Lords amendment: No. 1, page 1, line 3, at beginning insert

"Subject to section (Commencement: report on costs and benefits),"

The Parliamentary Under-Secretary of State for the Home Department (Andy Burnham):

I beg to move, That the House disagrees with the Lords in the said amendment.

With this we may discuss Lords amendments Nos. 68 to 70, Government motions to disagree thereto and amendment (a) in lieu thereof.

I should say at the beginning that the Government support amendment (a), tabled by my right hon. Friend Frank Dobson and, should the need arise, the Government will move it.

The amendments cover the requirement for openness in relation to the costs of the identity card scheme. That is a legitimate request, with which I shall deal head on. It is of course desirable that as much information as possible about the scheme is placed in the public domain. However, it is true to say that that aim has to be balanced by the need to secure best value in an open procurement process and to adhere to the guidelines for such Government procurement.

We have two legitimate aims, therefore, that pull in opposite directions. We have to seek to resolve that tension and strike a balance. We believe that my right hon. Friend's amendment does just that, with subsection (4) being the crucial element. By contrast, the alternative amendment passed by the other place is heavy-handed and prescriptive and would not allow us to achieve best value in the procurement process. It would of course also be something of a precedent to accept that amendment and we will resist it.

We have made available a full account of the costs of the identity card scheme and we are pleased this evening to account again for the costs and explain them in some detail. We touched on the issue earlier in the debate, and we heard some inaccurate and misleading comment designed to undermine public confidence in the scheme. Some even claimed that a card would cost as much as £300. I would not pay £300 for an identity card, and nor would I expect my constituents to do so. Those costs, I am pleased to say, are completely wrong.

Does the Minister agree that his comments would carry much more weight if No. 10 Downing street had not published the somewhat fatuous report on the £1.7 billion cost of identity fraud that was pulled apart by experts on both sides of the argument?

The hon. Gentleman should be cautious about rubbishing the figures that were placed in the public domain, not by No. 10 Downing street but by the identity fraud steering committee, which works under the auspices of the Home Office but brings together a range of partners from the public and private sectors and is engaged in a serious attempt to tackle a real threat. I am sure that the figure placed in the public domain underestimates the true cost of identity fraud. The hon. Gentleman is wrong to suggest that it was a cynical exercise. The group has been meeting for some time and its methodology and the breakdown of its figures were placed in the Library. I urge the hon. Gentleman to look at the detail if he has not done so already.

Does the Minister recognise the public's concern that the costs of the scheme might be better spent on more police officers on the beat and tighter border controls? There is natural suspicion that the costs of any Government procurement scheme, especially one involving IT, are likely to exceed the amount stated, not fall below it.

I have two points to make in response. First, it is not a case of either/or. The hon. Gentleman will know—the point has been made many times—that this Government have invested significantly in police on the beat and we are proud to have done so. His main point—and a mistake made by the Opposition throughout the debate—is the suggestion that a pot of funds is sitting in the Home Office to pay for the entire scheme and that it can easily be directed to another Home Office priority. The whole premise is that the basis of funding the scheme will be the same as for passports: the costs of running the passport service are predominantly recovered from the fees people pay for their passport. That principle will continue when we introduce a biometric ID card system.

May I draw Members' attention to the Minister's letter of 7 February, which was sent only to Labour Members? In attacking the London School of Economics' report on the costs of the project, he said:

"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."

Was not the Minister aware when he wrote the letter that the Government had received a denial of that point on 5 August 2005 when the LSE responded to the Government response to the LSE report? Surely he was aware that the LSE status report issued in January 2006 stated that it had made no such estimate. Would he care to correct that erroneous allegation, which continues the line of ad hominem attacks that he and his colleagues have made on Simon Davies and his colleagues?

It is entirely legitimate for the Government to point out what we believe were flaws in the LSE report—

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I am answering the hon. and learned Gentleman's point, so perhaps he could give me a moment to do so.

I am pleased that the hon. and learned Gentleman has attached himself to the parliamentary Labour party mailing list—I do not know what his intentions are. He will see from my letter that, based on our scheme, the main cost driver assumed by the LSE is incorrect. The LSE assumed a five-year refresh rate for biometric enrolment, but there is no evidence to support that as the main assumption for the scheme—the major basis on which we have challenged the LSE figures, because they would add enormous costs to the scheme.

I do not want the debate to go over the ground of the LSE report. I will answer some of the points raised in it later.

Can we get a straight admission from the Minister that the allegation in his letter, that the LSE allocated an inflated £1 billion marketing budget, is wrong? If that is true, where does it appear in any of the LSE documents? There is no point in the Minister trying to avoid the point: is it true or not? He has been told by the LSE that it is not true, so why does not he tell the House what he thinks?

