Whitehall. Frank Strange arrives for his last day at work at a secret government unit known only as 'the Directorate' to find one of his staff, Richard Lister, has jumped to his death from the window of his office.

The Directorate uses a huge computer database to store records on anyone considered a danger to the state. The department is based at two sites - the head office is in Whitehall, while the mainframe computer which holds the database is located in Southampton.

Strange assigns young intelligence officer James Quitman the task of reporting on Lister's death. Instead of heading straight for his retirement cottage in Cornwall, however, Strange pays a visit on Lister's wife in Southampton. He also contacts some former members of the Directorate with connections to Lister: among them his old friend Johnny Davenport, who designed the database, and former departmental press officer Hoskins. Strange learns that three years ago there had been an internal inquiry at Southampton, after Lister alleged that the department's files were being misused by a senior officer. The inquiry rubbished Lister's claims, but he refused to let the matter lie.

Meanwhile, in a meeting with his new section manager Guy Preger and the directorate's deputy controller Michael Hatherly, Quitman is told that Strange did not retire but was fired due to concerns about his reliability. Quitman is put in charge of an ongoing operation to tail Strange.

Quitman's absorption in the case leads to a falling-out with his girlfriend Liz, and he becomes involved with his workmate Jilly. She reports their conversations to Sir Gerald Dangerfield, the departmental controller. For his own reasons, Dangerfield also has a man following Strange. He instructs his man to frustrate the attempts of the Directorate's security officers to track Strange.

Strange contacts Quitman, insisting that Lister was murdered, and convinces him to pull the file on the Southampton inquiry from the database.  The file reveals that Davenport was the expert witness in the inquiry. When confronted with this, Davenport admits that he was asked by Hatherly to put his name to the report, without seeing the evidence.

Looking over the data for the first time, Davenport is surprised to spot radical MP David Fenton's name - Fenton is at the centre of a political storm following accusations of legal malpractice made in the press. The data is incomplete, however - and the journalist who made the allegations against Fenton is killed before Strange can get any information out of him.

Quitman and Strange also find out that shortly before Lister's death, on Dangerfield's orders, the job of tailing him was taken away from the Directorate's own security wing and handed to Army Intelligence at Aldershot - who promptly lost him.

Hoskins passes Strange the full report from the inquiry, enabling Davenport to understand what has really been going on. Using the MP Fenton's file as an example, he shows Strange and Quitman how secondary files have been created on certain citizens, which distort their biographies to make their activities seem criminal or unlawful. There are thousands of such files on the system, ready to be used to destroy the reputations of those deemed politically undesirable.

But that's not all - there is a second, entirely separate abuse of the system going on. A large number of Inland Revenue files for major multi-national companies have been illegally routed through the Southampton mainframe and altered, in a colossal tax fraud.

Over the next few days, Strange finally puts the pieces together. The tax fraud is being run by Preger, who also has a sideline acting as an agent for arms manufacturers. The bogus intelligence files, meanwhile, are Hatherly's pet project.

Strange drives to London and leaves the information for Quitman to collect. Shortly afterwards, he is killed by a bomb planted in his car.

Quitman goes to Dangerfield with the information. He is disappointed with the modest nature of the action Dangerfield proposes to take - a few early retirements, a resignation or two. Dangerfield advises him to take some time off. He does so - but finds himself, like Strange before him, under surveillance.