Britain's local councils - custodians of vast amounts of electronic data about our lives and local environments - have received a ticking off for their tardiness in freeing data. The Power of Information Task Force, set up earlier this year to promote web 2.0 thinking across the government, this month warned councils that they could face prosecution unless they publish terms and conditions for reusing their data. The task force also urges councils to waive powers to charge fees.

Local government has emerged as a major obstacle to setting taxpayer-funded data free for reuse. Unlike central government bodies, local authorities (including police forces) hold the copyright in data they produce, and some see it as a potential source of revenue. Earlier this year, a study found that only one-fifth offered data under the government's recommended "click use" licence.

New draft guidance from the Power of Information Task Force urges councils to get on board. "If everyone adopts the same approach to licensing, it will be easier for everyone to reuse local authority information - including local authorities themselves! Using the same licence across central and local government means that all our public sector information can be used together more easily and simply."

The task force warns that councils wanting to trade information could be breaking the law. "Councils are often monopoly information holders. If you trade unfairly and someone complains, you will be investigated by the Office of Public Sector Information - a process that will take time and cost money."

Not all authorities are laggards. Kent county council said this week that it is shortly to pilot a free data scheme on its website. The idea, says Noel Hatch, projects and research lead in the council's innovation team, is to take data that the council already publishes in hard-to-use formats and make it easily available to community groups to mix and match in mashups. "People will be able to mix our information with that being released by other services, and with online tools such as Google Maps or Flickr," he says.

The idea that free data can be a force for digital and social inclusion also appears - fleetingly - in the latest cross-government technology strategy to emerge from Whitehall. The Digital Inclusion Action Plan, published for consultation, says: "Future challenges include considering how to ... promote innovative ways of providing all sectors of the public with better information about public services."

But we'd suggest it goes much further.

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