What do you get when you combine an ambitious IT scheme run by the government and a plan that threatens to ride roughshod over civil liberties? The answer is an unholy mess. As leaked e-mails today reveal, Tony Blair’s flagship identity card scheme is struggling and could even collapse in an embarrassing shambles. Two years before ID cards are set to be introduced for people renewing their passports, the chances of meeting that timetable look remote. The entire scheme may yet have to be shelved.

In many quarters this will be a cause for celebration. The 9/11 attacks on America produced some overhasty government thinking. They gave us the lopsided extradition laws that permit British bankers to be flown to the United States this week but cannot be used to bring Americans to Britain. They also prompted the ID scheme. David Blunkett’s relatively modest proposal for an entitlement card for state benefits and National Health Service treatment has been transmuted into a fully-fledged ID card.

In its election manifesto last year Labour sold the policy as strengthening crime and security and protecting Britain’s borders. “Across the world,” it said, “there is a drive to increase the security of identity documents and we cannot be left behind.” Cards would make British citizens safer, protect them from identity fraud and cut the cost of welfare benefits and the NHS. What could be more sensible?

One big hitch was the enormous cost. When the London School of Economics (LSE) published research showing that the cost of ID cards could be as high as £19 billion — more than three times the government’s estimate — and said the cards could be legally unsafe, ministers went into attack mode. Charles Clarke, the former home secretary who now languishes on the back benches, accused the LSE of being “technically incompetent” and said its figures were “simply mad”. But the LSE’s figures were carefully costed and the record of huge cost overruns and delivery failures in government IT projects, admitted in today’s e-mails, always suggested that official estimates should be taken with a pinch of salt.

Mr Clarke was honest enough to admit last year that ID cards would not have stopped the July 7 bombers. Dame Stella Rimington, former head of MI5, said ID cards would not make us safer, even against the threat from foreign terrorists, and she doubted whether anybody in the intelligence services would be pressing for them. As with all official documents, she suspected that determined forgers would find a way of replicating them.

Should the government accept the verdict of its own experts that a politically driven programme with a “lack of clear benefits” might, and perhaps should, be “canned”? It would be another broken promise from Mr Blair, but he is used to those, as are voters. Why press on with a scheme that will cost billions with very little discernible benefit?

Identity fraud is a growing problem. It is officially estimated to cost companies, individuals and the government £1.7 billion a year. Official figures suggest benefit fraud based on false identities is a tiny fraction of that amount, perhaps tens of millions of pounds, but that is almost certainly an underestimate.

On this, as on many things, Frank Field, the former welfare reform minister, has sound ideas. It was his committee which first identified the scale of National Insurance fraud in Britain, with at least 20m more NI numbers in use than there are people in the country. He believes that the scale of fraud in the NHS is significant. Rather than scrapping the whole ID scheme, he argues, it should be launched gradually, first to foreigners coming to Britain to stay and then to young people getting their NI numbers for the first time. A programme like this should be within the government’s capabilities and would even allow the prime minister and his colleagues to save face.