Did Darling “mislead Parliament”?

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21st November, 2007

HAVE WE HEARD ALL THE TRUTH YET?

With talk tonight, disputed by the government, of differences regarding the information on timing, retrieval and storage decisions of “desensitisation” of data, there is more to surface tomorrow, have no doubt.

REPORTED TONIGHT:

“A SENIOR STAFF MEMBER AT HMRC AUTHORISED THE DATA RELEASE”

Conservative MP Edward Leigh, Chairman of the Public Accounts Committee, says that a senior official AND an assistant director and NOT, as earlier claimed, a junior official was involved in the procedure which led to the loss of the data.

In March, it is said, a decision was made ‘for cost savings reasons’, NOT to desensitise the information. The National Audit office requested some changes to the HMRC’s system of storage concerning security and sharing, so that ALL data would not need to be sent to them on a regular basis, as had been the normal course. The HMRC said, according to the chairman of the PAC, that it would be expensive to make that change, and so they would leave things as they were. As a result they would continue sending CDs of ALL the data by post between departments.

Senior management would have known about this.

That decision still applied to this recent release, and loss.

Perhaps that explains why the 23 year old Junior clerk at the centre of the scandal is being put up in a hotel tonight with a 24 hour media guard? What? What? Are we in Russia!? I’ll have to write another post on this - I really WILL have to!

But, did Alistair Darling mislead the House of Commons? Well, that is a serious charge, and if so, his days are numbered. But, it is clear that he and the present prime minister are close. Much closer than the previous PM and chancellor!

The chancellor will NOT have known anything that Brown did not also learn, or know earlier; their decisions would have been made in concert. The present prime minister would surely have known if a decision not to desensitise had been taken in March. This department - HMRC - was a department which Brown, and not Blair, saw as his own, and which he guarded possessively.

As is clear, and as I stated at the breaking of this news yesterday, this story is going to run and run.

 

PMQs

A quick resume, as I listen and watch here live at the Parliamentary Channel.

On the data breach scandal:

Gordon Brown: “We have set up a review to check systems.”

David Cameron: “Millions will be worried … and angry. Is there a systemic lack of leadership at HMRC? A junior official sent the data … three times.”

GB: “The procedures … encryption … were not followed.”

DC: “This has been going on for years. This was the Prime Minister’s department … does he feel responsible for this?”

GB: “His party wanted to cut funding to the HMRC.”

DC: “Pathetic answer.”

On ID cards -

GB: “22 out of 25 European countries … have Identity Cards.”

DC: “A prime minister who tries to control everything but actually can’t run anything.”

Vince Cable (Acting Leader of the Liberal Democrats - he should remain as Leader, imho!): “Does the PM agree with Tony Blair that the Treasury is too powerful and needs to be broken up?”

GB: “Is that a new Lib-Dem policy?”

He supported the chancellor, after suggestions from a Scottish Nationalist backbench MP that Darling should resign.

In response to an MP’s question he mentioned the Annapolis talks next week on the Middle East, and the associated Donors conference in December.

Following a question on the unsightly nature of wind turbines, and a call for stronger backing for nuclear power…

GB: “No wonder the leader of the opposition is blushing. His party is all-talk and no action.”

Considering how much trouble this data loss may cost half the population, Brown was much better than recently in PMQs. Partly, probably, because he knew that the opposition party was not going to call for his or Darling’s resignation over this.

I also think it has something to do with the fact that the poor old chancellor (Darling) was evidently the object of scorn of most in the media. Brown is quite happy when someone else takes the flak. He’s good at that kind of contentment. Had loads of practice sitting next to Blair. Remember? And thus far the taunts from the opposition that he, Brown, is really the one responsible for the data loss, for several reasons associated with his previous decisions, fell on stoney ground.

We’ll see.

 

 

 

20th November, 2007

IS THE CHANCELLOR … er … GOVERNMENT FIT FOR PURPOSE?

