A Conservative government would have to compensate suppliers of the National Identity Scheme for lost profits as well as costs if it cancelled the project.
"To guarantee these payments knowing that a future Conservative government has already said it will scrap ID cards is improper and quite extraordinary," shadow home secretary David Davis told the Financial Times on 24 May, 2008, citing the convention that one Parliament may not bind a subsequent one.
Davis wrote to the potential suppliers of the scheme in February, giving formal notice that the Tories would cancel the scheme if elected.
The Home Office told GC News that the contracts include break clauses, which if exercised would mean the government paying costs and an element of lost profits. "It's based on how far the contract has got and various other factors," a spokesperson said, adding that these were standard contractual arrangements following Office of Government Commerce guidelines.
The spokesperson added that "nothing has been created bespoke" to deal with the Conservatives' intentions, and that the figures involved in cancellation are commercially confidential.
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The Identity and Passport Service outlined the contracts to build the scheme, which is dominated by three major contracts each worth around £500m, on 23 May. Only the deal to produce identity cards, due to be announced in summer 2009, would be at risk of complete cancellation in the event of the Conservatives gaining power.
The other two, for passport applications and for a biometric database, both due to be awarded early next year, would be reduced in volume and scope if the scheme was scrapped, although both would be required to produce passports containing applicants' fingerprints. These reductions would also trigger compensation payments for vendors, although smaller than those for total cancellation of a contract.
Talkback
The Conservative leader must make it very clear that he will introduce retrospective legislation to enable such contracts entered into have a non compensatory cancellation retrospectively added. While actual cost incurred must be duly considered for repayment, the compensation for "loss of profits" and any termination payments must be nullified.
This must be made very clear to all companies that are involved in government contracts in order that they cannot plead ignorance.
And, as a reward for their actions, all senior civil servants involved in such forward committing contracts should also be made aware their involvement would be under scrutiny.
As stated, the Tories have notified the participants that they will cancel the scheme. They have done this up front before any agreements have been entered into. Once elected by the UK population assuming we still have a UK and population by then, they will be carrying out the will of the people by implementing a decision already made before contracts are signed.
This should be taken into account at the negotiation stage with standard clauses removed and the labour ministers forced into providing personal guarantees if they are so sure that the scheme is best for the country and they will also be in a position to continue following the next election, also bearing in mind that the Tories have notified their intent to cancel.
They could always call a snap election to ensure they are in place for the contract duration which would alleviate them of this worry.
The precedent has already been set with government legislation making local councilors personally responsible for any overspend due to their decisions.
It was only pointed out to me today that most of this government seem to have stopped their Art education at GCSE or as we used to call it O level standard, hence the collective noun I keep hearing them referred to by - "Art'O's"