Blair accused of creating a 'digital underclass'

The research institute accuses the UK government of 'short-termism' - ignoring the problems associated with information exclusion in favour of the easier but less challenging problem of computer access.

According to Perri 6, author of the report and senior research fellow at Strathclyde University, the UK is on the brink of creating a permanent 'data underclass' because too many people are unaware of how their personal details are being used to determine their creditworthiness.

He said: "The fuel of the modern economy is personal profiling, data matching, data mining and data warehousing about identified individuals."

According to Perri 6, market pressure will make technology accessible to a wider audience without the need for government intervention, but data profiling threatens to permanently exclude many more in society. He warns that unless the government acts now to educate people the problem could get out of control.

"It's what drives the basic decisions that organisations make about customers, and as that information gets shared, increasingly the danger is that it's a very unforgiving system.

"The hardware problem is basically easy to solve, it involves a bit of public expenditure and helping the market along. So the government can be seen to be doing things," he claimed.

But e-envoy Andrew Pinder defended the government's record on the digital divide, stressing the success of the UK Online initiative which last month celebrated the opening of 1,200 computer centres nationwide - double the target set by the Prime Minister a year ago.

Demos wants to see positive action to counterbalance the negative commercial decisions taken against the underprivileged. Strengthening of the data protection laws which prevent data being stored for too long, tax incentives and improvements in bankruptcy rules are all suggestions made by the report, which is sponsored by outsourcing firm EDS.

However, Pinder sounded a note of caution over the prospect of the government coming in with a heavy hand.

He said: "There is a conflict between protection of the citizen and directly intervening to distort the market. I think society has to take a view and decide whether it wants intervention."

A copy of the paper, Divided by Information? is available from http://www.demos.co.uk