The chairman of HM Revenue & Customs, Paul Gray, resigned today following news that the confidential details of 15 million child benefit recipients may have been lost by staff. See BBC report.

This could affect as many as 25 million people, 7.25 million families in this country.

Twenty five million!? Almost HALF the population.

This is astounding, and VERY disturbing.

The statement by the Chancellor Alistair Darling, to a badly attended House of Commons, running as I write, is muted and sober. After an initial gasp of astonishment from MPs, the debate settled and became less contentious than might have been expected or deserved.

He and the government are NOT being slaughtered, as well they might have been. But the expressions on the faces of those around and behind him tell their own story.

But have no doubt - this government is REALLY in it today … up to their necks. The government’s very future, and not just that of the chancellor, is now under serious scrutiny. Oh how GB/PM must wish he could wind the clock back. So do I, Mr Brown, so do I.

THE DAMAGE

Until and unless the missing CDs are found, almost half the country - those of us with children in receipt of child benefit - including, presumably, the Prime Minister and his predecessor Tony Blair - (he who received a P45 in his last days as PM) - are now in danger of their personal and private information being distributed far and wide.

Alistair Darling began by harking back to a leak in March, which had broken a “strict rule” by a junior clerk. Presumably to show that a similar situation (though they were NOT exactly similar) arose under the previous PM’s stewardship. Or perhaps to show that no widespread illegal use of data had resulted on that occasion. But then the National Audit Office returned the information.

AMAZING - DOUBLE WHAMMY!

But THIS time, after the first package did not arrive at the NAO, yet ANOTHER COPY was sent to the NAO. This one DID arrive but the first copy has still not turned up.

Until they find the missing CDs I can see nothing but deep concern emanating from this.

CHILD PROTECTION CONCERNS

After the statement ended an MP tried to raise the issue of Child Protection. The Speaker would not take this question as the debate had ended.

But given that names, addresses and dates of birth of children, child benefit numbers, as well as personal bank details, telephone numbers and the National Insurance numbers of their parents might well be in the public domain and being distributed to those with evil or criminal intent, it was strangely negligent that NOT ONE MP managed to raise it in the debate.

BREACH OF THE DATA PROTECTION ACT?

If anyone working in the relevant government departments is charged with a breach of this act, it will be serious indeed, but not quite as serious as the whole business of the MISSING DATA.

Since there had already been a minor slip-up or two earlier this year, why hadn’t the holes been plugged? Are vetted couriers used to transfer this kind of data between government departments? Is an “internal” postal delivery system always used? Is this the correct thing to do? And why is ALL data not encrypted as a matter of course, whichever way it is transferred physically or electronically from A to B? That these questions, and many more are being asked, beggars belief!

The head of the HMRC has resigned. We need no minor, sacrificial lambs, please!

The Chancellor says that the Police are looking into this. I sincerely hope so.

ECRYPTED?

And, it gets worse. It seems, unencrypted data was sent through the post. And the package was unregistered!

ANOTHER FINANCIAL CRISIS - TO OUTSHINE NORTHERN ROCK?

When day broke today we were wondering how Alistair Darling, now possibly in line to be one of the shortest serving chancellors ever, would get out of his latest scrape on Northern Rock. As the value of its shares slid relentlessly to rock bottom and a buyer had not yet surfaced who was willing to pay ‘full value’, things were not looking good for him.

With the recent revelations that the bail-out of Northern Rock may end up costing the tax payer billions of pounds and an emergency loan from the Bank of England already in the region of £25 billion, possibly rising by another £20 billion, questions had already risen over the repayment.

The government’s interference in the free market, leading to a loan of as much as £1,000 per tax payer in the country, has some asking - “what about schools/NHS/immigration” investment.

Personally I have found it difficult to believe that this chancellor has been acting on his own. I have always suspected that he answers FULLY to Brown and is probably guided by him on economic matters. Do YOU imagine he would have done what he did for Northern Rock without the chancellor’s say-so? Me neither.

