A grovelling letter of apology sent to as many as seven million families over the loss of child benefit data cost the government £3m, Accountancy Age can reveal.

The figure is the first to pinpoint the immediate cost to the government of the taxman’s lost discs crisis, and has emerged despite government attempts to keep the number under wraps.

Experts have estimated that it would have cost the department only £5,000 to filter the data and make it safe to send by mail.

PricewaterhouseCoopers senior partner Kieran Poynter is due to report on 14 December on what happened at HM Revenue & Customs, where events have already lost chairman Paul Gray his job.

HMRC wrote to all child benefit claimants to apologise for the loss of discs containing their details alongside their bank account and national insurance numbers, but the tax authority has refused until now to say how much the exercise cost.

A ‘hotseat’ briefing, in which acting chairman Dave Hartnett answered questions from staff through the HMRC intranet, a transcript of which was seen by Accountancy Age, originally put the figure at £2m.

The briefing took place shortly after the chancellor admitted the loss of the data. However, an HMRC spokesman admitted this week that the cost was actually £3m.
The first Poynter review is expected to place IT chiefs and a host of those working in the child benefit area under scrutiny.

At board level, child benefit is overseen by Mike Hanson, a career civil servant, while day-to-day responsibility rests with benefits and credits director Sarah Walker.

The Conservatives have argued that the problems at the department were systemic.

The ‘hotseat’ briefing reveals disagreement within the department over what went wrong. One employee suggested that ‘basically this problem seems to be symptomatic of the department with the rush to reduce staff without thought of the consequences’.

Hartnett responded by saying that it was up to Poynter to determine what had happened.