I do not intend to debate the detail of the LSE report. If I need to correct anything, I shall write to the hon. and learned Gentleman, but I can say with confidence that the LSE figures have moved around somewhat. In a discussion with me in the House, one of the authors of the report said publicly that they would have to "revise downwards" some of the figures. It has been quite hard to keep track of the some of the LSE figures, but I do not want the debate to be purely about that point.

Will my hon. Friend give way?

I want to make some progress.

My two key points are, first, that the costs of the scheme are both realistic and affordable for the Government and the individual citizen and, secondly, that it is worth making the investment now because Britain does not have a high-standard, comprehensive system of identification. We have published the expected costs of issuing ID cards, and the current best estimate of the annual average running costs of issuing ID cards and passports to British citizens is £584 million, from the start of the ID scheme, including the cost of compiling and running the national identity register.

I am pleased that the figure has been made public, but does my hon. Friend accept that some of us still have concerns about the cost? The biggest problem is the cost of the IT infrastructure. We do not want another Rural Payments Agency problem, where the IT was renegotiated as the scheme was being introduced, so it would be helpful if the Government said that, rather than hiding behind commercial confidentiality, they are prepared to share such information with the House so that we can be sure that the IT consultants do not run off and make a bomb out of the proposal. Does my hon. Friend agree?

It is precisely because we do not want people running off and making a bomb at the expense of the taxpayer that we are proceeding as we are. As I said earlier, we recognise the tension between running, and getting best value from, a procurement process and the need to be open and accountable by putting as much information as possible in the public domain. Those are two conflicting aims, but in the amendment tabled by my right hon. Friend the Member for Holborn and St. Pancras we begin to see a way to resolve them. I agree with my hon. Friend Mr. Drew inasmuch as we want to put information into the public domain as early as possible, but without fettering our ability to secure the cost and keep it down when we go to market. A person would not ordinarily say how much they had to spend before trying to obtain the best price from a supplier, and that principle holds good for this exercise.

It may help my hon. Friend to learn that when I questioned IT professionals who are hoping to take part in the tender, they said that the LSE figures were entirely speculative, bearing in mind the degree of knowledge about the project, but they added that the Government's were too. There is no proper basis for estimating such a project without much greater knowledge about its purpose and its specification. Does my hon. Friend agree?

I note my hon. Friend's point about the LSE figures. On the Government's figures—the main thrust of his question—he will know that we commissioned an independent assessment from KPMG. It looked in detail at the business case for the scheme and concluded, in an independent summary that we placed in the Library, that it was "robust and appropriate". We have not opened up the whole report to Members, so some of the details will have to be taken on trust, but I can assure my hon. Friend that that was KPMG's conclusion and I urge him to refer to the document, which suggests that our figures have some validity.

Will my hon. Friend set out how the Government are approaching the commissioning of the enormous contract for a database that must be pushing at the envelope of IT knowledge? The Government's track record in commissioning computer-based technology is disastrous—as was that of the previous Government—so how are they approaching it differently to ensure that we do not experience, as we have in the past, vast overruns and increases in expenses in a programme that is not fit for purpose?

My hon. Friend is right to note that the project is a major undertaking and will require significant sums, and I shall set out in detail how much we expect to spend. I have two points in response to her question. If we said that because there had been problems in the past we would never embrace new technology and never make significant investment in a project that could bring improvements, that would be the wrong approach. However, I assure her that we are basing the delivery body for the scheme on that of the UK Passport Service. It had problems a few years ago, but they were not related to the introduction of the IT system, and it has since emerged as one of the highest-performing public sector organisations and is extremely well equipped to deliver the scheme cost-effectively.

I am not against identity cards in principle, so I ask this question in kindness, rather than anything else. Does the Minister agree that there has been a pretty long trail of failures by all Governments in implementing IT and that this Government have had a number of such failures, which he perhaps underestimates? Has he conducted an inquiry into those failures? Will he place in the Library the list of lessons that the Government have learned from the failures of the past, so that we can estimate whether they will be able to handle what is, on all accounts, a very large order of magnitude in changed technology?

I hesitate to ask whether the right hon. Gentleman has experience of such matters. Governments of both colours have had negative experience in that regard, but it is precisely because of some of the past procurement problems that the Office of Government Commerce gateway process has been established. As he will know, that involves private sector expertise at every stage of a major project to consider its readiness and whether the associated risks are adequately addressed. The scheme has been through a series of gateway reviews, and I assure him that that directly builds on experience learned from past failures. Some of the people involved in the process have been involved in other major public and private sector procurement. [Interruption.] Obviously, they have clearly learned the lessons and know exactly what they are doing now. The serious point is that the scheme is being closely examined, and we seek to make as much information from the gateway process available as possible. I take on board the right hon. Gentleman's point.

