Taxpayers will face a bill of up to £2.5bn for the so-called “snoopers charter” giving police, the security services and tax officials the power to track emails, website visits and mobile phone calls.
Theresa May, the Home Secretary, faced a civil liberties outcry and criticism from Coalition backbenchers today when she published plans to require companies to hold details of phone and internet use for 12 months.
She insisted the move was essential to enable police to keep track of terrorists, criminals and paedophiles using more sophisticated ways of staying in touch.
But critics denounced the Draft Communications Bill as an unprecedented attack on personal privacy.
The Home Office today estimated the cost of the measure as £1.8bn over ten years - and when VAT and inflation are added, the state could eventually have to foot a bill of £2.5bn to operate the scheme.
Mrs May contrasted its £180m a year expense with the £14bn that the country spends each year on the police.
“This communications data is vital for catching criminals and protecting the public,” she said. “If we don’t do this, if that money isn’t spent, then we are going to catch fewer criminals.”
The Home Office argues that the country will benefit to the tune of between £5bn and £6.2bn over the ten years as a result of tackling criminality and tax evasion.
Mrs May stressed the plans would not allow the content of communications to be released and would not allow police to monitor contacts in real time.
She would not be drawn on what the ultimate sanction would be against companies that refused to comply with requests either to store or release data.
In an effort to placate critics, the Bill will be scrutinised by two parliamentary committees with the power to summon witnesses before the Government presses ahead with the measures.
While there is little doubt it will ultimately become law, there is opposition to the measures on both sides of the coalition.
The Cambridge MP Julian Huppert, a Liberal Democrat nominee to one of the committees, said he already had “lots of concerns” about the draft Bill.
He said: “It allows data collection exercises that are perfectly reasonable – but would also allow pervasive black boxes that would monitor every online information flow; an idea which is clearly unacceptable. This must be tightened up urgently.”
The Conservative David Davis, a former shadow Home Secretary, protested that David Cameron had attacked similar proposals when they were produced by the previous Labour government.
He added: “It’s incredibly intrusive. If they really want to do things like this - and we all accept they use data to catch criminals - get a warrant. Get a judge to sign a warrant - not the guy at the next desk, not somebody else in the same organisation.”
Nick Pickles, director of privacy campaign group Big Brother Watch, said the Bill was "an unprecedented and unwarranted attack on our privacy that will see the Government track where we make calls, who we email and what everyone does online".
He said: “Across 117 pages the Home Office has set out the greatest attack on the private life seen for generations.”