| Previous Section | Index | Home Page |
Mr. Newmark: Does my hon. and learned Friend agree with the hon. Member for Birmingham, Selly Oak (Lynne Jones), who made some excellent points? Even if we go with the Government's assumption of £540 million, the key point is that KPMG did not stand behind that figure, but—to use its words and those of the hon. Lady—it did stand behind the costing methodology and the key assumptions. KPMG recommended improvements, such as a
"sensitivity analysis, revisiting the process for estimating contingency and revisiting some cost assumptions."
The point about a sensitivity analysis is that there is some doubt about the cost figure of £540 million that the Government have come up with and that KPMG has decided that further analysis is needed.
Mr. Garnier: My hon. Friend, who comes to the matter with some years' experience in the financial services industry, is entirely right, as was the hon. Member for Birmingham, Selly Oak (Lynne Jones). By not giving a candid explanation, the Government are falling down in their obligations to the House and to the public. I suspect that the United States Congress got more candour out of the Pentagon on the projected costs of the stealth bomber than we are getting out of the Government on the IT project that we are discussing.
Mr. Todd:
May I reiterate the point that there were false expectations of the KPMG report? To be frank, there is no
13 Feb 2006 : Column 1217
way in which there can be any certainty at this stage about the cost of the project. KPMG produced a fancy consultants' report—I used to commission such things—that says, "On the one hand, this; on the other hand, that; and here's the outcome", but we cannot be anything but completely uncertain about the costs of the project. I hope that that helps the hon. and learned Gentleman.
Mr. Garnier: It merely confirms that a Government who do not know what they are doing ask a distinguished firm of accountants to produce a report that answers no useful questions and we are no further on. No doubt the public were required to spend several hundreds of thousands of pounds on fees to obtain that rather unhelpful answer. In any event, the end picture is not a happy one for the Government, and it is certainly not a happy one for the taxpayers of this country.
May I put to the Minister a point with which he did not seem to want to get to grips? The letter that he wrote on 7 February was sent only to his own colleagues and is written on House of Commons writing paper. It is interesting that it could not go out on Home Office paper—first, because I do not imagine that the Home Office civil servants would have put their name to such a letter or allowed it to go out from their Department; and secondly, because it contains a statement that is, to put it at its lowest, highly disputable and that illustrates the Government's conduct of this debate. The Minister says in the letter to his hon. Friends:
"The LSE also allocated an inflated £1 billion marketing budget and assumed a much higher loss/theft rate than is the case for existing documents."
The Minister either knows, or has failed to pick up the fact, that on at least three occasions the authors of the LSE report have made it clear to the Government that they made no such assumption and that they included no such figure in their report. If we were outside Parliament and if, for example, we were considering the concept of express malice in a defamation action, that letter would be evidence of it. As we are here, it does not apply.
Mr. Garnier: The Minister wishes to intervene. I shall accept his intervention.
Andy Burnham: I am very grateful to the hon. and learned Gentleman for accepting my intervention. To be clear about this, he will know that page 3 of the LSE report states that its costs were based on a Kable spreadsheet, which allocates £1 billion to marketing. If it wishes to correct that and say that it is not the case, I would be happy to accept that. I made that point at a meeting with LSE representatives present. On that basis, and on a number of other points, they said that they would be prepared to revise their figures downwards. That is the basis on which we make our point, and I hope that he now has clarification of that.
Mr. Garnier: Let me help the Minister. The claim that he reiterates for the fourth or fifth time was first made in the Home Office response to the LSE alternative blueprint issued in July 2005, which stated that the LSE
In the LSE reply, issued on 5 August 2005, it noted:
"The LSE report did not set out an estimate for marketing costs or indeed for any line item of that nature."
The LSE's status report issued in January 2006 states that it had made no such estimates and even suggested in a footnote a possible explanation for the confusion. The Minister repeats the error again and again.
Andy Burnham: The hon. and learned Gentleman's colleagues have repeated in the media and in the House the original assumptions on which the report was based by giving the figure of £300 and saying that the scheme could cost up to £19 billion. Those were the original estimates that were used to justify the headlines. It is entirely appropriate for us to point out where we believe those costs to be inflated.
Mr. Garnier: The debate is becoming a little sterile and circular. Where the basis of a belief is confounded, it is normally best to start believing something else.
Lynne Jones: The Minister said that the LSE revised its costs downwards because of the durability of the card, but that is not the case. It has maintained its arguments on durability, and it had a range of durability estimates. Where it has revised its costs down is in relation to the interviewing process. It originally assumed that everyone would be interviewed to get verification of their biographical details. The Government explained that that was not going to be the case. As a result, the LSE revised those costs, which are a small element of the scheme, downwards.
Mr. Garnier: If I have not reset the Minister's mind, I sincerely hope that the hon. Lady has done so, but I am not at all confident that either of us will have succeeded.
