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Stewart Hosie: The figure of £200 million represents the non-passport element of the scheme, but is the Minister convinced that that will be the total required to tackle insurance fraud, payments fraud, banking and building society fraud and finance and leasing fraud? It seems a rather small sum if it is intended to tackle all £1.7 billion fraud identified by the Government.
Andy Burnham: I am making the point that that figure relates to the budget for issuing biometric passports and identity cards to the public. The perspective that needs to be taken is that ID cards do not account for the whole of that amount. The hon. Gentleman makes my point partly for me: £1.7 billion is the annual cost to the UK of identity fraud, so the benefits case begins to stack up for the scheme.
I will summarise the additional costs over and above those of biometric passports that the scheme would place on the Government, as shown in the regulatory impact assessment. First, the costs include covering the whole resident population aged 16-plus, rather than just the 80 per cent. of British citizens who will have passports by 2008. Secondly, they include recording, matching and storing three types of biometric informationface, fingerprint and irisrather than one, which is the current standard required for the first generation of biometric passports. Thirdly, they include providing an online identity verification service that can validate ID cards and other identity inquiries for user organisations in the public and private sectors. That is what we are talking about this evening, and it is important to apply that perspective to the scale of the costs.
Lynne Jones: The current passport application support system is a 10-year private finance initiative and, as my hon. Friend said, that must be part of the £397 million for the Passport Service's running costs. Is the £584 million for both capital and revenue costs? Will it be a similar sort of PFI scheme?
Andy Burnham: My hon. Friend asks a fair question. The £584 million relates to the cost in its totality of issuing biometric passports and ID cards and, crucially, of enrolling people. That is where the bulk of the costs of the process would be. It would be an annual cost that the expanded Passport Service would need. She is right to suggest that it is possible that payment for some of the set-up costs of the scheme could be delayed into the running costs of the scheme. That would be a way of financing the scheme that would require the private sector to fund the scheme up front, and the costs would be recovered over a longer period. Those would, quite properly, be issues for the procurement process. Obviously, we will seek to secure the best deal for the taxpayer when we make the decision.
Is my hon. Friend saying that if it is not a PFI scheme, which would have an annual running cost, there will be an additional capital cost to begin with
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that is "revenuised" into the £584 million? What proportion of the £584 million is for the operation of the verification scheme?
Andy Burnham: I will be honest with my hon. Friend. Some of these issues have not been decided yet. They will be decided when the procurement phase gets going properly. It is true that there are up-front set-up costs at the start of the scheme that fall to the Home Office. As I have explained, we have decided not to make those costs available at the moment because that would prejudice our ability in the middle of the procurement process. However, I can tell my hon. Friend that those costs will be much less than the annual running costs of the scheme.
We have said that the costs should not be fully divulged as that will limit our ability to secure value in the market, but I can say that the annual set-up costs will be much less than the annual running costs. Our published running costs for issuing identity cards do not include future costs that may or may not be incurred by other Government Departments that will use identity cards as a way of improving their services to the public.
As I was saying, the costs do not include the costs incurred by other Government Departments as a way of improving their services to the public any more than they include the costs to private sector companies, such as banks or building societies, that decide in the future to use identity cards as a way of verifying people's identity. Indeed, it would be odd if they did.
Decisions on any future investmentfor example, in IT systems that might be required to make the best use of identity cardswill be made in due course, and not now, by the organisation concerned on the basis of a cost-benefit analysis.
Public services will use the scheme if there is a net benefit to them. The work that we have undertaken so far shows that there would be a net benefit for many public and private sector organisations. There may be many net benefits to a wide range of organisations and the Government have already published a high-level summary of likely future benefits in the "Benefits Overview" paper, a copy of which is available in the Library of the House. It suggests, we believe, conservatively that the quantified financial benefits of the identity cards scheme will range from £650 million to £1.1 billion per year once the scheme is rolled out fully.
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Our business case is therefore sound and, as I explained, it has been reviewed by the Office of Government Commerce gateway reviews.
Martin Linton: My hon. Friend mentioned the benefits review. The figure of £1.1 billion is for the expected benefits of the ID scheme and it includes £570 million savings from the prevention and reduction of ID fraud. Since he published those figures, he has revised his estimate of the total amount of ID fraud from £1.3 billion to £1.7 billion. Has he, or his officials, done any work to estimate whether he should therefore revise the figure for the benefits expected from the scheme?
Andy Burnham: That is a good point. Of course, we keep the benefits case under review and it changes as the scheme develops and as different organisations see how it might benefit them. My hon. Friend is absolutely right to suggest that the figure is a conservative estimate of the benefits that the scheme may bring. In fact, once the scheme is comprehensive, the benefits may be far greater.
Mr. Todd: My hon. Friend is being very generous. He has referred to the potential savings, but one of the puzzles in the presentation of benefits is that, although there is reference to potential private sector participation in the projectthat will be critical to delivering the savingsno companies have come forward to suggest their enthusiasm for the project or their willing participation in it. I have puzzled over that conundrum; has he?
Andy Burnham: We have been in a different phase of the scheme. The debate has been happening in the House and in another place and, in those circumstances, one might expect that people would not want to intrude on the debate. I suspect that, now the scheme has received a pretty strong endorsement from the House, there will be considerable interest from the private sector in delivering it. I would be surprised if that were not to be the case. I am confident that the capability exists within the market to deliver a high-quality scheme.
My hon. Friend has not addressed many of his remarks to the Lords amendments and the reasons for preferring the amendment tabled by my right hon. Friend the Member for Holborn and St. Pancras (Frank Dobson). I note that there is a difference. The Lords amendment talks about costs and benefits whereas that of my right hon. Friend talks about costs. I suspect that taking references to benefits out of the report would not shorten it by much but, more importantly, my right hon. Friend's amendment takes out references to all Government Departments. When costs are published over the next period, it is important that we do not see just what is happening in the Home Office but what is happening in other Government Departments as well. So far, there has been no information whatever on that.
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