I express no opinion about the bottom line of the Downing Street retyping matter, but I did want to speak to one small item raised by USS Neverdock:
It appears the originals may still exist after all. Raw Story has this tid bit:
“I first photocopied them to ensure they were on our paper and returned the originals, which were on government paper and therefore government property, to the source,” he added. [...]
“It was these photocopies that I worked on, destroying them shortly before we went to press on Sept 17, 2004,” he added. “Before we destroyed them the legal desk secretary typed the text up on an old fashioned typewriter.”
Smith appears to be tripping up here. He says he returned the originals because they were on government paper and therefore government property. So, photocopying a page out of a book makes the words no longer the property of the author?
Actually, if you get a government-owned government-written document in the U.S., and you want to print something from it, copying it and returning the original makes sense.
First, it is not a violation of the government's property rights for you to copy the material; under U.S. law, government-written documents aren't protected by copyright. Moreover, under U.S. law, it is generally not illegal for a newspaper to publish leaked classified documents (with, I believe, some exceptions), though it would be illegal for someone who got them in confidence to publish them. (One may also want to return the documents to help protect one's source, if the absence of the documents might implicate him in a way that the leak itself will not.) I realize that returning the originals may make it harder to authenticate the documents, and perhaps under some circumstances holding on to the originals may therefore be justified; but as a general matter, one isn't legally (or ethically) entitled to keep other people's or entities' physical property, even if one is free to publish copies of it.
Second, it is illegal to hold on to the physical document, because that tangible piece of paper is indeed the government's property. Moreover, it would probably also be unethical to do hold on to those documents, for the same reason.
My vague sense is that under U.K. law, the government does have copyright in government-written documents, but I suspect that (as in the U.S.) copyright is a narrower property right than the physical right to the documents; reprinting newsworthy copyrighted documents may under some circumstances be what U.S. law calls "fair use." Also, it may be the case that U.K. law does prohibit the republishing of classified documents -- but a newspaper might not feel that ethically obligated to comply with this law, but might feel ethically obligated to comply with the law that bars keeping tangible items that belong to someone else.
So I can't speak with complete certainty here as to what U.K. journalists are legally obligated to do; but in the U.S., it would make perfect sense -- both for ethical and legal reasons -- to return the originals even if one is publishing the copies.