I am not satisfied that the Minister has answered the question asked by Glenda Jackson. The tax credit fiasco suffered from enormous IT overruns, and when the Government tried to fix them the costs went up even further. I wonder whether the Minister still shares the Home Secretary's confidence that he will not only hit the target of about £540 million, but beat it?

I do share that confidence. Let me develop the point that I made in response to my hon. Friend Glenda Jackson. It is not correct to say glibly that the scheme is directly comparable to the Child Support Agency. They are not analogous, and we are describing a very different function. Before hon. Members run away with the idea that the scheme is intended to encompass everything, let me say that it is a basic identification scheme that will hold biometric details.

Let me refer the House to the experience of the United States since 11 September. The US has introduced biometrics into its immigration system pretty much from a standing start, and they are now used for all visas around the world and for people going through US customs control. Such schemes are workable. They are in use today. The British Government are increasingly using biometrics. We have progressively introduced biometrics into visas, and that process is beginning to be implemented around the world. A biometric is being used in applicant registration cards for asylum seekers, and we are seeking to build on such relevant experience.

May I draw my hon. Friend's attention to the need for greater transparency, which might provide reassurance? He referred to the fact that only a summary of the KPMG report has been published. It would certainly be helpful if the whole report were published, and commercial confidentiality would not be affected in doing so. The OGC gateways could readily be disclosed, at least in summary form. It is welcome that the Government have commissioned a concept viability report on the project, and it could also be made available. I have yet to see it, and it would have been useful to have seen it before the debate.

I take on board my hon. Friend's general point. I hope that, after this evening's vote, the discussion will change from one about whether or not the scheme should happen to one about how it will happen. I think that that important distinction will quickly take root in people's minds. I embrace my hon. Friend's point of view. It would not be right to proceed with a scheme of such national significance with any sense of a culture of secrecy. We will seek to put as much information as possible into the public domain, but as he will understand from his experience before first coming to the House, that must be balanced by a requirement to secure best value from what will be a major procurement process. We need to keep those two things in mind.

On independent scrutiny, an independent project assurance group is reviewing cost, project management and IT implementation and bringing together a range of experienced stakeholders. The biometric assurance group, chaired by the Government's chief scientist, Sir David King, will review that specific aspect. So there is independent scrutiny, but I take on board my hon. Friend's point that we should seek to make more information available as and when we can.

Order. When the Minister turns to speak to his hon. Friend, he is not only turning his back on the occupant of the Chair, but, more importantly perhaps, taking his voice away from the microphones, which makes it very difficult for the Official Report. I hope that he will bear that in mind.

I certainly will, Mr. Deputy Speaker, and I apologise for any inconvenience.

I want to stress to the House that the £584 million cost of issuing passport and identity cards includes all the existing costs of issuing passports through the United Kingdom Passport Service, together with the developments that will be needed over the next few years to introduce biometric passports, starting with passports incorporating facial images and moving to biometric fingerprints. About 70 per cent. of the cost of issuing identity cards, alongside passports, is attributable to the introduction of biometric passports. Let me put that figure into perspective.

The figure of £584 million includes the baseline figures for the operation of the UK Passport Service, which in 2006–07 is expected to be some £397 million. That is the organisation's running cost in carrying out its core responsibility of issuing passports to the British public. Essentially, the difference between those two figures—about £200 million—is what we are debating. That is the extra cost that the identity card scheme will place on the public, and it is the set-up costs of establishing the scheme, which were mentioned by my hon. Friend the Member for Stroud.

The figure of £200 million represents the non-passport element of the scheme, but is the Minister convinced that that will be the total required to tackle insurance fraud, payments fraud, banking and building society fraud and finance and leasing fraud? It seems a rather small sum if it is intended to tackle all £1.7 billion fraud identified by the Government.

I am making the point that that figure relates to the budget for issuing biometric passports and identity cards to the public. The perspective that needs to be taken is that ID cards do not account for the whole of that amount. The hon. Gentleman makes my point partly for me: £1.7 billion is the annual cost to the UK of identity fraud, so the benefits case begins to stack up for the scheme.

