Darling updates MPs on data loss

The chancellor has said that investigations into how the government lost 25 million people's personal information are "far from complete".

Alistair Darling told the Commons on Monday that Kieran Poynter's wide-ranging review into what went wrong at HM Revenue and Customs (HMRC) are continuing after three weeks initial work.

"Inevitably, therefore, this statement is short," he told MPs as he outlined some of the initial recommendations of the inquiry being led by the UK chairman of PricewaterhouseCoopers. A full report is expected by spring 2008.

But shadow chief secretary to the Treasury Philip Hammond said the statement had been a "wholly inadequate response from a wholly inadequate chancellor".

Darling said Poynter had more interviews to conduct and more evidence to assess before he could make any full conclusion about how two unencrypted discs were lost in the post between HMRC and the National Audit Office.

But he told MPs that there was still no evidence of any fraud attempts following the loss of the data, which included people's bank account details.

The department has already made changes to systems and procedures that Poynter had confirmed he would have recommended, the chancellor said, such as a complete ban on the transfer of bulk data without adequate protection and the disabling of laptops and personal computers so databases could not be downloaded.

Darling said that further recommendations would be forthcoming and the department would act upon them, along with the findings of its civil service capability review, also published on Monday.

The chancellor said the review highlighted a number of the department's strengths, including a staff who were "committed people with honesty and integrity with a clear desire to improve" as well as problem areas.

But Hammond told the chancellor that there was a real "sense of anger and betrayal" among the millions of people whose data had been mislaid and were waiting for an explanation for the "most catastrophic data security breach in British history".

He told the chancellor that even the acting chairman of HMRC, Dave Hartnett, had admitted that the department was suffering from "systemic failure".

Acting Liberal Democrat leader Vince Cable also warned MPs that the loss of the discs - and subsequent data security breaches - were causing real "damage to public confidence" in government in general.

The reviews came after it emerged last month that HMRC had sent two discs containing the names, addresses and bank details of every child benefit claimant to the National Audit Office by courier, but they did not arrive.

The discs had been sent unregistered and unencrypted, but the government says there is no evidence they have been used for criminal activity.

HMRC chairman Paul Gray resigned as a result, and Darling apologised for the "extremely serious failure" which has left people exposed to the risk of identity fraud.