News Analysis

Are passport fees paying for ID cards?

Tony Collins

Bill Crothers, CIO of the Identity and Passport Service (IPS), and its chief executive, James Hall, tell it like it is. Sometimes when officials talk to journalists they know immediately what the reporter wants to write - and they confuse, deliberately or not. Crothers and Hall are not like that. Two things were clear to us at the outset - before the interview - and were still clear afterwards.

The first is that if the Conservatives win the next general election and cancel ID cards there will be little in effect to cancel. The IT infrastructure for passports is being combined with that of ID cards. So the £650m worth of contracts awarded this week to CSC and IBM for new ID cards and passports IT will remain largely intact.

A new biometric system is, in any case, being built by IBM - the National Biometric Information Service (NBIS), which will store fingerprints and pictures of faces.

Under its new £265m 10-year contract IBM will take over the Immigration Automated Fingerprinting System from French company Sagem, which has been running the system for the UK Border Agency. The NBIS system will be needed for asylum seekers and visa applications whether or not the ID cards scheme is cancelled.

Likewise, CSC, under its £385m 10-year contract, is building a new IT infrastructure for ID cards and passports. It will be retained whether ID cards are cancelled or not.

So if the Tories cancel ID cards, the scheme can be re-instated without too much trouble.

The second thing, is that it is going to be increasingly difficult to separate the costs of producing passports and ID cards. The Treasury requires the Identity and Passport Service to be self-funding, which means that it can charge the public whatever it takes to ensure there are no losses. ID cards and passports share almost the same IT infrastructure.

So as more money is spent on ID cards the cost must be recovered from fees. It is politically unacceptable to charge too much for ID cards; few people would want to buy them. But the market for new and replacement passports is big and captive. There is also the potential to charge the public to have changes of addresses made on the new systems.

The official explanation for passport fee increases will always be that they are needed to cover the cost of more security to get in line with US and European requirements.

But that argument goes only so far. The internal cost of producing each passport - called the unit cost - was about £15 in 1999 - and this was expected to fall with the advent of new technology. Indeed, there was talk in 1999 that the Treasury would allow the Passport Service, on the basis of a £15 unit cost, to make a profit.

Since then there have been many fee increases, leaving one to wonder whether the cost of ID cards is being subsidised by passport fee increases.

The Identity and Passport Service denies that passport fees have been increased to cover the cost of ID cards, but its spokesman conceded that passport fees will in future cover the cost of the combined ID cards/passport infrastructure. That makes it highly possible that there will be, one day not too soon, a £200 passport fee. Already the cost to the public of a passport has risen from £28 in 1999 to between £72 and £114 today.

Computer Weekly has asked the Home Office for details of the unit cost under the Freedom of Information Act, which the Home Office has rejected. It is a sensitive issue because internal papers on the unit costs might show how the IPS could produce an excess of income from its charges for passports to cover the cost of the ID cards scheme.

A spokesman for the Home Office told Computer Weekly, "Identity and Passport Service passport production is self-funding and reliant on the fee income it generates. Rises in recent years have paid for security improvements to the passport, including interviews for first-time adult applications and biometric-enabled passports. Passport fees do not currently subsidise the programme to introduce ID cards.

"Passport fees are reviewed annually with HM Treasury and are set to ensure that IPS breaks even and recovers the total cost of producing passports.

"In the long-term it is our intention to continue to break even by recovering the operational costs of the National Identity Scheme from the fees generated by the issuing of ID cards and passports."

More on ID cards from Tony Collins' IT Projects blog

Gateway reviews on ID Cards - one impressive, one not >>

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