I will summarise the additional costs over and above those of biometric passports that the scheme would place on the Government, as shown in the regulatory impact assessment. First, the costs include covering the whole resident population aged 16-plus, rather than just the 80 per cent. of British citizens who will have passports by 2008. Secondly, they include recording, matching and storing three types of biometric information—face, fingerprint and iris—rather than one, which is the current standard required for the first generation of biometric passports. Thirdly, they include providing an online identity verification service that can validate ID cards and other identity inquiries for user organisations in the public and private sectors. That is what we are talking about this evening, and it is important to apply that perspective to the scale of the costs.

The current passport application support system is a 10-year private finance initiative and, as my hon. Friend said, that must be part of the £397 million for the Passport Service's running costs. Is the £584 million for both capital and revenue costs? Will it be a similar sort of PFI scheme?

My hon. Friend asks a fair question. The £584 million relates to the cost in its totality of issuing biometric passports and ID cards and, crucially, of enrolling people. That is where the bulk of the costs of the process would be. It would be an annual cost that the expanded Passport Service would need. She is right to suggest that it is possible that payment for some of the set-up costs of the scheme could be delayed into the running costs of the scheme. That would be a way of financing the scheme that would require the private sector to fund the scheme up front, and the costs would be recovered over a longer period. Those would, quite properly, be issues for the procurement process. Obviously, we will seek to secure the best deal for the taxpayer when we make the decision.

Is my hon. Friend saying that if it is not a PFI scheme, which would have an annual running cost, there will be an additional capital cost to begin with that is "revenuised" into the £584 million? What proportion of the £584 million is for the operation of the verification scheme?

I will be honest with my hon. Friend. Some of these issues have not been decided yet. They will be decided when the procurement phase gets going properly. It is true that there are up-front set-up costs at the start of the scheme that fall to the Home Office. As I have explained, we have decided not to make those costs available at the moment because that would prejudice our ability in the middle of the procurement process. However, I can tell my hon. Friend that those costs will be much less than the annual running costs of the scheme.

Will my hon. Friend give way?

I now want to make progress.

We have said that the costs should not be fully divulged as that will limit our ability to secure value in the market, but I can say that the annual set-up costs will be much less than the annual running costs. Our published running costs for issuing identity cards do not include future costs that may or may not be incurred by other Government Departments that will use identity cards as a way of improving their services to the public.

Can my hon. Friend inform the House what calculation was made about the income from fines in relation to clauses 6 and 7 of the Bill that we have just deleted?

The answer is that no such decisions have been made at this point.

As I was saying, the costs do not include the costs incurred by other Government Departments as a way of improving their services to the public any more than they include the costs to private sector companies, such as banks or building societies, that decide in the future to use identity cards as a way of verifying people's identity. Indeed, it would be odd if they did.

Decisions on any future investment—for example, in IT systems that might be required to make the best use of identity cards—will be made in due course, and not now, by the organisation concerned on the basis of a cost-benefit analysis.

Will the Minister give way?

I shall now make some progress.

Public services will use the scheme if there is a net benefit to them. The work that we have undertaken so far shows that there would be a net benefit for many public and private sector organisations. There may be many net benefits to a wide range of organisations and the Government have already published a high-level summary of likely future benefits in the "Benefits Overview" paper, a copy of which is available in the Library of the House. It suggests, we believe, conservatively that the quantified financial benefits of the identity cards scheme will range from £650 million to £1.1 billion per year once the scheme is rolled out fully. Our business case is therefore sound and, as I explained, it has been reviewed by the Office of Government Commerce gateway reviews.

My hon. Friend mentioned the benefits review. The figure of £1.1 billion is for the expected benefits of the ID scheme and it includes £570 million savings from the prevention and reduction of ID fraud. Since he published those figures, he has revised his estimate of the total amount of ID fraud from £1.3 billion to £1.7 billion. Has he, or his officials, done any work to estimate whether he should therefore revise the figure for the benefits expected from the scheme?

That is a good point. Of course, we keep the benefits case under review and it changes as the scheme develops and as different organisations see how it might benefit them. My hon. Friend is absolutely right to suggest that the figure is a conservative estimate of the benefits that the scheme may bring. In fact, once the scheme is comprehensive, the benefits may be far greater.

Will my hon. Friend give way?

I will give way but I want to wrap up my remarks pretty soon.

My hon. Friend is being very generous. He has referred to the potential savings, but one of the puzzles in the presentation of benefits is that, although there is reference to potential private sector participation in the project—that will be critical to delivering the savings—no companies have come forward to suggest their enthusiasm for the project or their willing participation in it. I have puzzled over that conundrum; has he?

We have been in a different phase of the scheme. The debate has been happening in the House and in another place and, in those circumstances, one might expect that people would not want to intrude on the debate. I suspect that, now the scheme has received a pretty strong endorsement from the House, there will be considerable interest from the private sector in delivering it. I would be surprised if that were not to be the case. I am confident that the capability exists within the market to deliver a high-quality scheme.

