The Minister for Borders and Immigration (Mr. Phil Woolas): I beg to move,

The Chairman: With this it will be convenient to consider the draft Identity Cards Act 2006 (Information and Code of Practice on Penalties) Order 2009 and the draft Identity Cards Act 2006 (Provision of Information without Consent) Regulations 2009.

Mr. Woolas: Thank you, Mr. Streeter. It is a pleasure to be here this afternoon under your chairmanship. I shall attempt to make sure that the business of the Committee is dealt with efficiently. It is, of course, my duty to read into the record the Government’s proposals in order to avoid doubt and for the benefit of potential legal action, should there be any—not that I expect any.

For the benefit of Members, we are discussing three statutory instruments plus the explanatory memorandum. I would also draw the Committee’s attention to the draft code of practice on civil penalties, which is also pertinent to this debate.

The statutory instruments set out some of the detail of the arrangements that are needed for the introduction of identity cards as part of the national identity service. The programme we are embarking on will provide an important service to the public. As we are discussing three separate statutory instruments this afternoon, I hope that the Committee will bear with me if I take a little time to explain their purpose and to draw attention to the changes announced yesterday by my right hon. Friend the Home Secretary in his written statement to the House.

We have laid before the House a package of six separate affirmative statutory instruments, three of which we are discussing this afternoon. The Home Secretary made it clear yesterday that holding an identity card should be as much a personal choice for British citizens as it is now to obtain a passport. Identity cards will help to deliver enhanced security in the airside pass-issuing process at airports by making it easier and more certain to verify an individual’s identity. In consultation with airport operators, we will be encouraging anyone applying for an airside pass to also obtain an identity card. However, we have listened to what the trade unions, the airline operators and others in the aviation sector have had to say about the plans and as a result we will now seek to achieve our aims by inviting applications to be made on a voluntary basis. The Government will therefore be withdrawing the sixth of these statutory instruments, the Identity Cards Act 2006 (Designation) Order 2009, which was laid before Parliament on 6 May this year. That would have made it a requirement for anyone applying for a criminal conviction certificate as part of the process for obtaining an airside pass to access the restricted area at a specified airport also to obtain an identity card.

James Brokenshire (Hornchurch) (Con): I thank the Minister for this introduction and, obviously, the reversal in approach and policy that has now been taken in relation to identity cards. I wonder whether the Minister could confirm what level of take-up of identity cards he is expecting from airside workers now that it is on a voluntary basis.

Mr. Woolas: I shall be coming to that point later on, but I suspect that the sensible members of the GMB union, Unite and others will wish to take advantage of this service. I shall go on to discuss the two airports that will be involved in this process: Manchester airport—the finest airport on Planet Earth—and City of London airport, one of the finest airports in the world. I will come back to the hon. Gentleman’s specific point, if I may, later on.

As I was saying, since November 2008 we have been issuing identity cards to foreign nationals in the form of biometric immigration documents issued under the UK Borders Act 2007. We are now looking at how to speed up the roll-out of these cards to foreign nationals, including to foreign national airside workers. We need these statutory instruments to be approved and put in place before the first identity cards are introduced for British citizens and European economic area nationals in the autumn of this year.

The national identity service is a major undertaking, which will eventually provide us all with a secure and reliable means of proving identity whenever we wish to do so. Cards in a credit card-sized format, at an initial fee of £30, will provide a much more convenient proof of identity than existing identity documents. There will be significant benefits for individuals in holding an identity card which will become the most convenient, secure and affordable way of asserting identity in everyday life. The cards will also be valid for travel throughout Europe, in place of a British passport.

Later this year through a phased commencement of the provisions of the Act, we will start to issue voluntary ID cards to airside workers at Manchester and London City airports, where identifying people to the best possible standard—who are applying to work in a critical area of employment with access to the airport’s secure restricted zone—is of vital importance. The cards will also make life more convenient for ordinary people. We will be introducing the cards on an entirely voluntary basis to people resident in Greater Manchester, also starting this autumn. This will help make life easier for ordinary people, who will be able to obtain a fingerprint biometric identity card valid for travel in Europe at the cost of £30, compared with the current standard passport fee of £72. Introducing the cards will involve the recording of fingerprint as well as facial image biometrics. These will link the holder reliably to their identity. Information for everyone issued with an ID card will then be held securely on the national identity register.

Of course, we intend to phase in the cards to ensure we can make improvements from the early stages of the programme and also to make sure we reduce the risk from a “big bang” implementation, if I may put it that way. This will include the extension of identity card enrolment to other Identity and Passport Service offices in north-west England. We are also looking at options which could allow elderly people—aged 75 and over—to receive an identity card free of charge. I am especially grateful to my hon. Friend the Member for Bradford, West for his suggestions in this area. From 2012 we will move on to issue identity cards in high volumes, so that everyone aged 16 and over applying for a passport should be offered the choice of being issued with a separate biometric identity card or a biometric passport, or both. We currently issue over 5 million passports each year.

I shall now address the specifics of the SIs before us, the first of which is the draft Identity Cards Act 2006 (Fees) Regulations 2009. They outline the fees and fee exemptions to be introduced. The regulations establish that the total fee when applying for the issue of a first, or replacement ID card will be £30 and not, as some would have us believe, as much as £300. The regulations deliver on the Government’s commitment made during the passage of the Identity Cards Act 2006 that we intended the initial fee for a stand-alone ID card to be no more than £30.

