Leading article: A debacle that may come to haunt the Government

No wonder the Shadow Chancellor, George Osborne, looked like the cat with a humungous saucer of cream. Such comprehensive government catastrophes simply do not come the way of young Opposition ministers every day. Not only are the figures breathtaking – the confidential personal details of almost half the population "lost in the post", information on 7.5 million households gone Awol – but the essence of the debacle fits with such consummate plausibility into the array of popular suspicions about this government. In every appalling detail, it is the disaster that was somehow always ready to strike.

In the circumstances, Alistair Darling performed as well as could have been expected. He gave every appearance of telling it as it was – a cock-up of the first order. We glimpsed the full-blown panic that had clearly spread like wildfire from the deep undergrowth of Her Majesty's Revenue and Customs, to lick at the joists of the Chancellor's office. At least Mr Darling had a sacrifice to offer: the chairman of Revenue and Customs, Paul Gray, had done the decent thing.

For Mr Darling, of course, things could hardly get worse. Barely 24 hours after his conspicuously not upfront statement about Northern Rock, the Chancellor was before the House again, with another dire setback to report from the nation's financial front. But it was also clear, from the sepulchral mien of the Prime Minister, that this latest disaster was bigger than the Chancellor. It encompassed the whole government, up to and including the Prime Minister and former Chancellor, Gordon Brown.

Was it not Mr Brown whose brainchild it was to merge HM Customs with the Inland Revenue and bring them more closely into the orbit of the Treasury? What effect has this had on efficiency and morale? And is it only since late June, 2007, that the Revenue has been sending confidential data through the post on the say-so of a junior civil servant? The move from Chancellor to First Lord of the Treasury entails risks that will be all too apparent to the Prime Minister.

There are two particularly damaging ways in which this debacle will now weigh down his government. The first is political. Mr Brown built his initial success, and impressive poll ratings, on the appearance of competence. "Not flash," you may recall, "just Gordon". More recently, the promise from No 10 was that sound common sense would be enhanced by "vision". When Mr Osborne invited Mr Brown yesterday to "forget the big vision, just get a grip", who would not respond with a heartfelt "Hear, hear"?

Since September, almost nothing has gone right for the Government. To mislay half the population's personal details – even if the information is never misused – speaks of the grossest mismanagement. Even if it is not directly the Government's fault, this is an episode that will be immortalised in our political folklore, entertaining a generation in the retelling.

The second consequence for Mr Brown is practical. In the decade that it has been in power, New Labour has shown an ineptitude with information technology that has not only cost the country dear, but sown doubts about how far it can be trusted. Now, our worst fears have been confirmed. A major government department has been exposed as taking a casual, not to say negligent, approach to other people's personal information. Civil servants have flouted their own rules and laws on data protection.

We find it hard to believe that a government with such a colossal blot on its record of data management will be in a position to introduce a national identity card. That plan should be abandoned: a small benefit from a blunder of truly epic proportions.