My hon. Friend has not addressed many of his remarks to the Lords amendments and the reasons for preferring the amendment tabled by my right hon. Friend Frank Dobson. I note that there is a difference. The Lords amendment talks about costs and benefits whereas that of my right hon. Friend talks about costs. I suspect that taking references to benefits out of the report would not shorten it by much but, more importantly, my right hon. Friend's amendment takes out references to all Government Departments. When costs are published over the next period, it is important that we do not see just what is happening in the Home Office but what is happening in other Government Departments as well. So far, there has been no information whatever on that.

As I said a moment ago, it is a decision for those Departments how and when they engage with the creation of the national identity register. It is up to each Department to make its own business case about whether the investment that it would need to make is justified. At the point at which it makes that decision, it is a matter for it as to whether it puts that information into the public domain. I am saying to my hon. Friend that that is not a crucial element on which our costings rest. We believe that we are delivering something of public benefit that people will want to use, but such information is not a crucial plank on which the costings that we have put before the House are based.

Will the Minister give way?

I will now make some more progress.

In order to provide even further reassurance, we commissioned KPMG and its report recognised the high quality of the outline business case and confirmed that the majority of cost assumptions were based on appropriate benchmarks and analysis from the public sector and suppliers.

Will my hon. Friend give way?

I will make progress now, but I hope to give way before I end my remarks.

The Home Office benefits will, of course, play a significant part in realising the strategic benefits of the overall scheme, including protecting identity for the citizen, helping to reduce crime, protecting our national security, reducing the problems of illegal immigration and illegal working and enabling more efficient and effective delivery of public services. The running costs of the identity cards scheme will be funded from fees charged to passport and ID card applicants or to users of the identity verification service or from within existing departmental budgets. The fact that the bulk of the costs will be covered from fees means that, as I explained to Opposition Members earlier, without these fees, there is simply not a pot of money that could be diverted to other uses—whether it is more police officers or more immigration officers.

The published unit cost of the joint passport and identity card package is £93 for both documents—a passport and ID card. The Home Secretary has also announced that it would be affordable to issue a stand-alone identity card for a fee of about £30, or £3 a year over 10 years. The Home Office agency that will be established to issue identity cards and incorporate the existing UK Passport Service will publish corporate business plans, as well as annual accounts. The full business case will be subject to extensive review—both internal and Treasury review—and challenge prior to the signing of contracts on identity cards.

My hon. Friend Mr. Gerrard urged me to comment on the detail of the Lords amendments. We cannot accept that there should be such an unprecedented review of the estimated costs of the identity card scheme, which would cover 10 years and the consequential costs that could fall on other Departments, before the Bill can come into effect. Such a review would not be necessary. It would be unprecedented that a Bill to fulfil a centrepiece manifesto commitment could be implemented only after a report on cost estimates had been completed, which would be the effect of Lords amendment No. 70. The logic behind the amendment is fundamentally flawed. It would appear to have been motivated by a desire to keep costs down, but, in practice, it would limit our ability to do precisely that.

I am pleased to say that we are persuaded that we should include a commitment in the Bill to publish regularly—at six-monthly intervals—reports to be laid before Parliament, as is proposed in the new clause tabled by my right hon. Friend the Member for Holborn and St. Pancras. The measure is sensible, balanced and would not put value for money at risk. As I mentioned, subsection (4) of the new clause would allow the Home Secretary to decide to withhold information that might prejudice the procurement process.

Is it not true that the KPMG report examined cost centres that amounted to only 60 per cent. of the operating costs? Did that not leave a big hole in the assessment? If we are to have such six-monthly reports, by what mechanism may we take the decision that the costs are out of control and thus stop the scheme from going ahead?

I make it clear to my hon. Friend that KPMG had access to the scheme's full business case and that its report went into considerable detail about the scheme. It concluded that the £584 million running costs that we had published were "robust and appropriate".

KPMG actually said that the methodology for determining those costs was accurate, but did not put a figure on them.

My hon. Friend has examined the information that the Home Office has put out assiduously. KPMG examined the methodology behind the entire business case in considerable detail. She is right that it considered 60 per cent. of the assumptions underlying the scheme, but it gave the figures to show that the identity cards team produced a clean bill of health.

