A database with details of 3,213 construction workers has been found by the Information Commissioner's Office (ICO).

Over 40 companies have had access to the facility in order to vet individuals for work, with data of a sensitive nature contained on the files including personal relationships and trade union activity.

A raid in the West Midlands area of Droitwich by the ICO found that Ian Kerr, the owner of a company called the Consulting Association, was understood to have been running the facility for 15 years.

The offence constitutes a "severe" breach of the Data Protection Act, deputy information commissioner David Smith said.

"I remind business leaders that they must take their obligations under the Data Protection Act seriously. Trading people's personal details in this way is unlawful," he added.

The sole practitioner of a London law firm, Michael Robinson, was recently successfully prosecuted under the Data Protection Act by the ICO.

In a recent survey of SMEs for Connect, the two most important benefits of outsourcing were guaranteed response times and allowing in-house IT staff to concentrate on more strategic issues.