I support Lords amendment No. 70 and want to address amendment (a) in lieu, which the Government intend to support, tabled by the right hon. Member for Holborn and St. Pancras. The hon. Member for Walthamstow (Mr. Gerrard) made the eminently sensible point, which came straight out of Lords amendment No. 70, that it requires a detailed estimate not just of the revenue and capital costs, but of the expected benefits. He is right to say that a clause without proposed subsection (2)(b) would not be much shorter than one with it. However, it seems that the policy behind Lords amendment No. 70 is much more rigorous and candid, and it would produce a much more sensible and open understanding of the Government's financial estimates and expectations, than the amendment drafted by the right hon. Gentleman. There is nothing in Lords amendment No. 70 of which the Government should have any fear. Indeed, they have half sold the pass, in one sense, by agreeing to support the amendment.
The Government say that the annual running costs are broadly £584 million. Multiply that by 10 and we get the £5.84 billion that people have talked about. For one year, starting in late 2008, the figure would be £584 million. The LSE report, which came out last June, put the figures over a 10 year period in a range of £10.6 billion to £19.2 billion. If the Home Office's annual figure of £584 million is representative of costs
13 Feb 2006 : Column 1219
over 10 years, we get a total of £5.8 billion. The Government say that the fee will be £93 for a passport and £30 for an identity card, and they imply that the fees are driven from the £584 million cost estimate.
So far so good, but if the LSE report is right, the fee for a passport could be between £170 and more than £300, and the cost of an ID card could rise to more than £100. As I understand it, the Government have refused—they may have changed their mind today—to cap fees. The implication is that if costs rise, so too will fees. There is plenty of research to show that the acceptability of the ID scheme declines as its costs increase. The opinion polls started off by showing that people were greatly enthusiastic about the scheme, but that support steadily declined as the public came to realise that not only is it not going to assist in the several ways that the Government say it will, but that it will be increasingly expensive.
The Home Office has produced some analysis in an attempted rebuttal of the LSE's figures, but the lines of attack have been about a few specific assumptions. There has not been an open and detailed debate between the LSE and the Home Office. That is a pity, to say the least. I understand that last summer the LSE found some areas on which it had overestimated costs, but also some areas in which it had underestimated costs. In the latest report, which it issued in the middle of January this year, it stands by its original estimates.
Subject to the problem that the Home Office has in marshalling accounts of any sort, it cannot be beyond it to produce a report that contains a detailed estimate of the revenue and capital costs arising from the Bill, and it cannot be beyond it to produce a statement in the format of resource accounts, a statement of cash expenditure, and a statement setting out the material assumptions that were made in preparing the cost estimate. Nor can it be beyond the Home Office to provide the necessary subsidiary detail of the cost estimate, as set out in proposed subsection (4)(a), which states:
which is when the original Bill was published,
and in paragraph (b), which states:
"the costs that are estimated to be incurred during a period of 10 years after the date to which the estimate is prepared"
or such longer period as the Secretary of State may determine.
All of those are things that accountants have to do all the time. They are all projects which, as the hon. Member for South Derbyshire said, are commissioned by business men and women in far smaller operations than the Home Office and, probably, in far bigger operations. It is not an unusual accounting exercise, and it is extraordinary that the Government are reluctant to undertake it.
The Government say that there is a better idea in amendment (a), which the right hon. Member for Holborn and St. Pancras has tabled in lieu of the Lords
13 Feb 2006 : Column 1220
amendments. I shall not cite the entire amendment save subsection (4), which is where the cogency of his argument falls to pieces:
"If it appears to the Secretary of State that it would be prejudicial to securing the best value from the use of public money to publish any matter by including it in his next report under this section, he may exclude that matter from that report."
The amendment leads us down a path of wonderful expectation—at last, a new Labour Government are going to be candid about their extraordinary project on identity cards and the national identity register—only to hand over to the Secretary of State the subjective ability to pull the report if he does not find it convenient. I urge the House not to be mollycoddled into thinking that the preceding provisions will ever be delivered if subsection (4) remains part of the right hon. Gentleman's amendment.
8.30 pm
Even if the subject is dull and uninteresting, this is an important area of debate. The supply of Government money from public funds—from our constituents' pockets—should be controlled by the House, and the Government should make clear to the House what they intend to do with our constituents' money. They have never provided us with sensible estimates of the capital or revenue costs, still less the benefits, as the hon. Member for Walthamstow implied. Now that the Government are on the retreat on compulsion under clauses 6 and 7, it is time that they went a little further and condescended to do justice not only to the House but to the wider public by providing them with access to their thinking and their methodology on those huge costs. Whether they are £5.8 billion or £20 billion over 10 years, the principle remains the same. We are entitled to know—we have a duty to know—and the Government have an obligation to disgorge that information.
| Next Section | Index | Home Page |