
Stupid and pointless for two reasons. Firstly because it's just another example of the incumbent administration's predilection for announcing new legislation as a panacea for every problem they experience, even when it's clear that existing legislation has not been enforced.
This is especially relevant with data protection issues, the MP who forced the FOIA exclusion for MPs business because some of his constituents data was released in error for instance. In that case, had the existing DP regs been followed, there would have been no data breach.
Everyone who's worked for an org that handles large amounts of personal data knows that the DPA is given lip service at best, and that's being fairly generous. In the case of the HMRC data, the same appears to be true. Had the existing legislation (or possibly even the departments own guidelines) been followed, or even taken seriously, there would have been no problem. But it wasn't.
Proposing new legislation when existing legislation is not being enforced is a waste of everyone's time and money.
Secondly, the threat of a prison sentence is likely to ensure that the next time this happens we simply won't hear about it, or if we do, it will be impossible to find anyone who was responsible. Civil Servants (especially senior ones) are notorious for avoiding blame and responsibility, upon this foundation are successful CS careers built . You can bet that they'll muddy the waters even further in order to cover their own asses.
Of course, a cynical person could easily conclude that encouraging silence about ,and cover ups of, politically damaging incidents is the intended outcome of such an announcement.