The House of Lords Select Committee on the Constitution issued a stinging rebuke to Government in February, claiming that over-surveillance was breaking the trust between Government and the people, and that intrusion into people's privacy risked undermining democracy itself.
It said that judicial oversight of surveillance must be introduced, but the Government has rejected that proposal.
The Government has issued a point-by-point response to the Lords' claims and says that it does balance privacy on one hand and protection and effective service delivery on the other.
"The Government respects the privacy of its citizens," said the Government Response to the Lords' report. "We take the protection of their personal information extremely seriously and we are committed to handling it safely and securely."
"It is essential that we all understand that the Government must strike a balance between the right of the public to their privacy, their right to the more effective delivery of public services and their right to protection from crime and terrorism. This Government will always take a principled and proportionate view of what needs to be done to protect the public and respect individual privacy, and will flex our approach where necessary," it said.
The Government has refused to extend to the private sector the power of privacy regulator the Information Commissioner's Office (ICO) to inspect public bodies' privacy and data protection systems. It would only say that it would "listen" to the arguments for extending that power.
"There are sound arguments for applying a higher level of scrutiny to public sector bodies," it said. "The citizen cannot shop around for a service provider with different data protection standards. However … the Government will continue to listen to the arguments made in support of extending assessment notices to the private sector and react accordingly."
A report into Government data handling recommended that public authorities conduct impact assessments when adopting policies or measures that could affect privacy. The Lords Committee called for these to be published, but the Government rejected that call.
"While departments are encouraged to publish their privacy impact assessments, it may not be appropriate to publish a privacy impact assessment in full or at all in certain cases, for example, where the privacy impact assessment contains sensitive or confidential information," it said.
The Government rejected outright the Lords' demand that the ICO be involved in the legislative process. "We … recommend that the Government should be required, by statute, to consult the Information Commissioner on bills or statutory instruments which involve surveillance or data processing powers," the Lords' report had said.
The Government said that this raised constitutional problems. "It is the responsibility of the House[s of Parliament] to scrutinise legislation and for this reason we do not consider it appropriate to introduce a statutory requirement for the Government to consult the Information Commissioner at this time," said the Government. "In practice, departments routinely consult the Information Commissioner when legislation could have implications for privacy or the protection of personal data."
The Lords also said that surveillance should be subjected to judicial oversight, but the Government said that this was not needed.
"We recommend that the Government consider introducing a system of judicial oversight for surveillance carried out by public authorities and that individuals who have been made the subject of surveillance be informed of that surveillance, when completed, where no investigation might be prejudiced as a result," said the Lords' report.
"The Government believes that the current system strikes an appropriate balance between the need for operational effectiveness on the one hand, and safeguards necessary to protect privacy," said its response.
"Where individuals believe powers have been used inappropriately, they can take their case to the IPT [Investigatory Powers Tribunal]. If the Tribunal upholds a complaint it is required to notify the complainant and make a report to the Prime Minister. It may, if appropriate, quash any warrant or authorisation, order the destruction of relevant material or order compensation," it said.