Government admits confidential data was lost when it 'fell off the back of a lorry'

David Hartnett revealed that in one case, confidential waste had literally fallen off the back of a lorry.

He added that despite the agency's mistakes, its senior bosses were paid around £10million in bonuses last year.

Mr Hartnett was appearing before MPs at the Treasury select committee to explain how computer discs containing personal details of 25million benefit claimants were lost by the organisation.

He said the number of security breaches – which is higher than previously thought – was down to "systemic failure" at the agency.

The admission directly contradicts assertions by Chancellor Alistair Darling, who has insisted the loss of the benefits disc was an isolated incident.

Mr Hartnett said that since HMRC was set up when the Inland Revenue was merged with Customs and Excise in April 2005, it had suffered seven breaches of security of "some significance".

The losses included letters about tax credits being sent to the wrong addresses, confidential waste falling off the back of a lorry and records from the pension company Standard Life about 15,000 people being lost.

Asked by the committee chairman, Tory MP Michael Fallon, whether seven serious security breaches added up to "systemic failure", Mr Hartnett said: "It may well do."

He said the losses included a disc full of bank details which was mislaid by HMRC's computer experts in 2006.

Although the disc was subsequently recovered, the breach was serious enough to be reported to the Information Commissioner.

John Thurso, a LibDem MP, attacked the high cost – as much as 40p a minute – charged to those who called to the HMRC's lost data helpline.

Worryingly, he revealed 200 benefits claimants complained that the letters advising them of the data loss had been sent to the wrong addresses.

Mr Hartnett also described morale at the organisation as "very low indeed". He took over as acting head of the HMRC when chairman Paul Gray quit over the scandal two weeks ago.

But yesterday it was revealed that Mr Gray has since taken a job at the Cabinet Office, on the same pay.

A £20,000 reward has been put up for assisting the return of the child benefit CDs lost in the post by HMRC, Scotland Yard said yesterday.

The offer comes after more than two weeks of fruitless police searches along the likely route of the discs, including a trawl through a rubbish tip.

Shadow Chancellor George Osborne said yesterday: "These admissions blow a hole in Alistair Darling's defence.

"As the acting head of HMRC admits, far from being a mistake by a single junior official, the data security breaches at HMRC are the result of serious systemic failures.

"Alistair Darling's credibility is hanging by a thread. He is running out of time to reassure the British public that he's capable of getting a grip."

Last night the HMRC refused to disclose exactly how much had been paid out in bonuses, saying they could not do so before they had passed the exact information to the select committee.