The Home Office has upped its estimates of the cost to the UK of identity fraud and now puts the losses at £1.7bn a year.

Estimates in 2002 put the cost per year at £1.3bn. The new study included costs to the telecoms industry which had been left out of the original statistics. 

"The very nature of the services provided by the telecoms industry makes us a target for identity fraud," said Jack Wraith, chief executive at the Telecommunications UK Fraud Forum.

"Figures available for 2004 would suggest that the loss [in the telecoms industry] in respect to identity fraud was in the region of £370m.

"The industry is pleased to work with the Home Office and other industries in combating this problem which, with the advent of modern telecoms, is a growing problem for everyone."

Home Office minister Andy Burnham has been quick to suggest that a national identity card scheme, such as the bill currently before the House of Lords, would solve the problem. 

"Proving identity is an intrinsic part of life in modern societies. But our current reliance on documents such as birth certificates, utility bills and bank statements to prove who we are leaves an open door to identity criminals," he said.

"One way we can reduce the potential for identity fraud is to introduce a national identity card, backed by a National Identity Register, using biometric technology to crack down on multiple identities and secure personal data on behalf of the individual."

But in an interview last year the then head of the National High tech Crime Unit told vnunet.com that identity cards would do little to cut identity fraud, suggesting instead that they would simply spawn a market in fakes.

The former head of MI5 has also raised doubts, saying that the cards would be "absolutely useless". 

"Identity fraud has been escalating for many years, so today's announcement does not come as a real surprise to us," said David Hill, security consultant at Red 24.

"Simple measures like shredding documents that contain any personal information before you throw them away can significantly reduce the risk of your identity being assumed by someone else.

"The government has known that this crime is on the increase for a number of years, and needs to play a greater role in protecting the public by making the legislation that relates to identity fraud clearer."