Will identity cards cut fraud?

The government has unveiled plans to phase in compulsory identity cards with the full rollout penciled in for 2017.

ID cards will become compulsory for non-EU nationals this year, widening to include around 200,000 UK citizens and EU nationals working in “sensitive” airport jobs the following year.

In 2010 students will be able to join a voluntary ID scheme and in 2011/12 anyone taking out a new passport will be included on a National Identity Register. However, they will be able to choose whether to use their ID card until 2017 when the scheme becomes compulsory.

Home Secretary Jacqui Smith says the cards will ensure that cards will enable UK residents to securely verify their identity.

She added: 'We will be able to better protect ourselves and our families against ID fraud, as well as protecting our communities against crime, illegal immigration and terrorism.

“And it will help us to prove our identity in the course of our daily lives - when travelling, for example, or opening a bank account, applying for a new job, or accessing government services.”

How will ID cards work?

ID cards are only half the story. As well as the literal proof that people carry with them to proves who they are, details of all UK residents will be held on a national ID register.

The card itself will only contain basic information about you, such as a photograph, your name, address, gender and date of birth. It will also include a microchip which would also hold biometric information of your fingerprint.

The ID register will also include all your basic details, but the biometric information will be kept on a separate register.

Neither the cards themselves nor the register will hold any information relating to your political or religious believes, your race or sexuality. Criminal records will not be stored, nor will information relating to your mental or physical health.

Will ID cards prevent fraud?

According to CIFAS, the fraud prevention service, there were 65,043 victims of ID fraud in 2007. A further 6,272 people had their accounts taken over by fraudsters.

And a recent study by the Association of Chief Police Officers estimated the cost of fraud to the UK economy to be in the region of £14 billion.

The government says that the register and the cards themselves will prevent ID fraud by criminals as well as terrorists.

But critics claim they could actually make it easier for fraudsters to steal identities.

The Conservative Party, which has pledged to scrap ID cards should it get into power at the next general election, warns that ID cards could actually make the risk of fraud greater.

A spokesman says: “This costly white elephant will not improve security – in fact, it could make it worse as the register will act like a honey pot for criminal hackers who want to get their hands on peoples’ information.

“And that’s not to mention this government’s track record of losing sensitive consumer information.”

A spokesman for APACS – the UK payments association – says it remains to be seen whether the scheme will reduce ID fraud in the UK.

But he added: “If this initiative achieves the government’s aim of reducing ID fraud then that has to be a good thing. However, it must ensure that the right safeguards are in place to ensure the information is kept secure from fraudsters.”

CIFAS has welcomed the cards but has warned they do not offer a blanket solution to ID fraud. Kate Beddington-Brown, head of communications, said: “It is possible that [cards] might help to prevent some attempts at ID fraud. But much ID fraud occurs remotely, over the internet or the telephone for example, where ID cards would not have a role to play unless there was a mechanism to verify identity card numbers in real time.

“In mainland Europe, in countries where individuals already have identity cards, it seems to be more difficult for fraudsters to commit identity crime. Once ID cards are in place in the UK, it follows that the same should apply here.

“It is likely therefore that, at that point, the UK will experience some ‘fraud migration’ to countries where an ID card scheme is not yet in place.”

There is also a concern that criminals could design “fake” ID cards, and that staff employed to maintain the ID register could pose a risk to security unless properly vetted.

Are you concerned about ID fraud? Moneywise shows you how to see if you are at risk and how to prevent criminals getting their hands on your information.

More about