James Brokenshire: On the £30 fee, can the Minister confirm that it actually represents the cost, or what the level of discount might be as to the cost of issuing and processing an ID card? In other words, is this the true value of issuing an ID card or is there a discount that has been applied in arriving at that charge?

Mr. Woolas: That depends on how many are issued. It is called marginal cost. It is not possible to determine the cost. The first one, if you base it on the marginal cost, is very expensive indeed. The millionth is very cheap. The average across that depends on how many are issued. The policy is based on a cost recovery.

James Brokenshire: I assume therefore that the Minister in his costings will have come up with what might be described in business terms as a break-even figure. Could he give the Committee any indication of what that number might be?

Mr. Woolas: The issue of costs is complex and there has been a lot written about it, not much of it accurate. The costs also relate to the passport service, and one must compare the take-up of ID cards for the purposes of European travel with the impact on passports. That is what we are working through. If the hon. Gentleman will bear with me, I will come to that point.

Mr. Graham Stuart (Beverley and Holderness) (Con): The Treasury will have worked out how many cards it expects to be issued—I think that is how government normally works—so there will be an assumption of the cost. The Treasury tends not to issue ranges but to pick a figure, so the Minister must be aware what the cost will be for the expected number that will be issued. It would be quite proper for him to share that with the House.

Mr. Woolas: The hon. Gentleman suggests that the Treasury picks a specific cost figure, but my experience is that it picks a range. If the Committee will bear with me, the answers to those questions will come out. I think I am joined by experience on this matter, and I am also a Treasury Minister because of my customs functions.

The regulations therefore deliver on the Government’s commitment, made during the passage of the 2006 Act, for the initial fee for a stand-alone card to be no more than £30. That compares well with the cost of the passport, which is currently £72. Our commitment is that the £30 fee will apply not only in 2009, but will remain at that level for 2010.

Tom Brake (Carshalton and Wallington) (LD): I do hope we get an answer to the question of how much the taxpayer will be subsidising ID cards by. Is the Minister considering introducing any incentives for people to take up ID cards, such as a buy-one-get-one free scheme?

Mr. Woolas: That is the single transferable card, isn’t it?

I shall pause to help the Committee with the figures. Much has been written on the matter, most recently in correspondence with the Conservative shadow Home Secretary, the hon. Member for Epsom and Ewell (Chris Grayling). When we published the proposals and the secondary legislation, we published the impact assessment. The latter made it clear that once the national identity service is fully rolled out—that will take more than 30 years—there will be an estimated net economic benefit of some £6 billion, because there are savings in other areas. The accusation that the identity card costs money is often made, but in fact there is a net benefit because of the roll-over.

The current card production contract has capacity for at least a quarter of a million cards per year in its first phase. The £4.945 billion figure in the May 2009 cost report is the total resource costs of providing passports and identity cards to British and Irish citizens resident in the UK, from April 2009 to April 2019. That figure comprises £245 million of set-up costs—the hon. Member for Hornchurch asked about the marginal costs—and £4.7 billion of operational costs. That is the cost of the passport and the ID card, which are of course part of the same project.

The total cost estimates can also be analysed between those specifically relating to the passport and those specifically relating to the ID card. Those are the common costs. The total common passport and ID card cost is £2.625 million. The passport specific cost is £1,010 million and the ID card specific cost £1,310 million. That is based on the current contract. The fee that we have set is based on the same policy principle as the passport service.

The regulations establish a number of exemptions to the fee. The first relates to identity cards issued to airside workers at the two airports. The introduction of identity cards to critical workers as part of the airside pass checking regime will improve the robustness of existing identity checks, will provide better identity assurance of those working in sensitive locations—including the recording of fingerprint biometrics—and will be used to help improve the current airside pass-issuing system. We have been working closely with the airport authorities at Manchester and London City to maximise the benefits. We will also review and evaluate jointly with them over the first 18 months of the scheme for airside workers at those two airports. That is an important commitment that my right hon. Friend the Home Secretary has made.

As part of the evaluation, we have decided that the fee for an ID card should be waived for anyone who is issued with a card and who needs to hold an airside pass at the two airports. Once the 18-month evaluation period is complete, we will review the waiver again in light of the results of that evaluation. We will then be in a position to take wider decisions on the future level of fees for passports and ID cards.

The second exemption will make provision for a replacement card to be issued free of charge if an applicant has been issued with a card that was faulty by virtue of a defect in the issue, or damaged before issue to the applicant. It seems only fair that that is the case. Of course, we intend all the cards that we issue to be of the highest quality, but it is important to ensure that we do not have to charge for a card if, for any reason, there was a manufacturing fault, not the fault of the individual.

The third and final exemption will address what could be described as a legal technicality. While the applicant will make just one application for their ID card, the Identity Cards Act treats it as two applications, one for registration on the national identity register, and the other for the issue of the ID card. For such applications, the regulations provide that there is a single fee of £30 for the application to be entered in the register, and there is therefore no separate £30 fee for the ID card itself. Hence, the total fee remains at £30. I am grateful for the patience of the Committee in allowing me to read that into the record.