Confidential records and sensitive intelligence on tens of thousands of the country’s most prolific criminals have been lost in a major breach of data security at the heart of Whitehall.

Scotland Yard is investigating the loss of the information, which was taken from the Police National Computer and entrusted by the Home Office to a private consultancy firm.

The data had been encrypted for security reasons but was decoded by staff at PA Consulting Group and placed on a computer memory stick that was subsequently lost. The device contains personal details and intelligence on 33,000 serious offenders, dossiers on 10,000 “priority criminals” and the names and dates of birth of all 84,000 prisoners in England and Wales. There is also information on an unspecified number of people enlisted on drug intervention programmes.

The disappearance of such a massive amount of secret information has widespread implications. Police informants could be at risk of reprisals. Named offenders may seek rehousing or police protection from vigilantes, and individuals who believe that their personal data has been compromised could seek compensation.

Jacqui Smith, the Home Secretary, was informed on Tuesday and was said to have been furious. The loss is a major setback for her efforts to reform a department described by her predecessor John Reid as “not fit for purpose”. The police were contacted yesterday and detectives from the Serious Economic Crime Command at Scotland Yard began conducting searches, viewing CCTV material and interviewing potential witnesses.

Ministers had promised to tighten security controls. The latest loss is particularly embarrassing because the data originated at the Home Office’s headquarters, where Ms Smith, her ministers and their senior officials work.

David Ruffley, the Shadow Minister for Police Reform, said: “This shambles proves that this accident-prone Home Secretary hasn’t even got a grip of what goes on in her own building.” He said that it would be outrageous if criminals were able to claim compensation as a result.

The information from the secure police computer had been collated as part of JTRack, a programme to track persistent and prolific offenders through the criminal justice system. Access is supposed to be limited to police forces, crime reduction partnerships and other official bodies. PA Consulting, which helped to develop the national ID card scheme, was brought in to work on the project last year.

A Home Office spokesman said: “We have been made aware of a serious breach of security at the offices of external contractors. A full search has been conducted and both the police and Information Commisioner have been informed.”

A spokesman for Scotland Yard said that it had been asked to review the circumstances of the loss. He added that there was no evidence that any offence had been committed.

David Smith, the Deputy Information Commissioner, said: “It is deeply worrying that after a number of major data losses and two government reports on high-profile breaches of the Data Protection Act more personal information has been reported lost. It is vital that sensitive information is held securely at all times.”

No one at PA Consulting, which reported the loss of the memory stick to the Home Office on Monday, was available to comment.

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