The report, entitled Preparing the Ground: Stimulating Growth in the Digital Economy, states that although the coalition is right to explore the benefits of cloud computing, ministers must do much more to address issues around cloud security and data protection.

Cloud is riddled with risk "We recommend that as a matter of urgency, the government consider the security issues involved with cloud computing, particularly regarding data location and segregation" it says.

"Cloud computing is an area where, if left unchecked, there is serious potential for abuse – for example, large corporations taking control of enormous quantities of public or private data outside the reach of national law."