Apology for disc blunder costs the taxpayer £3m

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.