So, things for this government, it seems, can only get worse.

ID CARDS

This was ammunition for those against ID cards, of course, and they took full advantage. But that is in reality an argument for another day.

One can imagine a widespread multi-fraud operation being mounted on banks and financial institutions in this country as a result of the missing Child Benefit data. Not tomorrow, but later when things have calmed down and choice pickings can be made from the 25 million. Cherry-picking indeed.

And while high profile people such as this and the previous prime minister will be on the list, automatically as I understand it, because they have children under 16, their bank accounts are unlikely to be subjected to fraudulent interference. Other security matters, however, will be of concern.

And as for the rest of us - well, we’ll just have to tough it out and keep an eye on our bank statements and letters and e-mails arriving on financial matters.

In my humble opinion, the Chancellor and the government got off VERY lightly in the Commons. I guess MPs were dumbfounded with shock!

If the government has NOT yet worked out what half the population should do to secure their own personal information, it’s about time they did. Changing a password, if it happens to be linked with your child’s birthday or name, has been suggested.

I suggest that you don’t log on to your bank tonight to change your password unless you are one of the potentially affected half of the population; I imagine their servers will be busy.

The main points of Mr Darling’s statement are listed below.

This will run and run.

Watch 3 minute excerpt of Darling’s statement to Parliament.

POINT BY POINT - CHANCELLOR’S STATEMENT

Chancellor Alistair Darling is making a statement to MPs about the loss of confidential details of 15m child benefit recipients. Mr Darling said earlier this year a junior official within HMRC provided a full copy of the details to the National Audit Office - which he said did not follow strict security rules and rules about its transit He said the information should not have been handed over by HMRC as it was. But the NAO had returned all the information in March. He said it now appears that at a junior level, in October, two password protected discs containing a full copy of HMRC’s entire data in relation to the payment of the child benefit was sent to the NAO in October. He said the package was not recorded, and it appeared it had not arrived at the NAO. A further package was then sent, by recorded post, which did arrive, but Mr Darling said that should not have happened. He said he was informed on Saturday 10th November and asked for an immediate investigation and for steps to be taken to stop it happening again. He said by Wednesday 14 November it was clear the HMRC searches had failed to find the missing package, and he called in the police to find the missing package. Mr Darling said inquiries were continuing, staff have been interviewed, but the information had not been found. He said there was no evidence it had been used for fraudulent activity. The missing information contains details of 25m individuals, 7.25m families - including children’s names, addresses, dates of birth, NI numbers and where relevant bank and building society account details. He said it was important to make sure the appropriate safeguards were in place before publicising the information and said the banks had been adamant they had sufficient time before a statement was made. He said he sought advice from the FSA, serious organised crime agency and others. He said bank associations had been informed, individual institutions were monitoring accounts to look out for unusual activity, and they were tracking back transactions on affected accounts and had as yet found “no evidence of unusual activity”. If someone was an innocent victim of fraud, he said they would have protection under the banking code and would not suffer any financial loss. He said the missing data in itself was not enough for people to access people’s bank accounts as passwords and other information would be needed, but admitted there was an “increased risk” and said people should keep an eye on their accounts and not give out personal details requested unexpectedly by phone. He said the police investigation continues, but there was likely to be an Independent Police Complaints Commission inquiry as it has responsibility for HMRC. It was “highly likely” there have been breaches of the Data Protection Act, he said. The National Audit Office was also reviewing the way it requests information. “No one will suffer any loss if they are innocent victims of fraud,” he said. For the Conservatives, George Osborne said half the country would be anxious about the safety of their family and their bank accounts. He asked what contingency plans had been drawn up with police if it becomes clear details have fallen into the wrong hands. He asked what steps had been taken to prepare for any “potential financial instability” owing to people being worried about their bank