'Consult on ID cards or scrap plan'

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Research by the think-tank Demos warns that people are losing control of their personal data and calls on the Government to act to ensure greater protection.

Its report, which is based on nine months of research, also calls for Labour's ID cards policy to be scrapped unless the public are properly consulted.

And the think-tank suggests banks could have an insurance-type "no-claims" bonus for people who successfully protect their own identity from fraudsters.

Its recommendations come less than a month after HM Revenue and Customs managed to lose two discs containing the data of 25 million people and amid growing fears people using the internet are leaving themselves wide open to identity fraud.

Chancellor Alistair Darling raised gasps from MPs in the Commons when he revealed the discs had been lost in the post after being sent unregistered and unrecorded.

In the wake of the security breach, Prime Minister Gordon Brown announced checks on the handling of data by every Government department and agency would take place.

He also pledged that new powers would be given to the Information Commissioner to enable spot-checks on public bodies holding personal information.

FYI: The New Politics of Personal Information says people need to count on a greater level of trust and openness with the Government and companies holding their personal details.

The study recommends: "The Government must urgently develop a more coherent strategy around the way personal information is held and used. Government departments should have a responsibility to tell individuals how their information is used and how that affects them."