Identity Cards Bill

I shall adopt the modus operandi advocated by my noble friend Lord Barnett and say: I agree with my noble friends Lord Bhattacharyya, Lord Macdonald and Lord Carter of Coles. I prefer the arguments that they propose. I therefore disagree with the noble Lords, Lord Phillips and Lord Crickhowell, and the noble Baroness, Lady Noakes. That is how we would do it in judicial committee. I could then sit down. I thought that would get a great deal of approval from my noble friend Lord Barnett, which is of course my only aim in life. I was intrigued by the exposition of the noble Baroness, Lady Noakes, not least because of her professed scepticism about commercial confidentiality, bearing in mind the role she very recently held at KPMG. I am sure she is familiar with the thrust and the importance of those issues. I listened with some care to her acceptance, and I agree with her that her arguments were somewhat lopsided when it came to benefits. She concentrated on one issue. I understand entirely that she speaks for the Opposition on this, and one has to cast one’s arguments as one can, but I respectfully say to her that such an imbalance means that we are left in a situation where issues expounded on behalf of the Government are the more sound. I want to explain why. In my letter I went through many of those issues, although not all noble Lords may have had the benefit of seeing that letter, so, for the purposes of this argument, I should just outline the main thrusts contained therein. For the record, I make the following clear: the current best estimate of the annual average running costs of issuing identity cards and passports to British citizens is £584 million per annum for the start of the identity card scheme. As I have said previously, on current plans, that is expected to be at the end of 2008, bearing in mind the comments of my noble friends Lord Carter and Lord Bhattacharyya about the developments that will come very rapidly during that period. This cost will absorb all the existing costs of issuing passports through the current United Kingdom passport service, together with the developments that will be needed over the next few years in order to introduce biometric passports. Around 70 per cent of the annual figure of £584 million we have estimated for the issue of biometric passports and identity cards would need to be spent in any event, if we were simply to move towards the issuing of biometric passports incorporating facial image and fingerprint biometrics. We would have to spend that money anyway. To give a sense of the costs of other existing government agencies, the estimate of the United Kingdom Passport Service’s annual revenue and expenditure published in its corporate and business plans is £293 million in 2005–06 and £397 million in 2006–07. As a wider comparison, the total operating expenditure of the Driver and Vehicle Licence Agency for 2004–05 was £470 million. I quote these figures to reassure your Lordships that our published estimates are in the right order. Noble Lords ask how we can be certain that the estimates are produced on a sound basis. That is the thrust of the question that has been asked. As with any major government project, the identity cards programme is subject to regular review. That was made absolutely clear in the comments made by my noble friend Lord Macdonald, who has had intimate knowledge of how rigorous those processes are—and, indeed, how effective. The review teams have had full access to the business case for the identity cards programme. An independent assurance panel has been established to provide a further lane of oversight and offer additional assurance that the programme can deliver the effective implementation of the identity card scheme. We should also not forget the level of scrutiny that has been, and will continue to be, given to this project by our colleagues in HM Treasury, as the noble Lord, Lord Barnett, well remembers from his day. The estimates have to be approved by Parliament by being voted through the supply estimates process, either in the main or in supplementary estimates. It is worth reminding ourselves that this is a matter for the other place. It is the elected House that has the democratic responsibility for approving estimates of government expenditure. In order to provide even further reassurance, we commissioned the accountants KPMG to carry out an independent review of the cost methodology and cost assumptions in the outline business case. I will not repeat what my noble friend Lord Macdonald said, but the noble Baroness will remember well that KPMG is sound in terms of the advice it gives and rigorous in the approaches it takes. The report recognised the high quality that has already been alluded to, and the 15-page extract from the report has been published containing all KPMG’s recommendations. As noble Lords know, this has been placed in the Library. Some have suggested we should be spending the money earmarked for identity cards on something else. That was the point made by the noble Lord, Lord Phillips of Sudbury: more on police, for instance, or on immigration officers. Again, there is an easy answer to that suggestion. We intend that most of the costs of issuing passports and identity cards should be recovered from the fees charged for passports and identity cards. If we were to stop the planned introduction of identity cards, there would be no fees, and so no spare pot of money to spend on another pet project; and I come back to the fact that we will have to spend £397 million anyway on these new passports. Several noble Lords asked why we are not able to provide more details on costings. The reason is simple: it is not because of a desire for unnecessary secrecy, but to protect the taxpayer and the public, who will benefit from the identity card scheme. The noble Lord, Lord Crickhowell, asked about the Supreme Court. The issues that arise from which building to buy for the Supreme Court are different from the issues we now have to deal with, for this reason: the provision of secure facilities and managed IT data centres is a highly competitive market. It is precisely for this reason that we would not want to let the market know how much we are prepared to pay for this service, because we have found in the past that people tend to pitch their bids at how much they think you are able to spend. Therefore, I am afraid it would be quite wrong of us to publish detailed costings now. If, for example, I were to say how much of the £584 million annual running costs is expected to be spent on running the national identity register, or the estimated cost of printing plastic ID cards, companies specialising in this sort of work would tailor their bids, to the estimates we suggest, as I have just indicated. In plain terms, there would be no chance of finding a cheaper option as no one would dream of bidding lower than our forecast costs, even if that could be done. The same argument for commercial confidentiality applies to other estimates: for example, why we cannot publish in advance what we estimate the setup costs to be, or why it would not be appropriate to publish what other departments might expect to spend if they introduced identity card readers. We are working with key departments now to ensure that any amendment to their existing systems, or plans for new ones, is planned well in advance to ensure the benefits of the identity card scheme are realised. I should say to the noble Baroness, Lady Noakes, that the £584 million estimate of annual running costs includes the annual capital costs, in accordance with the Government’s resource accounting procedures, and includes the depreciation of capital costs too. Neither costs of capital nor depreciation costs are themselves capital costs, but they are consequential to incurring capital costs. I am sure the noble Baroness is very familiar with that, although others may be less so. I have dealt with the budget approval process for the ID card scheme. Perhaps it is worth reminding noble Lords that my right honourable friend the Chief Secretary, who, many in the Chamber will recall, was formerly the Minister responsible for ID cards, keeps a close eye on these developments, and will continue to do so. The other issue that was raised was the lack of transparency on costs. We have published the operating cost estimate of £584 million. It was suggested we have not made clear, over a 10 to 15 year period of running the scheme, what the operating costs will be. But we say that is a clear indication of the scale of the costs. We think that we have struck the right balance between indicating the scale of the total cost, including what the costs will be to the individual—we have made that clear, to answer the point made by the noble Lord, Lord Hylton, in relation to the ID card itself being estimated to cost £30—and the need to secure value in a highly competitive market. A number of noble Lords, not least the noble Lord, Lord Phillips, asked about the difference between the LSE’s consultation and ours. With the greatest respect to the LSE consultation, we say that it contains flaws in relation to the way in which the figures were put together. One understands the basis upon which that has been done but the LSE consultation exercise papers did not anywhere state the suppliers it had consulted, but it stated that commercial confidentiality was not necessary. Interestingly, I note that the expert panel of suppliers did not endorse the final LSE findings. Indeed, the high level of participation by suppliers within the Intellect market sounding process, which is designed to protect the confidentiality of both parties in the procurement process, seems to indicate an acknowledgment by suppliers of the need for confidentiality in the process. As many Members of the Committee will know, Intellect is a trade association of IT and communications technology which runs market sounding seminars connected with the ID card scheme. We have received a recent letter in relation to the LSE’s findings from Professor Angel of the LSE, which replies to another letter. That will be published. I hope the Committee will appreciate that there are a number of reasons why we disagree with those findings and prefer our own.