accounts. He asked where liability rests, if money was taken. “This is now the third and most serious breach by HMRC this year,” he said, and asked when the chancellor knew security protocols in his department were “absolutely worthless”. He asked for confirmation that the police were investigating the individual responsible for sending the disc, and his or her superiors. He asked whether it was a “final blow” to the ID card scheme, saying the government “simply cannot be trusted with people’s information”. He said it had compromised the security and safety of “every family in the land” and told Mr Darling to “get a grip and deliver a basic level of competence”. Mr Darling agreed the way it had been handled was “inexcusable” and said there was no excuse for breaching laid down procedures. Mr Darling said the banks had put in place all the precautions they reasonably could and said the police would not want him to speculate on what they would do if a crime were to take place but police were “addressing” the risks. He said he had been told there was “every chance” the discs might be recovered during searches - but when it became clear that would not happen he called in the police. He said the banks asked him to give them time to put in place the necessary protections before making a statement. On ID cards he said the key thing was that information was protected by biometric information, while at the moment information was “much more vulnerable” than it should be. He said it was a “deeply regrettable” incident which should never have happened and he was doing everything possible to put it right. Liberal Democrat acting leader Vincent Cable asked how many unencrypted CDs were being sent around government at the moment. He asked why information was being transmitted through CDs, not electronically and was it because of the “ancient IT systems” used by HMRC. And he asked if half of the problem wasn’t due to the 25,000 job losses in HMRC. “Clearly if officials are being asked to do more and more with fewer staff then mistakes will be made”. He said Mr Gray had resigned “as a matter of honour” - and said Treasury officials were reluctant to do so - adding: “Where does the buck stop in this government?” Mr Darling agreed the information should not have been downloaded and sent in the way that it was. He said the key problem was HMRC had clear instructions and rules in relation to downloading and transmitting information, but in this case the individuals concerned had ignored them. “That shouldn’t have happened, and that’s what we need to put right,” he said. The Conservative chairman of the public accounts committee Edward Leigh, said the auditor general had asked for bank account numbers and personal details to be removed before the information was sent to the National Audit Office. He said there was “no doubt” the information never arrived, and the NAO should not be blamed adding: “This is criminally irresponsible behaviour on the part of a department (HMRC) which once had an unimpeachable reputation.” But Labour MP Sion Simon said it was a “random act” that could have happened under any government and the real test was how the government responded to it. Labour MP John McDonnell said it was clear Mr Darling had taken action as soon as he had been aware of the mistake, but asked Mr Darling to meet with the PCS trade unions to discuss concerns about the job cuts at the HMRC. But the Conservative former minister Peter Lilley described it as “calamitous breach of privacy”. Labour MP Anne Snelgrove said a “good balance” had been struck, in the time given to allow banks to prepare, and that to inform the House of Commons. But Conservative MP Michael Fallon, a member of the Treasury select committee asked, if the chancellor knew on 10 November, when did he inform the banks and why did he “dither” for 4 days before alerting the police. Mr Darling replied that he had immediately asked for a thorough search by trained Customs officials, who are experienced in that type of search. On Monday 12 November people were “optimistic” the package would be found, but by Wednesday it was clear that wouldn’t happen, so police were called in. He also said the banks has asked for time to put in place “proper defences” before it was made public and he had discussed his decision with the Information Commissioner. He said he believed he had struck the right balance between informing the House of Commons and protecting the public. Labour MP Mike Hall asked whether the NAO’s original request had been compliant with the Data Protection Act. Mr Darling said it had yet to be established who was involved at what level, what was asked for and how it was responded to. He said Sir John Bourn, the current NAO auditor general, said he would review what sort of information was being requested by the NAO.

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NOT THE FIRST TIMEThis is by no means the first time important personal data has been lost. But this is by far the most serious, potentially. See previous lapses of care over data.

