Verify’s £40m bill for losing Experian

The Government Digital Service (GDS) insists that its plans for Verify “remain on track” despite the withdrawal of three of the five remaining identity providers (IDPs) supporting the increasingly troubled programme.

GDS faces its March 2020 deadline to hand over the government’s flagship digital identity scheme to the private sector with only two IDPs still involved – and they are in effect only one IDP and a reseller.

The Post Office, which operates on the Digidentity platform, brings much more to the game than simply fronting the Digidentity technology, with its ability to potentially offer a face-to-face element to identity verification through its national branch network and its trusted consumer brand.

But it’s the loss of Experian that will damage Verify the most, and bring a huge additional financial burden to a project that is expected to have already cost £175m by the end of next March.

Do not underestimate the significance of Experian’s withdrawal.

The company has been involved with Verify from the start, one of its strongest supporters. Its director of identity and fraud, Nick Mothershaw, is chair of OIX, the identity standards body that has been largely funded by GDS to establish Verify as an international standard. Experian is serious about digital identity – but is no longer serious about Verify.

We cannot find out why Experian – or the other departing IDPs, Barclays and Secure Identity – decided to ditch Verify, because all the IDPs are gagged by GDS from talking about their contractual arrangements.

But we can work out what losing Experian will cost. Bear with me, there’s maths involved.

According to the National Audit Office (NAO), GDS currently pays to the relevant IDP about £20 for every new Verify account that is set up. These charges were renegotiated as part of the new IDP contracts agreed in October 2018 that last until March 2020, in the hope of reducing sign-up costs by introducing better volume discounts.

The NAO said that for Verify to become cost-neutral by April 2020 – the stated government goal – the cost of verifying identities needs to fall by 95%, which suggests the target is £1 per new user. It’s clear from the NAO’s March report that Verify is nowhere near that.

According to a McKinsey report produced for GDS in October 2017, Experian was the biggest IDP at that time, with 44% of all users. Post Office had 42% and Digidentity 9%. The other IDPs – all of which have now withdrawn – had only about 5-6% between them.

If those percentages are similar today, Experian would be responsible for over 2.1 million of the 4.8 million people signed up to use Verify. The company will continue to service those existing users for 12 months after March 2020, but will not take on new registrations.

This means that 2.1 million Experian account holders will have to re-register with either Post Office or Digidentity to continue accessing online government services after March 2021.

And at £20 per user, that means 2.1 million additional £20 charges – more than £40m in total – that will have to be paid by taxpayers on top of what Verify has already cost.

That’s a nice windfall for the Post Office – not to mention Digidentity, which will get a cut from every Post Office account registration too and have an effective monopoly of Verify users.

There’s a whole other issue to discuss – that a Dutch company will exclusively own the database of all the UK’s online public service users – but I digress.

Even if volume discounts kick in somewhere along the way, Experian’s withdrawal from Verify will mean tens of millions in additional costs. Considering that HM Treasury has already put a block on further spending for Verify, will government be willing to pay that bill?

And who knows, perhaps the tens of millions the Post Office stands to make from taking on all those homeless Verify users might even help to pay its ballooning costs in the High Court case examining its controversial Horizon branch accounting system.

Meanwhile, here’s the official GDS line: “Digital identity remains a key priority for government and we are currently undertaking a call for evidence seeking views on how to support the development of digital identities fit for the UK’s growing digital economy. We are working to create a flourishing, private-sector led marketplace for digital identity and our plans to do so remain on track,” said a spokesperson.

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