The price of fraud is a glass of vodka

My invitation to you to send a large donation to my Cayman Islands bank account in return for an understanding of the cost of fraud has clearly fallen on stony ground.

However, I was offered a glass of vodka for this earth shattering revelation. I have a nasty feeling that the gentleman in question was an agent of HP Potts, my nemesis at the tax office who will do anything to entrap me. If the vodka had been in the Cayman Islands, I would not have to declare it, but as things stand.....

In any event, noblesse oblige. So the cost of fraud, if you are a government minister, is £14 billion. The tot up various scams such as identity theft (£1.4 billion) benefit fraud (£3 billion) credit card fraud (£500 million) and pretty soon we have a good picture of the remarkable entrepreneurial creativity, zeal and hard work of the average British citizen trying to rip off his fellow citizen. Pause for a moment and think of when you were last asked to pay cash by a builder, plumber or home help. Fraud? Moi? Ha ha ha.

Of course, the biggest fraud of the lot is government itself, which defrauds the public of £500 billion a year from what the taxman, including Mr Potts, refer to as their "customers". I asked Mr Potts if I could exercise my rights as a customer: to choose another supplier, and to not buy or pay for their lousy services and to get my money back when they do not deliver. In return I got special "customer service" in the form of a special investigation.

The reason that the government publishes such a large figure for fraud is that it justifies their plan to defraud us of even more of our hard looted cash by introducing identity cards. This, they say, will cost a mere £5.8 billion to eliminate £14 billion of fraud annually, which sounds like a good deal.

Now let's look at reality.

• The cost of fraud is fraudulent: they have no idea how much the fraud is. If they count tax dodging as fraud then clamping down on this will be economic disaster: no more Polish builders, no more Philippina nannies and no more East European fruit and veg pickers. Our houses, food and children depend on avoiding the rapacious taxman. If they get hold of this lot, we are doomed.
• The good news is that ID cards will fail: everyone will quickly find a way round ID card to continue with their entrepreneurial fraud activities. So the "benefit" (to the tax collector) will evaporate faster than an open bottle of vodka in the hands of Uncle Vanya.
• The cost of ID cards will go through the roof. The London School of Economics put their cost not at £5.8 billion, but at £19 billion. Other estimates (ZD Net) put the cost nearer £30 billion. Given the ability of government to mismanage costs on a heroic scale (think Dome and Scottish Parliament), I know which result is most likely.

So instead of spending £5.8 billion to rip the tax payer off to the tune of £14 billion, the government is more likely to spend £30 billion to rip the taxpayer off to the tune of £2 to £3 billion. This is economic lunacy of the highest order, which is precisely why we should expect to see ID cards implemented very soon.