U.K. Office Says Computers Alerted Staff to Data Loss (Update1)

By Robert Hutton

Nov. 22 (Bloomberg) -- The U.K. government department at the heart of a probe into how tax officials lost personal data and bank details on 25 million people said the computer system would have alerted senior staff that the information was being downloaded.

``It would normally come out in a printout and be passed to a senior manager,'' Patrick O'Brien, a spokesman for Revenue and Customs, said in an interview. ``You would know about it. It would immediately raise an alarm.''

The comments lend weight to claims yesterday by the opposition Conservatives that senior officials at Revenue and Customs had authorized the release of the data. Chancellor of the Exchequer Alistair Darling, who called the data loss ``catastrophic,'' said it was the result of a junior member of staff breaking the rules.

O'Brien spoke before e-mails were released by the National Audit Office apparently showing several Revenue and Customs staff discussing how to handle the data release.

Darling was this week forced to explain to lawmakers how two unencrypted disks containing records of 7.3 million families claiming child-benefit payments had gone missing from the tax authority, which is overseen by the Treasury. The loss, the largest of its kind in U.K. history, lays open the 25 million people named in the data to the risk of fraud and theft.

Lost in Post

The disks contain the names, addresses and bank and national- insurance details of every household claiming child benefit, a tax-free monthly payment available to everyone with children. They went missing after being posted in the internal mail to the National Audit Office by a junior official in one of the revenue department's offices in Newcastle, northern England.

``There's an audit trail attached to all use of our system,'' O'Brien said, in answer to questions about how the data was lost. ``Anything that anyone at Revenue and Customs does at a computer is logged.''

As the data was first downloaded in March, O'Brien's comments suggest that either senior staff were aware it was being given to the NAO, or that the computer logging system wasn't working properly. That would raise questions about whether other breaches of data security had gone unreported.

The National Audit Office today released e-mails that appear to show at least four members of staff at Revenue and Customs were sent e-mails in March discussing how the data should be released.

E-Mails Released

While names on the messages were blacked out, they show someone at the NAO asking if the file could be made smaller by removing people's names and bank details, and someone at Revenue and Customs saying this would ``incur costs.''

An Oct. 2 e-mail requesting a further set of data asks that the disks be sent ``as safely as possible due to their content.'' According to Darling, these disks were put in the internal post and lost.

Conservative lawmaker Edward Leigh said yesterday had been told that two of the recipients of the e-mails were senior officials at Revenue and Customs. The Treasury was unavailable for comment today.

Asked about today's comments from O'Brien, the Treasury said it wouldn't comment on speculation.

``Alistair Darling claims it is all down to the mistakes of a single junior official, and that senior management didn't know,'' Conservative Treasury spokesman George Osborne said in a speech in London today. ``The Prime Minister says there was no systemic failure. We need to know the truth, the whole truth and nothing but the truth.''

To contact the reporter on this story: Robert Hutton in London at rhutton1@bloomberg.net.

Last Updated: November 22, 2007 12:49 EST

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