Brown faces Commons with 'profound' regret
The Prime Minister said he regretted the "inconvenience" that has left 25 million people exposed to potential fraud after an HM Revenue and Customs (HMRC) official copied the sensitive details to computer discs which were then lost in transit.
Facing the Commons for the first time since the scandal broke, he promised security checks on all government departments.
Mr Brown told MPs: "I profoundly regret and apologise for the inconvenience and worries that have been caused to millions of families who receive child benefits."
The government would do "everything in our power to make sure data is safe" and there was "no excuse" for the breach of security procedures which caused the current crisis.
He has given Richard Thomas, the Information Commissioner, new powers to conduct spot checks on how Whitehall departments keep data.
Mr Brown's apology came as a credit reference agency warned that what was being cast as a bureaucratic blunder could pose long-term danger for those qualifying for child benefit.
Children whose details had been lost, particularly those aged between 15 and 17, were also at risk, because once they turned 18, fraudsters would start applying for credit in their names, Experian warned.
Helen Lord, compliance director at the credit reference agency, said: "The fraudsters will wait until they turn 18 and start applying for loans, credit cards, mobile phone contracts and other credit products in their names.
"That could have a catastrophic effect on their ability to get on the housing ladder, rent a flat, obtain their first credit card, obtain a loan for their first car, even open a bank account."
Mr Brown was further challenged on government claims that no-one else other than a junior official was involved in trying to obtain the information for the National Audit Office (NAO).
The NAO has since said that it dealt with senior officials at the HMRC to request less comprehensive information, but was told that it was less burdensome to receive the entire database.
Edward Leigh, the Conservative MP and chairman of the Commons committee overseeing the work of the NAO, pointed to a briefing note written by NAO head Sir John Bourn for the Chancellor. It indicated that senior HMRC officials authorised the release of sensitive information.
The note states that the NAO requested data on child benefit claimants in a "desensitised" form, with bank accounts and other personal data removed, in March.
Mr Brown's insistence that the error was not down to systemic errors was met with derision by David Cameron, the Conservative leader.
"The government has failed in its first duty to protect the public," he said during a stormy Prime Minister's questions.
"What people want from their Prime Minister on a day like this is for you to stand up, show some broad shoulders, be the big man, take some responsibility."
The Conservatives made clear that they plan to blame Mr Brown, not Alistair Darling, the Chancellor, for the crisis.
Mr Brown has insisted that his Chancellor will not step down, although the HMRC falls under the Treasury's remit.
On Tuesday, Paul Gray, the chairman of the HMRC, had resigned over the affair. But it was revealed last night that he was signed off on full pay until the government worked out an early- retirement package for the 190,000-a-year civil servant.
The controversy has shaken back-benchers' confidence in the Prime Minister and his policies. Even normally loyal Labour MPs started to question whether the government's identity card scheme should go ahead.
Karen Buck, a former Home Office minister who once endorsed the policy said: "The real fall-out from this has got to be confidence."
Meanwhile, the junior official - who has not yet been named - at the centre of the row was believed to be in a "safe house". The IT specialist, who worked in HMRC's office in Tyne and Wear, was reportedly in a hotel with a 24-hour minder.
The government will be keen to avoid a David Kelly-style "witch hunt" for the individual.
Yesterday, the Public and Commercial Services Union (PCS) confirmed it was providing support to the employee involved and described the mistake as "inevitable" because of restructuring and job cuts demanded by the government.
Mr Darling earlier had admitted that the crisis had rocked his self-confidence.
In a round of media appearances, Mr Darling apologised "unreservedly", but added: "I am not going to start running away from things when things get difficult. It is difficult, it is unwelcome in every respect and I am determined to see it through."
Meanwhile the Information Commissioner said it was "almost certain" HMRC had broken the Data Protection Act when an official had been able to copy an entire database.
The act does allow victims to sue HMRC and the Chancellor for compensation - but ultimately it will be taxpayers picking up the tab.
It also emerged that in August, the Lords science and technology committee had called for a security breach notification law and for the Information Commissioner be given new powers to conduct random audits of organisations' security measures.
The government's response at the time was that this was not necessary.
A slip so serious that no-one is even calling for resignations
WHEN the career of a government minister looks shaky, it is often the result of a political row that is little understood by those outside the Westminster village - a conflict of interest, perhaps, or inadvertently misleading another politicians.
This time it is different.
Neither the Chancellor nor the Prime Minister were personally responsible for the string of clerical blunders within Her Majesty's Revenue and Customs (HMRC).
But with half of Britain's citizens now exposed to fraud and identity theft - a risk about which Whitehall agencies have spent years lecturing citizens - the government is now battling to keep the trust of the people.
And all for the sake of a missing CD. The names, dates of birth and National Insurance numbers of millions of Britons have probably fallen behind a desk. But the political damage has been done.
