Brown in the frame as emails suggest cost-cutting was to blame for lost data

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A desire to cut costs at HM Revenue & Customs (HMRC) may have contributed to the fiasco in which the sensitive personal data of 25 million people was lost, it has emerged.

Emails disclosed last night also suggested that a senior manager at HMRC was informed about the decision to send the information to the National Audit Office (NAO), the public spending watchdog. The Tories claimed this undermined the Government's attempt to blame a 23-year-old junior official.

The exchange of emails reveals that the NAO did not want the HMRC to send it the bank account details and addresses of child benefit claimants. But they were sent because HMRC did not want to "overburden" itself the and "incur a cost" by filtering the information it held.

The revelation will add to the pressure on Gordon Brown over the scandal in which information about 7.25 million families, including bank accounts, went missing when they were sent by HMRC in Tyne and Wear to the NAO's London headquarters.

Trade unions have complained that HMRC staff were under pressure to cut costs after Mr Brown, then Chancellor, forced through a 2004 merger between the former Inland Revenue and Customs & Excise and axed a total of 25,000 jobs.

Mr Brown's problems deepened when normally loyal Labour MPs urged him to restore confidence in the Government and a new opinion poll gave the Tories a nine-point lead. The YouGov survey for Channel 4 News put the Tories on 41 per cent, Labour on 32 per cent and the Liberal Democrats on 14 per cent – the biggest lead the Tories have ever enjoyed in a YouGov poll and one of their largest since 1992. In a further blow, a Populus survey for today's Times showed the proportion of voters confident of Labour's ability to handle economic problems had halved from 61 per cent to 28 per cent

Emails published by the NAO show that one of its officials told the HMRC on 13 March: "I do not need address, bank or parent details in the download – are these removable to make the file smaller?" An official at HMRC replied: "I must stress we must make use of data we hold and not over burden the business by asking them to run additional data scans/filters that may incur a cost to the department."

Computer discs were sent successfully between the agencies in March but went missing last month when the process was repeated. Their discussions acknowledged the sensitive nature of the information. But there was no mention of breaches of the Data Protection Act – even though Richard Thomas, the Information Commissioner, has said the law was almost certainly broken.

The Tories seized on the disclosure that a senior official, believed to be an assistant secretary, was copied into the emails. They said this contradicted the Commons statement by the Chancellor, Alistair Darling, that a "junior official" sent the information in March and that last month's dispatch was handled at a "junior level". The Tories demanded a further Commons statement by Mr Darling to clarify his version of events. But Downing Street and ministers would not comment while inquiries into the loss were under way.

George Osborne, the shadow Chancellor, said: "These emails conclusively show that senior officials at HMRC were involved in the decision to send sensitive information to the NAO, and that the NAO explicitly requested that the discs be sent 'as safely as possible due to their content'.

"This brings into question Alistair Darling's version of events. The Chancellor needs to tell us the truth, the whole truth and nothing but the truth." Labour MPs said last night's disclosures confirmed that the decision to send the data was taken at a senior level. But Edward Leigh, the Tory chairman of the Public Accounts Committee, said the senior level official who was aware of it could have stopped the process.

John McFall, the Labour chairman of the Treasury Select Committee, said: "The core issue is competence. I think there is a challenge here now for Gordon Brown in terms of leadership. Is there a fatal flaw in government? I don't think there is, but is it time for iron to get into the body politic? It is, and that is for Gordon Brown to do."

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