ID cards could cost business £3bn

GOVERNMENT plans for an identity card could cost UK businesses a massive £3bn in hidden expenses.

Experts have warned that switching from National Insurance numbers to biometric ID cards will cause huge knock-on administrative burdens to industry.

The Home Office, which is championing the idea, has admitted these extra costs to British firms - for what is called 'private-sector compliance' - have not been allowed for in its published calculations.

So far, the total cost of the controversial scheme has been put at about £3bn, or £35 to £40 a card. Yet the impact on businesses is set to double this cost, with employers picking up the bill.

Nick Kalisperas of computer trade association Intellect, which has been advising the Government on the concerns of the computer industry, says the additional costs of trying to purge fraud from the State system appear not to have registered with Home Secretary David Blunkett and MP Beverley Hughes, who unveiled the plans this week.

Kalisperas said: 'As far as I can see, the Government has not considered what using an ID card as an enabler for electronic Government means. It seems that business will bear a disproportionate cost for tackling fraud. The Government have not thought this through. There are a number of issues that will have to addressed yet.'

One of the stated aims of the biometric ID cards, which would use fingerprints or iris scans, is to reduce social security fraud caused by the misuse of National Insurance numbers.

Fraudsters create fake identities with these numbers to claim benefits unlawfully, at an estimated cost to the Treasury of between £4bn and £7bn a year.

The new cards would replace the NI numbers as the key to claiming benefits. The Home Office is researching the creation of an ID using passport and driving licence numbers.

The snag is that NI numbers are used by employers when it comes to administering taxes and NI contributions. For their admin systems to comply or 'interface' with ID cards, companies would have to overhaul their systems or pay for expensive new software. They might even have to buy new equipment to store digitally-created fingerprint and iris scans.