Well I've just spent the last few months trying to send a file over secure ftp to a govt dept. Let me just say I hope never to have to do that again, give me the private sector any day.
I expect the data is compressed plus the record length of each record is not that long name/address/dob/NI number/Child benefit number so probably not as big as it would initially appear. This coupled with the fact that the term CD is often interchangeable with the word DVD in non IT cirlces perahps explains it.
As for password protected, whats the betting it was good old WinZip, google that and you'll soon have a cracker !
Darling can't be to blame, cost cutting was propogated down for the last Chancellor - hey our good old PM !!
Last laugh, seems Gordy's details were on there too as he claims child benefit ! hahaha