Revenue boss quits after 'operational failure' » Central Government » 24dash.com

HM Revenue and Customs chairman Paul Gray said today that he was resigning after "a substantial operational failure" in the department.

Chancellor Alistair Darling is due to make a Commons statement on the issue at 3.30pm

The Treasury would not comment on reports that it related to the loss of personal data covering more than seven million child benefit claimants.

In a letter to HM Revenue and Customs (HMRC) staff, Mr Gray said: "This is not the way I would have planned to organise my departure from HMRC.

"I had hoped to be around for a while longer, and to have had the continuing privilege of leading HMRC towards the vision we have been developing.

"But I am extremely proud of what all of you in the organisation have achieved during my time as deputy chairman and chairman."

Conservative member of the House of Commons Treasury Committee, Michael Fallon, said he was "stunned" by Mr Gray's departure.

"Paul Gray is a very distinguished public servant who had served successive governments and we thought had a very good grip on the problems at Revenue and Customs," he told BBC News 24.

HMRC was created by the merger of the Inland Revenue and HM Customs and Excise at a time when the Treasury was demanding thousands of staff cuts, and has been under "immense pressure", said Mr Fallon.

He said that the affair raised new questions about Mr Darling's performance as Chancellor.

"We were already beginning to wonder whether the Chancellor was up to this. Being Chancellor of the Exchequer is an enormous job and so far Mr Darling has not looked very sure-footed," he said.

"He was slow to respond to the Northern Rock crisis and there have been persistent rumours that all was not well at Revenue and Customs.

"It may be that he has taken his eye off the ball with the organisation."

MPs would want reassurance that Revenue and Customs - which is responsible for gathering in taxes, as well as ensuring people get the tax credits to which they are entitled - is "fit for purpose", said Mr Fallon.

"This is a major department of Government and we need to be reassured pretty urgently that this department is fit for purpose," he said.

The problems could hardly have come at a worse time for Mr Darling.

The Chancellor was already under fire over his handling of the Northern Rock crisis, which has seen billions of pounds of taxpayers' money being used to prop up the ailing bank amid suggestions that it may never be fully repaid.

And earlier today official figures showed a deterioration in the state of the public finances.

City analysts said that disappointing tax revenues and increased spending meant Mr Darling was likely to overshoot his borrowing target of GBP38 billion for the current financial year.

It is understood that senior officials from Revenue and Customs were called to a meeting with Treasury officials at the weekend as the scale of the problem emerged.

The Metropolitan Police is understood to have been involved in investigating missing discs containing personal data, which contain the names, National Insurance and bank details of millions of child benefit recipients.

Jonathan Baume, general secretary of the FDA, the union for senior public servants, said: "There has been a serious operational error, which should not have occurred.

"Paul Gray was in no way personally responsible, but he has recognised that, as the most senior official in the department, the accountability ultimately lies with him.

"His decision to take on this accountability is an example of British public service at its best.

"We believe that public trust in the civil service and the wider public services is best maintained where there is clear and transparent accountability, and when things go wrong the public wants to understand where this lies.

"These are always complex issues, but on this occasion the FDA accepts Mr Gray's judgment that accountability must rest with him.

"Mr Gray's decision to step down in these circumstances reflects his high level of personal integrity.

"We greatly regret Mr Gray's departure.

"He has a very distinguished record of achievement in the civil service and has recently played a critical role in building a successful new department, following the merger of the Inland Revenue and HM Customs and Excise.

"We wish this fine public servant the very best for the future."

The Metropolitan Police confirmed it was "making inquiries" into the loss of the discs.

Liberal Democrat leadership candidate Chris Huhne said: "We will have to see exactly how much Alistair Darling knew and exactly how much has been covered up over what period of time.

"But frankly it is a very major problem of delivery of this kind in an absolutely key department and I think it's going to be very hard for ministerial heads not to roll."

Campaign group Action on Rights for Children (ARCH) warned children could have been put in danger.

Director Terri Dowty said: "This appalling security lapse has placed children in the UK in immediate danger especially those who are already vulnerable.

"Child Benefit records contain every child's address and date of birth. We are not surprised that the chair of HMRCs Board has resigned immediately."

ARCH accused the Government of ignoring warnings over the dangers of creating "large centralised databases" of sensitive information about children.

Conservative MP Nigel Evans, the chairman of the parliamentary all-party ID fraud group, said that until the information was recovered people would be extremely concerned that they could be exposed to the risk of fraud.

"If they are not encrypted, not password protected, then clearly this sort of information if it's generally readable could be an amazing resource to an ID fraudster," he told Sky News.

"It is quite chilling that this sort of information isn't in the hands of the Government.

"On the deep web that sort of information is traded on a daily basis to ID fraudsters who want to get access to information about people's addresses and bank statements.

"I am sure somebody, somewhere would be prepared to pay a lot of money to get access to that information."

The national co-ordinator of the NO2ID campaign against identity cards, Phil Booth, said: "This data disaster shows up the madness behind the Government's ID schemes.

"It's bad enough that HMRC can't be trusted with basic financial details. But within five years the Home Office could be leaking or losing people's complete identity records.

"Development of the National Identity Scheme should stop now. But more than that, we all need to know what information the Government holds about us now, how it is already being shared among departments, and what the dangers are. That will only happen if there is a full and independent audit of what personal information is currently collected and the ways it is used."

TaxPayers' Alliance chief executive Matthew Elliott said: "It's appalling that Revenue and Customs are so careless with the private information entrusted to them.

"Taxpayers should have the right to know that their private information is safe and secure, especially given the growing problem of identity theft.

"The incompetent way data is handled in reality will horrify everyone.

"Individuals, families and businesses all have to trust HRMC and that trust has been betrayed."

TaxPayers' Alliance chief executive Matthew Elliott said: "It's appalling that Revenue and Customs are so careless with the private information entrusted to them.

"Taxpayers should have the right to know that their private information is safe and secure, especially given the growing problem of identity theft.

"The incompetent way data is handled in reality will horrify everyone.

"Individuals, families and businesses all have to trust HRMC and that trust has been betrayed."

UK Independence Party leader Nigel Farage said: "And these are the same people who want to force us to have ID cards?

"If we can't trust them with bank details, how can we trust them with biometric information?

"Mr Darling must take the rap for this; I doubt he'll be blaming his predecessor."

Chairman of the Commons treasury select committee Labour's John McFall said he wanted to wait until Mr Darling's statement before commenting in detail.

But he added: "It's a deeply worrying issue, particularly in relation to the internal security procedures of HMRC and I think it's sufficiently grave that it's the right thing to do for the chairman to resign.

"I recognise the efforts he has tried to make to take HMRC forward but someone has to be responsible for this at the end of the day.

"I would want reassurance to be given to people regarding their personal details and to feel that the banks were on top of this case so that any disruption of IDs could be kept to a minimum."

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