Job cuts at Revenue & Customs have led to chaos and a culture of carelessness that resulted in the latest security scandal, union leaders said last night.

The Public and Commercial Services Union (PCS) called on the Government to halt its programme of job cuts at the Revenue and claimed that, with the whole department in chaos, one million pieces of post were lying unopened at HMRC offices. Entire rooms were filled with mail bags stuffed with self-assessment tax returns, tax inquiries and tax-credit forms, a position which had worsened over the past ten months, said the union.

Cheques, often for large amounts of money, have been left undeposited for “signficant periods of time” said a union spokesman, while switchboards were jammed because there were not enough staff to process calls.

The records of tax-credit claimants were not being updated, even though they had tried to call telephone help lines to change details. This had resulted in overpayments being lodged unfairly against hundreds, if not thousands, of people.

After the merger of the Inland Revenue and HM Customs department two years ago, 14,000 posts were cut as part of the Gershon programme to streamline Whitehall. Four thousand of these posts were devolved to other parts of the Government or relocated out of London but 10,000 staff lost their jobs, reducing the merged department to 80,000 employees.

All Whitehall departments have since been told to make efficiency savings of 5 per cent over each of the next three years and the Revenue has been told to cut a further 12,500 posts by 2011. Mark Serwotka, the PCS general-secretary, said the latest cutbacks were untenable and were bound to lead to further errors. “It’s an accident waiting to happen,” he said.

The union complained that millions of pounds was being paid to external management consultants while civil servants were losing their posts. Last year the department spent a total of £106 million on consultants while supposedly making savings of £105 million through staff cuts.

The union said that confidence and satisfaction levels were at a record low since the merger of HMCE and Inland Revenue in 2005, with deteriorating customer service and acute mismanagement of staff.

UHY Hacker Young, the national accounting group, says that this was the first time there had been any proof that the merger had been handled ineffectively.

In a survey completed by almost 13,000 HMRC staff members last summer, 49 per cent of respondents disagreed or strongly disagreed that “the quality of service to customers is improving”.

A total of 44 per cent said they would not recommend the department as a good place to work, up from 36 per cent in November 2005.