We are giving a commitment today on the six-monthly reports in response to the amendment tabled by my right hon. Friend the Member for Holborn and St. Pancras precisely because we want to be as open as possible and to allow people to get up-to-date information about how the scheme is progressing. Indeed, the reports could be a helpful focus for the Home Office when it ensures that the costs are kept under control. If the costs change in the way in which my hon. Friend Lynne Jones suggests, a public debate on those costs will follow. As I said to my hon. Friend Mr. Todd, she can be confident that we want to put as much information in the public domain as possible, while respecting the wish to get the best possible deal for the taxpayer.

I hope that the House will disagree to Lords amendments Nos. 1, 68, 69 and 70. As I indicated, we will support the much more sensible and workable amendment that has been tabled by my right hon. Friend the Member for Holborn and St. Pancras.

There is a growing air of scepticism in the Chamber, and the longer the Minister spoke, the more the scepticism became apparent. He said that there would not be a special pot of money to prevent Home Office funds for the police and other necessary forms of security from being spent. However, one is of course always reminded of the Prime Minister's remarks in 1995 when he criticised the then Home Secretary, my right hon. and learned Friend Mr. Howard, by saying:

"Instead of wasting hundreds of millions of pounds on compulsory ID cards as the Tory Right demands, let that money provide thousands more police officers on the beat in our local communities."

What goes around turns around.

The longer the Minister spoke, the more it became abundantly clear not only that members of the public do not read party political manifestos, but that Ministers do not read their own manifestos. No sensible person who read the Government's manifesto could have reached any conclusion about the natural and ordinary meaning of the words other than that the scheme would not be anything other than entirely voluntary. The likely costs of the scheme reinforce the Government's wisdom of writing such words into their manifesto.

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I give way to the hon. Gentleman, whose copy I used to save from libel writs when he was writing for "The Grauniad".

The hon. and learned Gentleman might remember that when he was night lawyer on The Guardian and I was night news editor, a quote passed over his desk that read:

"If we are serious about tackling this problem, there is one obvious remedy: identity cards."

Does he need to be prompted to recall that those were the words of Mr. Howard at the Conservative party conference?

I was paid to prevent libels, not to read the newspaper—[Laughter.]

Order. Perhaps we can get back to the Lords amendment under discussion.

The Minister is keen for us to be assured that we will be able to trust entirely the figures that his Department will come up with if the amendment tabled by Frank Dobson is accepted. However, we must see the situation in the context of a report by the Comptroller and Auditor General. He had to report to the Home Office and the public at large that the Home Office had fallen down on its 2004–05 resource accounts. Let me pick out one or two paragraphs of the report so that hon. Members can get an idea of the context of our debate. The report also addresses the concern expressed by Mr. Todd about the absence of proper accounting assumptions in several of the Minister's assertions.

Paragraph 10 of the report said that the Home Office accounts for last year

"contained numerous errors and internal inconsistencies. In particular, amounts relating to cash, Exchequer funding and non retainable income due to the Consolidated Fund were contradictory and did not reconcile between the different places in which they appeared in the accounts. There were also material omissions and misstatements".

Paragraph 14 said:

"Difficulties were encountered in the transfer and cleansing of data, and staff were not trained to use the new system on a timely basis. These problems and delays, together with a lack of understanding of the new accounting system, meant that the Home Office could not use data from its new accounting system effectively to produce a cogent set of accounts to the required faster closing and statutory timetables."

Paragraph 15 cited:

"control weaknesses within key Information Technology applications including access to the system, inadequate segregation of duties, the creation of standing data and the ability to interrogate and monitor changes made."

It continued:

"These weaknesses made access to the database by unauthorised staff possible, representing a risk to the integrity of Adelphi data and exposing the Home Office to a greater risk of fraud and error."

Let us go back to paragraph 11, which refers to the second draft accounts, which, unlike the first draft accounts—which were delivered rather late—were delivered only two days late. It states:

"The amounts in the revised accounts had changed significantly from the first draft. In particular nearly every major balance was markedly different. To illustrate the scale of the movements: the amount owed to the Exchequer by the Home Office of £68 million in the September draft accounts became an amount owed by the Exchequer to the Home Office of £112 million in the December draft accounts. This swing is due to major changes elsewhere in the accounts resulting in a change to the cash required by the Home Office."

The Comptroller and Auditor General went on to say that because the Home Office was incapable of implementing its new accounting system, it had been

"unable to reconcile its cash at bank position".

Paragraph 16 continues:

"Bank reconciliations are one of the most fundamental of all accounting controls as they enable payments, receipts and cash balances to be validated to an external source and provide assurance about debtor and creditor balances. They are also a key control for the prevention and detection of fraud."

