Home Office cuts estimated cost of ID-cards scheme

The home secretary has said the three main contracts establishing the National Identity Scheme will cost between £800m and £1.05bn combined, down from an earlier estimate of £1.5bn.

Jacqui Smith said the cost of the application and enrolment contract is now estimated at between £350m and £450m, while the National Biometric Identity Service will cost between £200m and £250m, and the figure for the design and production of the national ID card will be between £250m and £350m.

In May, Bill Crothers, executive director of the Identity and Passport Service (IPS), said that the three main deals would each cost around £500m.

Smith provided the figures in response to a question from Liberal Democrats justice spokesperson Chris Huhne. The costs are a "current view" provided to bidders by the IPS, but Smith emphasised that negotiations are continuing.

"They are subject to further refinement and discussion throughout the procurement process, so should be treated as indicative only," she said.

In reply to another question from Huhne on the cost of cancelling the contracts, Smith said that, if they were cancelled by the government — for a reason besides poor performance — with 12 to 18 months' notice given, the supplier would be able to charge for costs to the point of termination, and for ending the work.

"Where less notice is given, in addition to costs incurred, some anticipated profit lost as a result of the decision to terminate early may be claimed," she said, adding that the dependence on timing and work incurred to date means no cancellation value can be provided.

The Conservatives and Liberal Democrats have said they want to cancel the ID-card scheme, if elected to government.

Smith also told Huhne that the Home Office spent £41.1m on its ID-cards programme in 2003-05. In the last two financial years, costs were subsumed within IPS spending on future development projects, along with work on biometric passports: this amounted to £30.9m in 2006-07 and £61.7m in 2007-08.

In a separate parliamentary written answer on Thursday, Home Office minister Meg Hillier said that, although the scheme will involve 10 fingerprints being taken from everyone joining, only two prints are likely to be stored on the card itself.

As the Home Office has recently revealed, most biometric checks at borders will only use the data on the card, rather than that held on the National Identity Register.