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WHAT IS CHILD BENEFIT?
(See more)Child Benefit is a regular payment made to anyone bringing up a child or young person. It’s paid for each child that qualifies and isn’t affected by income or savings, so most people bringing up a child can get Child Benefit.Who is eligible?You’ll be able to get Child Benefit if you’re bringing up:* a child aged under 16
* a young person under 19 (under 20 in some cases) who is either studying in full-time non-advanced education (A level or equivalent) or on an approved training programme
* a 16 or 17 year old who recently left school or training and registered for work or training with the Careers or Connexions Service or similarHow much do you get?* £18.10 a week for the eldest child
* £12.10 a week for each additional child

 

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25m benefit records lost

By Katherine Fluke, November 20 2007

Paul Gray, chair of Revenue and Customs (HMRC) has resigned from his £170,000-a-year job amid reports of millions of child benefit details being lost, striking another blow for a government which is already reeling from the Northern Rock crisis.

The missing data includes at least two CDs used to store details of every family with school-age children receiving any form of child benefit. This includes 25 million individuals, or 7.25 million families. The missing data includes the recipient of the benefit, the child’s name, the address of the family, the relevant dates of birth, national insurance numbers, child benefit numbers and bank and building society account numbers.

HMRC recently came under fire when it lost the records of 15,000 taxpayers linked to Standard Life’s pension fund.

Read how MSN Money broke the Standard Life story

In a statement to Parliament, chancellor Alistair Darling explained that a junior official in HMRC provided the National Audit Office (NAO) with a full copy of HMRC data in relation to child benefit last March. The NAO then returned all of the data it received.

But following a further request from NAO in October, the two password-protected discs cotaining entire data was sent to NAO via unrecorded and unregistered internal post.

When the data failed to reach its destination, a further copy was sent via registered post, which was received.

The data breach occurred on October 18, and was not reported until November 8. Darling was informed on November 10.

Darling said: “I deeply regret and apologise for the anxiety that will be caused.”

Darling made clear that the strict rules surrounding the handling and distribution of confidential data had been breached. The chancellor stated that on November 14, the Met police called for a full investigation, which is still underway. “I deeply regret and apologise for the anxiety that will be caused,” he added.

Darling also said that while it is of the utmost importance to recognise the increased risk of identity theft, he doesn’t think there was any need for families to close bank accounts. “There is no reason to believe they this has fallen into the wrong hands,” he said.

Full coverage of the HMRC data loss

Shadow chancellor George Osborne said that the government breached its duty of protection: “The whole country will be wondering how on earth the government allowed this to happen,” he said.

“What is the point of this house passing laws to protect the privacy of personal information if these laws are not embraced by the government?” the shadow chancellor said.

The government’s action
Before going public with the data breach, the government informed the UK payments association of all of the affected accounts. Individual accounts are being monitored for irregular activity.

Darling emphasised that if someone is an innocent victim, they will not suffer any financial loss.

To prevent future breaches, the HMRC has initiated changes to its procedures, and the controller and auditor general of NAO will review its processes for requesting data.

Child benefit payments will continue as normal.

Worried? Here’s what to do

Paul Gray’s departure
Gray’s resigination came after he’d been in the role for just nine months.

HMRC is one of the chancellor’s prime responsibilities. “He (chancellor Alistair Darling) has got some explaining to do this afternoon,” said Michael Fallon, an opposition Conservative member of parliament.

The government’s popularity has sunk in the last few weeks, facing heavy criticism over the crisis at Northern Rock.

Gray, a career civil servant and economist, was appointed deputy chairman of HMRC in September 2006 and his position as chief was made permanent in February.

The tax authority has already taken a lot of criticism in recent years for its handling of tax credits and VAT fraud.

For more advice ring the HMRC Child Benefit helpline: 0845 302 1444

Related links

• Full coverage of the data loss scandal
• Advice on ID theft from APACS
• HMRC puts Standard Life customers at risk
• Check your credit report to make sure you’ve not been a victim

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…. to be continued

Tags: alistair darling, blair, brown, child benefit, data lost, Government, HMRCA, paul gray, statement