Other references in the Comptroller and Auditor General's report were equally impolite. In paragraphs 21 and 22 he criticised

"Poor controls and weaknesses in the audit trails maintained over the assignment of access rights; Absence of checks made against Human Resources records to ensure that new users are authorised, and leavers are removed promptly; Absence of controls to detect unauthorised access to the database" and

"Over reliance on the Home Office contractor to undertake security checks, and a lack of effective processes to address the risks this exposes the Department to".

If that is what the Comptroller and Auditor General says about the Home Office's accounts, it is perhaps not in the least bit surprising that other Departments have not found it convenient to hand over to the Home Office their assessments of the costs, workings, assumptions and accounting practices of their work in preparing for the great day on which the ID cards system is introduced and the national identity register comes on stream. In autumn, just before Christmas, I took the trouble to table written parliamentary questions to all the spending Departments, including the Home Office, to ask what work they had done to prepare for the national identity register and what cost estimates they had made. Even the Treasury said that it had done nothing to prepare for the great event. I suspect that it had done nothing because it did not want to become embroiled in an unquantified, unquantifiable and hugely expensive financial disaster, which the project seems likely to become.

The least that we can expect from the Government is openness and transparency, but so far no credible reason has been advanced in this House or in the other place—I have not heard one this evening either—for preventing the House of Commons from having a right of scrutiny in respect of the huge sums of public money that the Government intend to spend on the ID cards system and the national identity register scheme. Whether we spend £5.84 billion over 10 years, as the Government suggest, or the £19 billion to £24 billion that the London School of Economics report suggests, makes no difference to the principle. The House must know what it is giving the Government permission to spend.

There has been no willingness to be candid about the start-up costs, the capital costs, the transaction costs, the volumes or a host of other necessary details. I am driven to the conclusion that the Minister is not quite clear on what those concepts are. That puzzles and worries me.

Does my hon. and learned Friend agree with 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.

My hon. Friend, who comes to the matter with some years' experience in the financial services industry, is entirely right, as was 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.

May I reiterate the point that there were false expectations of the KPMG report? To be frank, there is no 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.

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.

rose—

The Minister wishes to intervene. I shall accept his intervention.

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.

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

"had estimated marketing costs of between £500 million and £1 billion."

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.

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.

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.

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.

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 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 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:

"the actual costs incurred in the period from 26th April 2004", which is when the original Bill was published,

"to the date to which the cost estimate is prepared", 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 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.

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.

I wish to speak to amendment (a), which I tabled in lieu of Lords amendments Nos. 1, 68, 69 and 70.

My amendment would impose a requirement on the Government to report every six months to the House on the latest estimated cost of the ID scheme, if it goes ahead. I do not support the Lords amendments because they deal exclusively with the initial estimate. History suggests that it is not the initial estimates that are the problem but the actual costs. Although the Government support my amendment, I believe that the ID scheme will not provide value for money. It will not bring an end to terrorism, and if a great deal of credit fraud affects the credit card and debit card industry it is not the taxpayer's job to help those commercial organisations. We ought to behave as the Victorians did with cheques. There was a simple law on cheques—if someone did not sign the cheque and the bank paid out, the loss was the bank's, not the account holder. If we took that robust attitude on debit and credit cards we would be a lot better off. You can bet your boots that those commercial organisations, which want us to bail them out when they suffer from fraud, would quickly find a way of stopping the problem.

Several hon. Members:

rose—

I should like to try to make progress.

The Government estimate that the scheme will cost £6 billion. If someone came up to a Member in the Chamber and said that they would give them £6 billion to make the country safer only to be told that ID cards would be introduced, that Member would be taken to the funny farm before they had time to draw breath. I am therefore not very keen on the proposition, to say the least.

As I have said, it is not the initial estimate or its nature or make-up that bothers me. IT systems companies such as EDS and Siemens appear to be competing for the title of intergalactic rip-off IT merchant of the decade, and have ripped off the public and private sectors time and again through their negligence, incompetence and stupidity, usually resulting in massive costs increases for users and huge delays. Our first job as the House of Commons, save to protect the security of the nation, is to control the raising and spending of taxpayers' money It is not overstating the case to say that a considerable number of people are doubtful about the Ministers' original estimates of the cost of the ID scheme. Nobody should suggest that that springs from deliberate deception, but all IT schemes seem to have had substantial cost overruns—with the exception, I might say, of NHS Direct, which did not involve any outside consultants, was done entirely in house, and worked.

I am prepared to accept at face value Ministers' original estimate of about £6 billion. The problem is that if we go on as we usually do, several years hence we will happen to learn from an article leaked to a newspaper or some technical IT journal that the costs have gone into the stratosphere. My amendment will require the Government to report to the House regularly every six months, so that if huge increases are taking place, it will not be too late for us to say stop.

