 300 million items of mail a year.

“Against this background, Mr Poynter sets out the action that has been taken to make information security a priority. This includes the appointment of a chief risk officer, new, clearer security guidance and a wide-ranging programme of training to raise awareness of security issues among staff. He also

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sets out the action that has been taken to simplify management structures and governance. He acknowledges the new organisational structure as a positive step forward.

“Mr Poynter’s team has worked closely with HMRC and in particular those teams that process large volumes of personal data or provide corporate services such as IT. By providing detailed recommendations to the organisation as its work progressed, rather than leaving them to the final report, the review team has been able to support HMRC and help it make good progress in implementing its recommendations.

“However, Mr Poynter states that,

In all, he makes 45 recommendations, all of which have been accepted. HMRC has made good progress on 39 of the recommendations, including 13 which have been fully implemented. Work is continuing on the remaining recommendations.

“Mr Poynter also makes a number of recommendations in relation to the way in which HMRC operates and the fragmentation and complexity of its IT systems. The organisation is already addressing these issues and will be spending £155 million improving data security over the next three years. The 45 recommendations, when fully implemented, will reduce the risk of a serious breach in the future and make sure that HMRC achieves the highest standards of information security.

“Kieran Poynter states that the decision to merge the Inland Revenue and HM Customs and Excise was the right one, but he says that the management structure subsequently adopted was not suitable—exactly the same failing identified in the capability review carried out by an independent panel, overseen by the Cabinet Secretary and published last December.

“In acknowledging the significant changes the organisation has undergone, Mr Poynter judges that,

In order to build from this platform, the management needs to continue to address the issues highlighted by Mr Poynter in his wider review and the capability review. In particular, HMRC’s security procedures must be improved to ensure information security is a management priority and, importantly, the management must raise staff morale.

“Mr Poynter acknowledges the new organisational structure put in place earlier this year as a crucial step and makes recommendations to develop it further. He concludes that his findings represent an opportunity to modernise work practices and systems, which will make the organisation more efficient as well as rebuilding its reputation for data security.

“I am grateful to Dave Hartnett, the acting chairman, who has overseen these improvements and led the organisation through a difficult time. Yesterday Mike Clasper, who has considerable business experience, was appointed as the new chair of HMRC. He and Dave Hartnett have made it clear that the

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implementation of the Poynter recommendations and, crucially, the importance of information security will be priorities.

“The Information Commissioner, who has been kept informed since the outset, has indicated that this review has investigated all the facts and issues with which he needs to be concerned; he fully supports all of Kieran Poynter’s recommendations. The Information Commissioner proposes to serve the appropriate enforcement notice on HMRC under the Data Protection Act.

“It is quite clear that the loss was entirely avoidable and, again, I apologise unreservedly to anyone who has been affected. HMRC employs tens of thousands of people, who work hard and who are dedicated to providing an excellent service to the public. The staff are entitled to expect clarity as to how they discharge their duties. The public are entitled to expect that their privacy is respected and that security of highly personalised information is the highest priority. It is essential that we now implement his recommendations. I commend this Statement to the House”.

3.42 pm

Baroness Noakes: My Lords, I thank the Minister for repeating the Statement made by the Chancellor in another place. We were beginning to think that the Government had forgotten about this. Last December, they assured us that Mr Poynter would issue his full report in the first half of this year. Well, he just about made it, with a couple of sitting days to spare.

Mr Poynter’s first review, published just before Christmas, was disappointing in its lack of hard facts, so we welcome this report. What is still a mystery is why it has taken so long. The Government want to introduce 42 days for the purposes of establishing evidence as to the facts in criminal cases, but they have allowed Mr Poynter to take eight months to establish the facts in this case. Doubtless that was convenient for a Government who hoped that this would disappear off the public radar screen.

Now that we have a definitive study on what happened in HMRC, we can address the critical issue of whether this failure was systemic, isolated or procedural. The distinction is important because Ministers take responsibility for systemic failures. The headings in Chapter IX of the Poynter review say it all: “Information security not a management priority”; “An unsuitable organisation design with muddled accountabilities”; “Fragmentation and complexity”; “Inadequate information security policies”; “Embracing the digital age”, which actually means not embracing it; and “Morale is low”.

This organisation has not had a long history contributing to a cumulative list of failings. It was created in 2005 by a decision of the current Prime Minister, when he was Chancellor. He chose to merge two adequate organisations and, in doing so, created one monster. He knew exactly what he was doing. He appointed a chairman from outside the public sector who spoke in management riddles and then set up an organisation that is described in the Poynter report as a,

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