I seem to remember being told that once upon a time Inland Revenue officers used not to be allowed to work on different tax schedules so that no one officer would ever know a citizen's true financial position. Oh for such propriety today when whole records in their millions are transported around different departments merely for audit purposes. Much has been said today about the loss of disks containing the child benefit records of 25 million people and many have suggested that it would be quite wrong now to go ahead with ID cards knowing that information security is so lax in a government department that already holds sensitive data on each and every one of us.

I want to take a slightly different line. I have always been and remain utterly opposed to the system of ID cards linked to a database that is now legislated for. However when I was on the Lib Dems' Civil Liberties working party eight years ago or so I did propose a wholly different type of ID card/account that would come into its own in this situation.

My idea was that we could all have a card or account that would "lock" all data held on us by government and that would require us to be present, or able to authenticate online or on the phone like you do with your telephone or internet banking systems, before any government officer could access your data or authorize any transfer of a part of it to someone else. A sort of a "nuclear key" where both the data subject's and the data user's half of that key would effectively be needed to decrypt any of the data subject's personal information. Yes, it might slow certain things down, but let's face it, there are some things we really don't want government interfering in unbeknownst to us. One needn't even have to trust government to guarantee one's identity - you could open it up so an individual could choose a firm like Thawte, who provide guarantees of identity to online commerce sites we trust with £40bn of our custom each year, to guarantee their identity and private key.

Data about us is part of us. It is our right to know it's secure, especially when we have no choice in handing it over - and such circumstances should be minimized. Whether it's bank account details or DNA it's an invasion of our privacy and self-ownership and every additional byte stored about us is a step towards totalitarianism. The apparatus of government should be our servant and not our master and many fought and died to ensure that we were not enslaved by overbearing states in the twentieth century.

I do not see why the National Audit Office should want all the records on the database. Surely audit is about taking a sample to prove that procedures were being followed and the bona fides of the person being audited and the figures they have produced. HMRC should have a system of internal audit that itself can be verified without any other department needing access to the original data. And if they do need access to the original data, then it should be done on site in a secure area or through secure access direct to the systems concerned. No other business surely sends all of their customer records to their external auditors do they? Nor should they in the civil service, and if that's how NAO and District Audit work then that too should change and urgently.

Commentators like Richard Murphy are just plain wrong in insisting that this is not an extremely serious breach that highlights systemic problems in organizations that handle such huge amounts of data without the effective scrutiny of competition for their customers to keep them on their toes. No junior official, in fact I'd go so far as to say no individual official should have had access to the whole data universe without a great deal of additional verification. It defies belief that anyone thought this system was sufficiently secure.

And finally - a word of warning...

In this highly interactive and globalized society, if we continue to insist on potentially intangible bases - our incomes - for tax, the amount and intrusiveness of data they will need to hold on us can only increase. Another plus for taxing land.