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Revenue and Customs: Data Loss

My Lords, I am grateful to both noble Lords for their contributions and for their seasonal good wishes, which I reciprocate in the terms in which they presented them to me. I hope they recover from their trials and tribulations ready for next year. With regard to the interim review, Poynter confirms that what the Chancellor said in his Statement to the House was entirely accurate with the data then available. There have been subsequent developments, but there is no question of any challenge to the Chancellor’s good faith in presenting to the House with total accuracy all the information that he had available at the time. Poynter is looking at how to improve security using encryption and other strategies. It will be recognised that HMRC took action immediately to ensure that restrictions were in place. The Poynter report emphasises that he entirely agrees with the prompt way in which the department acted and with the measures that it has taken. The noble Baroness said that the new acting head seemed to indicate that the errors were systemic. Noble Lords who have been before Select Committees in the other place will know that challenging questions are presented and responses are given in good faith. If we look at the context in which Mr Hartnett was responding to those questions, it is clear that he had an open position on whether the errors were systemic. He did not know at that time. He was all too well aware that that is exactly the kind of issue that the Poynter report is meant to identify and which it is in the process of identifying. Mr Hartnett was not ruling anything in or out. How could he when we still awaited a full investigation of what had gone on? The noble Baroness asked me to identify the costs of the process. I cannot do that at this stage. This is an interim report supported by a sophisticated level of efficiency, as the noble Baroness would wish. The costs involved will become clear when the final report is due, but no one would expect that at this interim stage we can identify the costs involved in this exercise. An element of cost that we can discuss is whether the culture of the department has changed significantly. It is somewhat striking that the party opposite suggests that it has never dreamed of anything that bears down on costs, improves efficiency or introduces new managerial techniques into the Civil Service and that as far as it is concerned this is a wilful Government who pursue aims that they do not follow. That party is for ever berating this Government on the costs of government and emphasising the excessive degree of red tape, which it regards as excessive bureaucracy, yet when we make a strategic change to a major department—a change that is now being reviewed by the Cabinet review which can see no evidence that there was a loss of efficiency through the merging of the departments—it suggest that somehow the Government are at fault. I entirely refute that proposition. It is important that we recognise that there was a significant failure, for which due apology has been made. Lessons have to be learnt from it and those lessons have to be acted on. Poynter identified that in the most important part of the interim report. If the noble Baroness can contain her impatience until after Christmas, in due course we will get a full report from that highly qualified individual who will give the Government the best advice from a full analysis of what went wrong. Far from it being a smokescreen, as the noble Baroness indicated, it would be absurd to suggest that in the space of three weeks Poynter could have analysed fully what went wrong in the department and have provided a full account of what needs to be done in the future. Of course the report is significant, not least because Poynter has been working against a background of an intensive police investigation. Indeed, not even the police have been able to conclude their inquiries at this stage, such is the complexity of the issue. I want to emphasise in response to the noble Baroness that in his previous Statement the Chancellor presented the full facts as he knew them, that the department acted immediately to repair the damage regarding its procedures in such a way that the interim report from Kieran Poynter can confirm the efficacy of its actions, and that Poynter is involved in a systematic analysis of the department so that we will learn the full extent of changes that need to be effected. On the question of the wider review, of course it covers all government departments. The review will come to fruition in the new year. The noble Baroness asked about Cabinet Office protocols. I cannot comment on those at this stage, but I can undertake in due course to give a full description and analysis of the published report. At that point this House will have an opportunity to comment on it. The noble Lord, Lord Newby, said that certain lessons had to be learnt. It is the case that we have to look at the relationship between the Government and the big computer companies, as he put it, with which we make arrangements. The noble Lord indicated that in the past he had witnessed a limited exchange of information, but we are in a new era. In order to provide effective government, it is necessary for departments to talk to each other about problems that are frequently referred to in this House as being cross-government in nature and thus in need of that level of co-operation. However, it is absolutely essential that such cross-government activity has to be secure, and that is what the major report will address its investigations into. It will look at the efficacy of government with a heightened emphasis on the security of cross-government information in the wake of this most unfortunate development at HMRC. The noble Lord also mentioned the problems surrounding communications with the general public through 0845 numbers. In the light of these difficulties, when the department does correspond with anyone directly affected by them, it is absolutely incumbent on officials that they guarantee that the reader and recipient of the letter is the person to whom it is addressed. Given that, of course such a letter will have a little more than just an initial and the surname of the person to whom it is addressed. It is bound to carry some additional information in order to make sure that the communication is delivered correctly. I hear what the noble Lord says, but noble Lords will recognise that this is a misadventure which has caused the Government a great deal of concern and grief. This is not anything more than the product of the need to provide interaction between departments at a much higher level than in the past. Further, the amount of information which a government now inevitably compile is much greater than in the past as a result of the expectations of our citizenry. It will therefore be appreciated that it is important to look at the Poynter report and the further investigation into the wider issues of government in order to identify clearly the constructive road ahead.