Government admits ID cards have no business case

idcard2.jpgBy Ian Grant | The government has, for the first time, admitted publicly that it cannot quantify in financial terms the expected benefits from its controversial £5.4bn National Identity Scheme (NIS).James Hall, chief executive of the Identity & Passport Service, said, “Many of these benefits [of the NIS] may be hard to quantify and potentially harder to articulate in financial terms within the scheme’s business case.”

Hall’s statement comes in the same month the IPS is due to announce initial contracts for the scheme’s framework procurement programme. The IPS estimated the technology costs to be 16% of total costs, about £758m. It said business and programme management costs would be 18% of costs (£853m), while the bulk of costs, 40% or £1.9bn, will go to “product manufacture and secure delivery”.

Hall’s statement was in response to an annual report from the scheme’s external watchdog, the Independent Scheme Assurance Panel (ISAP), published this week.

Hall went on to say, “The objectives and approach set out in our strategy will continue to lead the scheme towards delivery of a broad-based robust set of benefits.” Among the first to benefit would be job-seekers and employers who would find pre-employment checks easier, and young people, because the NIS would make it easier to get started in independent life, he said.

An updated assessment of the costs of the scheme published this week by the IPS reported an expected drop in the 10-year costs of registering UK and Northern Ireland nationals from £5.43bn to £4.74bn. However, the cost of supplying foreign nationals with ID cards would rise to £311m, bringing total costs to more than £5bn.

But anti-ID card lobbyist Phil Booth said the drop is attributable to “creative accounting in order to match the announcement by (Home Secretary) Jacqui Smith on 6 March”.

The IPS said the savings will accrue from rolling out the bulk of ID cards later in the project life-cycle, from a cheaper redevelopment of the existing passport application system, and from getting the private sector to collect fingerprint and facial images of card holders for the IPS. But it also said that holding back the bulk roll-out to 2012 would raise costs overall.

Computer Weekly has maintained from the scheme’s inception that the government has not made a convincing business case. It called then for the government to publish its Gateway Reviews that assessed the scheme’s viability. The government fought in court to keep these details secret, even in the face of recommendations by the Information Tribunal to publish them.

Toby Stevens, chief executive of the Enterprise Privacy Group (EPG), said the country had waited five years to see if the NIS would contribute to meeting public and private sector ID management needs. “If the government were to shelve or abandon it now, a host of competing initiatives would rush in. [Government] therefore [has] little choice but to proceed with the programme in one form or another, although there’s plenty of scope to modify how they deliver it,” Stevens said.

An IPS spokesperson said, “The Identity and Passport Service has made a robust business case for the National Identity Scheme and we remain committed to its delivery as outlined by the home secretary in March.

“The business case for the scheme has been produced in accordance with HM Treasury guidelines and includes assessment all of the relevant costs and benefits of the scheme.

“This business case has been subject to thorough review within the Home Office and by HM Treasury. It includes financial quantification of many of the currently dentified benefits of the scheme.

“It is clear that in addition to the currently quantified benefits there are many benefits that have been identified but have not been quantified. This is, in part, because some benefits are not easily quantified. For example increased identity assurance making terrorist acts harder to perpetrate is a benefit of introducing the NIS however it is not easy to put a value on the benefit to the UK economy.”

Stevens at the EPG said, “The early justifications for the ID cards scheme were driven by state-level needs such as preventing terrorism, stopping illegal working and reducing fraud. Unfortunately, it is very difficult to prove a business case in financial terms, and to their credit IPS are admitting this rather than trying to push unproven figures on us.”

Stevens said HM Treasury has made it clear that the scheme must be revenue-neutral in its delivery. “James Crosby’s report provides hope for such a justification, so long as the government is open to incorporating commercial needs in the scheme: delivery of clear commercial benefits for authentication, verification and entitlement services will create a charging mechanism for IPS to recover its costs, and even to reduce the delivery costs in the first place,” he said.

Stevens said if the government were to shelve or abandon the scheme now, a host of competing initiatives would rush in to fill that space created by the past five years of waiting to see if the NIS would contribute to meeting public and private sector ID management needs.