Home secretary Charles Clarke says private sector business stands to see up to £425m worth of benefits from his department’s national scheme for biometric identity cards.

But a 21 per cent rise in the cost of ordinary passports, partly to pay for biometric preparations that will also underpin ID cards, has sparked renewed attacks on the Home Office proposals.

The cost increase emerged as former MI5 chief Stella Rimington warned that ID cards will not make the UK any safer from terror attacks, and will be ‘absolutely useless’ unless they are completely unforgeable.

But writing in the Financial Times last week, the home secretary emphasised the benefits to business of a gold standard of identification. Possible uses include more higher-value online transactions, he said.

Clarke quotes Royal Mail director of information security David Lacey, chairman of the business panel advising the government’s ID cards team, who says the Royal Mail’s recruitment process will be much faster once the scheme is up and running.

The government has defended the passport cost increase from £42 to £50 as necessary to fund face-scan biometrics and personal interviews for passport applicants from next October. Fingerprint biometrics will not be introduced until 2008.

Home Office minister Andy Burnham said: ‘Countries all around the world are moving to strengthen the security of identity documents in the face of the growing threat of fraud and forgery.’

The increase is ‘worth paying in order to protect passport holders from fraud and afford them continued convenient international travel’, he said.

Liberal Democrat home affairs spokesman Mark Oaten says the money will fund 70 new interview centres, which will later be used for ID cards.

‘It must be made crystal clear that none of this money should be used to subsidise the ID cards project,’ he said.