Whitehall focus Departments reject joint compensation claim

27 Apr 06
Two departments involved in a tax credits fraud came under fire this week after civil servants claimed that Whitehall managers should not have kept some personal details stolen by criminals.

28 April 2006

Two departments involved in a tax credits fraud came under fire this week after civil servants claimed that Whitehall managers should not have kept some personal details stolen by criminals.

Public Finance has learnt that the fall-out continues from last year's fraud, in which the details of 8,800 Whitehall staff were stolen and used to obtain around £2.7m in tax credits payments.

The Public and Commercial Services trade union, which represents thousands of the Department for Work and Pensions staff who were victims of the crime, has had its claims for collective compensation from the DWP and the Revenue & Customs department refused.

The departments have instead offered to compensate staff on an individual basis.

While a police investigation into the fraud continues, the PCS has formally sought compensation for its members from two separate departments.

It wants the DWP to pay up because affected staff suffered 'damage and distress' caused by a breach of the Data Protection Act.

In documents obtained by PF, the union claims the Act was breached because the stolen data held by the DWP (which included staff's National Insurance numbers and addresses) was 'kept for longer than necessary'.

The PCS claims the stolen material recently revealed to have been paper copies of data referred to the department's 2003/04 Performance Development System, which determines staff bonuses, 'and so had no reason to be retained [in the unit concerned] beyond the payment of 2004 bonuses'.

The union also claims the stolen data was 'excessive', because it contained details that 'were unnecessary for the purpose for which the data was held' and 'not secure'.

The PCS also lodged a claim for compensation from Revenue & Customs which, the union claims, sent staff 'received demands for overpaid tax credits& that were a result of the fraud' and sent other letters to staff who were unaffected by the theft.

Other vital letters sent by Revenue & Customs either went to incorrect addresses or were contradictory, while staff endured lengthy delays in receiving 'accurate and adequate' advice following the fraud, the union said.

Revenue & Customs is also criticised for inadvertently disclosing further bank account details and National Insurance numbers to fraudsters after the theft.

Charles Law, PCS negotiations officer, told PF: 'Despite this, the departments, having taken legal advice, have informed us that there is no basis for collective claims. Both felt there was no need to treat all staff seeking compensation in the same manner.

'But we remain concerned that many staff could be affected by this in the longer term. There remains the possibility that this sensitive data could be re-used by criminals, while many [staff] will have to keep checking their credit ratings after the fraud.'

A spokeswoman for the DWP said: 'There is no provision to accept a collective claim for compensation under the DPA. DWP immediately put in place actions to reimburse [individual] staff for any financial losses, and provided the services of credit check companies and the Protective Registration Service at the department's expense.'

A separate DWP source added: 'We have also changed our data storage procedures so that only up-to-date information required for a particular purpose is retained.'

DCA set to cut jobs as part of efficiency agenda

The Department for Constitutional Affairs this week announced plans to lose more than 1,000 posts following an 8% cut to its operating budget.

In a letter sent to staff on April 25, DCA permanent secretary Alex Allan revealed that around 1,000 Courts Service posts will be lost, while at least 300 other DCA-related posts, including some at the Tribunals Service, will also go as part of Whitehall's latest efficiency drive.

The job losses are likely to fuel opposition by civil service trade unions already angered by job cuts at other Whitehall departments. Some have warned that reducing DCA staff will affect services.

Mark Serwotka, general secretary of the Public and Commercial Services union, said: 'The inevitable consequence of slashing jobs will be a growing backlog of cases and the grinding to a halt of the justice system in some parts of the country.'

In his letter, Allan blames the department's tight spending allocation until 2007/08 on a combination of savings required under Whitehall's £40bn Gershon efficiency plan, anticipated savings from the merger of magistrates courts into the Courts Service, as well as potential efficiencies from legal aid changes.

'All parts of the DCA will have to manage with less resources this year, but we have to ensure we all live within our means if we are to make a credible case for the investment we need to develop and improve our services to the public,' the letter states.

'Given that a very high proportion of our budget is on workforce costs, we have no alternative but to look to make at least some& efficiencies here.'

The document claims the job cuts will largely be met through 'normal turnover' and 'tight controls on recruitment', coupled with redeployments and the release of agency staff.

However, it emphasises that voluntary retirement schemes for middle and specialist management grades might be necessary.

Ominously, Allan's letter concludes that the number of job cuts required could rise.


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