Even if millions of bank accounts remain uncompromised, the drama is already in place for the public to perceive this as a crisis.
The weekend's opinion polls will be nail-biting reading for the government.
It must have been excruciating for Gordon Brown to be lectured by the much less experienced David Cameron on the need to show "broad shoulders". It must have been equally painful to apologise for what was supposedly an error by a single junior IT specialist.
Information has already come to light that more than one official at HMRC was involved in deciding what information to give the National Audit Office, posing a serious challenge to the government's initial explanations.
Alistair Darling, the Chancellor, yesterday admitted the blunder had rocked his self-confidence.
But the public's confidence has also been shaken in the government's ability to manage its information systems.
At stake is the progress of key government policies; critics of the identity card scheme have seized on this crisis as evidence that the whole scheme is doomed. Even loyal Labour MPs have called for a moratorium on identity cards.
Mr Brown's insistence that the government's entire child benefit database was sent in "error" by a single, junior official will do little to ease anxiety for the 25 million citizens at risk from identity fraud.
The Prime Minister was trying to convince us it was not a systemic failure - a bid to avoid the fate of home secretaries Charles Clarke and John Reid who found themselves having to admit that the department over which they presided was out of control.
But what he inadvertently did was highlight the ease with which such sensitive information could be lost. And thanks to his decision to shed staff at the newly formed HMRC, union bosses are now calling for a freeze on job cuts.
No-one has called for Mr Brown or Mr Darling to resign. This is bad news: it suggests the situation is so serious that one or both of them might have to go even without the intervention of the opposition.
ANGER AT CHARGES FOR LOST DATA HELPLINE CALLS
HM REVENUE and Customs came under further attack yesterday for charging millions of people whose personal data it lost to call a helpline for advice.
The Taxpayers' Alliance, which campaigns for lower taxes, said the use of an 0845 number was "rubbing salt into the wounds" of claimants.
High demand would also result in callers being put on hold, it predicted, increasing a total bill it estimated could run into millions of pounds.
Campaign director Mark Wallace said: "It is absolutely disgraceful that, having incompetently put 25 million people at risk of fraud and identity theft, HMRC now expects those affected to pay to phone the helpline.
"This scandalous failure has caused a lot of anxiety and could yet cost people a great deal of money. Making people pay for advice on securing personal data that should have been safe in the first place just rubs salt into the wound."
But HMRC defended its decision to use an existing paid-for helpline and said anyone concerned about the cost could give their number and be called back.
A spokesman also insisted there was surplus capacity available to deal with increased call volumes.
"We do not operate any free lines; it's a local rate number. If they are concerned about the cost we will take their number and call them back," he said.
An Ofcom spokeswoman said calling an 0845 number from a BT Option 1 Together package would cost around 3p per minute, which is the same as dialling an 02 or 01 number. But calls to 0845 numbers from mobile phones may be more expensive than calling a landline, depending on which tariff is being used.
Calls to 0845 numbers may generate revenue for the recipient if the organisation takes up that option. An HMRC spokeswoman said its 0845 number was the existing child benefit number which was charged at local rate and was not revenue-sharing.
The Ofcom spokeswoman said the telecoms regulator supported the use of 03 numbers by public bodies because these had the same charges for calls from both landlines and mobile phones and did not have a revenue-sharing option.
Banks say tidal wave of concern fails to materialise
BANKS reported a higher rate of calls from the public anxious about the security of their accounts yesterday, but not the tidal wave many expected following the government's loss of the personal details of 25 million people.
The number of callers to banks spiked yesterday morning, but by mid afternoon had returned to normal, according to the British Bankers Association.
Customers who receive child benefit were advised that security checks were being carried out on accounts and to keep a close eye on transactions for abnormal activity.
HM Revenue and Customs (HMRC) said its child benefit helpline, which people worried about the security breach have been instructed to call, was slightly busier than normal.
A spokesman for Halifax Bank of Scotland said it had not seen any significant rise in call levels. "We have offered guidance to those who have called with concerns, as well as urging them to look at the HMRC's website for all the relevant information."
A spokesman for the Royal Bank of Scotland said there had been a minor increase in the number of calls.
An HSBC spokesman said: "We did see some increase, particularly after the 6pm news broadcast (on Monday night). The number of calls was easily managed. Most customers were simply looking for reassurance that we had increased security, which we have done."
Britain's banks were notified there was a problem on Friday, but it took the weekend for the Association of Payment Clearing Services to sort the personal details into "bundles" for each relevant bank. Since then, the banks' computer technology has examined each account to check for any irregular activity. However, none has yet been discovered.
The banks added that security had been increased and the lost data on its own was not enough to enable a fraudster to access people's bank accounts.