LEADING fraud experts have rejected Tony Blair’s claims that identity cards will help to stem the soaring costs of identity theft.

Dr James Backhouse, a director of the London School of Economics Information Systems Integrity Group, said that identity cards would instead become the new master key for identity fraudsters, who would be able to acquire the cards using stolen documents. An identity theft takes place every four minutes and costs the country an estimated £1.3 billion a year.

It is one of the fastest-growing crimes in Britain. Fraudsters typically use discarded utility bills or bank statements of their victims to apply for loans and credit cards. Mr Backhouse said it would be impossible for the Government to stop fraudsters from applying for identity cards using fake documents.

Once a successful application has been made, an identity fraudster will have his own biometric details imprinted on an ID card displaying fake or stolen personal information.

Dr Backhouse said: “ID cards will exacerbate the situation. The stakes are raised that much higher if the master key is cracked; it opens the door to all sorts of frauds. The US has a very big identity fraud problem and this is partly because the system relies on social security numbers as a universal form of identity and this is exploited by fraudsters.” According to the US’s Federal Trade Commission, 27.3 million consumers there have been victims of identity theft in the past five years.

Dr Backhouse also raised doubts that banks and credit card companies would reject all applications from people whose ID card details failed to match their details on the national database. He said: “The ability to match up biometric records accurately to every person is not there at the moment. There will be flaws and lenders will have to ask themselves what an acceptable failure rate is. They risk losing a lot of business by rejecting every application from a person whose card details do not stack up with what is on the Government’s database.”

David Davis, the Shadow Home Secretary, said: “Labour claim that cutting identity theft is one of the central justifications for ID cards. It is some indication of how ill thought through the whole scheme is that experts believe ID cards would actually make the problem of identity theft worse.”

Mike Parker, a solutions architect at LogicaCMG, the computer services group, said that ID cards would be of limited use in combating identity fraud unless banks and building societies upgraded the details of the 64 million ID card holders to their databases.

There are currently 71 million credit cards in circulation in the UK and Mr Parker said that the banks would face huge costs if they tried to link these accounts with the ID card scheme.

A spokeswoman for the Home Office said: “We will check that the personal details which people provide match information held in other databases such as the driving licence system and National Insurance records. This will make it harder for one person to impersonate another.”

She added that the database of biometric information would enable the Government to detect people who try to establish more than one identity or who use multiple identities to hide criminal activities.

An LSE report into ID cards claimed that running costs of the scheme over ten years could rise to £18 billion. The Identity Cards Bill will receive its second reading in the House of Commons in the next few weeks and could be on the statute book by 2006.

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