Survey: ID theft costing UK billions in taxes

Billions of pounds of taxpayers' money is stolen each year through ID theft and other fraudulent activities, according to a survey of public sector security analysts and IT managers.

The survey, which was conducted by risk management consultants SPSS, found that only 1 percent of fraudulent activity in the public sector is being detected, which means billions of pounds could be saved each year by tightening up prevention and detection techniques.

Noel Coloe, general manager of SPSS UK, said that public sector organisations need to protect themselves from both internal and external threats.

"In the commercial sector, the increasing prevalence of fraud incidents -- such as phishing scams -- shows all too clearly how criminals will continue to take advantage of technology developments for illegal gain. This survey reveals how fraudsters are apparently also infiltrating the public sector to their advantage," Coloe said.

According to the survey, employees are responsible for around one-quarter of all fraud, but the worrying figure is that 99 percent of fraud in the public sector is never detected.

The government has been fast-tracking its scheme to roll out ID cards, which it said will be used to fight terrorism, but the SPSS survey recognises that ID cards could help combat one of the most common uses for ID theft -- benefit fraud.

"Illegitimate claims for benefits cost the taxpayer around £2bn per year. Given the increasing pressure on Whitehall to improve efficiency and local government to make budgets work harder, the public sector must act immediately to improve detection and prevention of fraud," said Coloe.