Ministers are planning a shakeup of the law on the use of confidential personal data to make it far easier for government and public-sector organisations to share confidential information supplied by the public.
Proposals to be published next month by the Cabinet Office minister, Francis Maude, are expected to include fast-track procedures for ministers to license the sharing of data in areas where it is currently prohibited, subject to privacy safeguards.
The development will raise fears among civil liberty and privacy campaigners that sensitive personal information supplied by citizens to a doctor, social worker or police officer for one purpose could be used arbitrarily, without the consent or knowledge of the citizen, by another agency of the state for a different purpose.
The proposals are similar to "database state" legislation abandoned by the last Labour government in 2009 in the face of fierce opposition. That legislation was intended to reverse the basic data protection principle that sensitive personal information provided to one government agency should not normally be provided to another agency for a different purpose without explicit consent.
Despite the coalition government's pre-election promises to roll back the database state, the growth of internal Whitehall databases has quietly continued apace in the last two years. A newly created "drug data warehouse" has been set up containing anonymised details of more than 1 million individuals who use illicit drugs.
Last month parliament approved data-sharing powers, buried in the Welform Reform Act, requiring jobcentres to supply local authorities with the names and addresses of unemployed families with children who miss school or are involved in crime and antisocial behaviour, so that so-called troubled family units can deal with their behaviour.
Maude believes technology has moved on so fast in the last few years that it is now possible to encourage data sharing without the government having to build huge databases of sensitive personal data that offer "huge flashing targets for criminals".
The minister is pressing ahead with a project he describes as a "little brother" identity scheme to succeed the government's abandoned identity card programme. Under this scheme, which will start with 21 million pensioners and benefit claimants this summer, private companies will be used to verify identities and authenticate transactions with the Department for Work and Pensions.
Maude will propose giving ministers a fast-track mechanism to revive legislation first proposed by the Walport-Thomas review in 2008. Maude believes that technology has moved on since then.
The proposals on data sharing and privacy are to form part of a forthcoming government white paper on the "citizen's right to data", which will also propose boosting transparency in public services and introducing new approaches to "open data" collaborations between government, business and the voluntary sector.
Maude argued in a recent speech that it was now possible to share data across, for example, health, criminal justice and employment records without the information needing to be held on the same computer server. He said social workers, doctors, dentists, jobcentres and the police all found that essential data sharing about individuals was hampered by legal complexities and muddled myths.
Officials were being denied access to personal data because of cultural and legal barriers despite legitimate benefits to frontline services.
"We intend to act by changing the way we work and by revisiting the existing legislation," said Maude. "In May we will publish the proposals that will make data sharing easier and, in particular, we will revisit the recommendations of the Walport-Thomas review that would make it easier for legitimate requests for data-sharing to be agreed with a view to considering their implementation."
Guy Herbert, of the No2ID campaign, said he was alarmed to see the revival of the Blair government's database state policies. "There has been a consistent – and it can only be deliberate – habit in Whitehall of conflating 'public information', which most people take to mean information about the state, with information on the public held by state agencies. This has now been hooked on to the new administration's modish transparency, and is used to suggest that 'open data' implies opening us all up to inspection at official whim. It doesn't."
Herbert said Maude was right to argue that information did not need to be held on the same server to be correlated. But he said that when data was collected and connected, a single database was being built, whether the data was in one place or dispersed. "Broad data sharing isn't just inimical to privacy, it's inimical to the rule of law. It necessarily means scrapping both confidentiality and ultra vires," Herbert said.
A Cabinet Office spokesman said: "This is emphatically not an ID card scheme or a national identity database. We want to enable people to prove their identity – if they choose to – without the need for a national scheme. This way the citizen remains in charge, not the state."