The British government has admitted that two compact disks containing the personal and bank details of 25 million citizens is lost. Nearly half the population of the country will have to live for years in fear of their accounts being hacked into, and their savings siphoned off by using their credit card numbers.
Even Prime Minister Gordon Brown and Conservative Party chief David Cameron are reportedly affected.
Experts said the fraudsters, if they get their hands on the information - names, addresses, dates of birth, child benefit numbers, national insurance numbers and bank or building society account details - can create fictitious bank accounts online using identities of real life individuals and play havoc.
They warned that with a little bit of ingenuity, crooks can hack into the accounts of the people whose details have gone missing. "As many people use their children’s names as online passwords, the information the criminals need to access the accounts has already been handed to them," said a security expert.
At the very least they would be able to order credit cards and spend thousands of pounds on each one. Alternatively, they could sell the credit cards too.
The official estimate of the identity fraud is £1.7 billion.
David Hill, senior security consultant at red24, a global personal security agency, said, "If this information fell into the hands of a fraudster they would need nothing more to hack into accounts because they have been given everything they need. Having a national insurance number is as good as having a passport."
Heads have started rolling. The head of HM Revenue and Customs, Paul Gray – one of the country's most highly paid civil servants – resigned his £198,000-a-year post as the scale of the fiasco became clear. But the Prime Minister and his embattled Chancellor, Alistair Darling, are counting the cost to their own reputations.
The question being asked is not if, but when the Chancellor too may have to resign following sustained public pressure.