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Darling admits Revenue loss of 25 million personal records

Lost: Two discs, 25 million accounts

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UK Identity Crisis Alistair Darling told the House of Commons this afternoon that a police investigation has been launched into how Her Majesty's Revenue and Customs has lost child benefit records relating to 25 million people.

Records for 25 million people, relating to child benefit payments for 7.25 million families, were sent using the HMRC's own postal system, called grid, but never arrived.

The Chancellor, flanked by PM Gordon Brown, told the House that the National Audit Office requested information which was first sent to them in March, in breach of HMRC procedures, and then returned to HMRC.

In October the NAO made another request and the entire database was put onto two password-protected discs which were sent by grid post.

Those discs did not arrive and cannot be found. A further copy of the information was sent again, this time by registered post.

Darling was first told November 10 and called for an immediate search. On Monday, November 12, he was told HMRC believed it would find the data but on Wednesday Darling called the police in to investigate. Police are continuing to search NAO and HMRC offices.

Darling said in light of the most recent failures, along with previous losses of a laptop and 15,000 records, he was asking Kieron Poynter of PWC to investigate HMRC procedures. An interim report is expected next month and the full report next spring.

Banks have been informed and are monitoring relevant accounts as well as tracking back to transactions made after 18 October. Darling said police had found no evidence of the data being misused.

Vincent Cable, acting leader of the Lib Dems, asked why any information was being sent around via CD rather than electronically and if this was a result of HMRC's ancient IT system.

Richard Thomas, Information Commissioner, said: “This is an extremely serious and disturbing security breach. This is not the first time that we have been made aware of breaches at the HM Revenue and Customs – we are already investigating two other breaches.

Any system was only as good as its weakest link, Thomas said: "The alarm bells must now ring in every organisation about the risks of not protecting people’s personal information properly.

"As I highlighted earlier this year, it is imperative that organisations earn public trust and confidence by addressing security and other data protection safeguards with the utmost vigour."

Thomas said the PWC report would be passed on to him, "and we will then decide what further action may be appropriate. Searching questions need to be answered about systems, procedures and human error inside both HMRC and NAO.”

Jamie Cowper, Director of European Marketing at PGP Corporation, said in a statement: "These discs should never have been transported in the first place - information of this type should only be transmitted using the strongest security protocols available such as encrypted batch transfer - but more to the point, these details should not have been stored in this medium.

Discs are easy to lose, but difficult to protect. This type of information should only be stored on formats where the data can be encrypted transparently, so that it remains protected wherever it resides, and whether at rest or in motion."®

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