The original £6 billion estimate may turn out to be correct, in which case my hon. Friend the Minister and the Home Secretary will have brought about a modern miracle. As I understand it, having demonstrated a miracle, they would qualify for canonisation as saints during their own lifetime. I think that that is unlikely and that we can expect sudden huge escalations in costs, but if we pass my amendment, we will know and be able to take action to stop it before it is too late.

People may argue that contracts may have been let. Contracts should provide for termination if they go over certain limits and, ideally, require those who have taken the contract costs over the limit to repay the money that they have already squandered. That is going a little far these days, with the delicate organisations with which the Government deal, but it should be done nevertheless.

I do not accept the comments of Mr. Garnier about subsection (4) of my amendment, which provides for the Government to withhold not a report, but any matter in the report if it would prejudice their relations with any of the outside contractors. It would be foolish for us to require of the Government to identify that they are putting X hundred thousand, million or billion pounds in the budget for a particular contract at the point when they are seeking bids from outside organisations. That would be to the disadvantage of taxpayers, and the point of my amendment is to put taxpayers at an advantage and stop them being ripped off, as they have been so regularly and scandalously in the past.

Is not the problem that over the past year or so, and during debates in this place and the other place, the Government have refused to be open and candid, as the right hon. Gentleman thinks that they will be, on the basis of commercial confidentiality? That is ingrained in their DNA. We need to be persuaded that they have changed their mind. They say that they will support his amendment, but their whole way of life in the conduct of the Bill has been to shut up and refuse to give information because they say that that would spoil everybody's confidential commercial arrangements.

The wording is:

"If . . . it would be prejudicial to securing the best value from the use of public money".

The Government therefore could not claim that they were securing the best value from the use of public money after some contract had been let. That covers the hon. and learned Gentleman's point.

All that I am doing is giving the House an opportunity for us to do our job. I can commend my amendment both to those who are for identity cards and to those who are against identity cards. For those who are present who are in favour of identity cards, voting for my amendment is a vote of confidence in the accuracy of the Government's estimates and the likelihood that they will prove to be true. There cannot be anyone who is in favour of identity cards who does not believe that the true costs should not be known, and that will also have the effect of bringing pressure to bear on the IT firms to make low bids, because otherwise they will go over the top of the £6 billion figure, and it will maintain a constant pressure both on civil servants and on the contractors to keep the costs low. Those arguments are intended to appeal to those who are in favour of identity cards.

If, like me, Members are not in favour of identity cards, instead of a vote of confidence, it is a vote of scepticism. It enables us to put the chocks under the wheel of the ID card wagon if it starts running down—or running up—the hill of cost escalation. I am in what might be described as a unique situation in that I can advocate my amendment to those who are in favour and those who are against for them to pursue their totally opposing reasons and attitudes to ID cards by voting for one single amendment, and that is why I commend it to the House.

It is a pleasure to follow Frank Dobson, whose speech I enjoyed. He has persuaded me that there is more merit to his amendment than I had first seen in it. Had he attached to the report some sort of sanction, as exists in the Lords amendments, I would certainly have been much better disposed to his amendment. I particularly enjoyed his description of the IT companies as intergalactic swindlers, or something to that effect. The thought did just slip through my mind as to what epithets he would apply to the Ministers and civil servants who wrote the cheques and completed the contracts with these IT companies in the first place.

It will not be lost on the House that the Minister spoke for 40 minutes. For the first 36 minutes of his speech, he did not make any reference at all to either the Lords amendment or the amendment moved by the right hon. Gentleman.

I began by addressing both amendments. I said at the beginning that the amendment of my right hon. Friend Frank Dobson struck the right balance and did not fetter us in seeking best value from the market, and that the Lords amendment was unprecedented in dealing, as Mr. Speaker said, in matters of privilege. I addressed them very directly at the very beginning of my remarks.

That must have been a good 30 seconds out of the first 36 minutes. It was his own hon. Friend, Mr. Gerrard, who made the point at almost 8 o'clock that he had not yet addressed the issue. We will be able to check the record tomorrow.

In any event, the complexity of the debate rather masks the simplicity of the issues at stake here. The point to be made here is not greatly dissimilar to that which we made in relation to compulsion, namely that if identity cards were as good as was claimed, why was compulsion necessary? If the Government's plans are as well costed and as affordable as they would have us believe, they should have nothing to fear from Lords amendment No. 70.

Whether one takes the LSE report or the KPMG report, or whatever basis one wishes to proceed on, the basic truth of the matter is that no one really knows what the cost of identity cards will be. That is possibly why the Government prefer the amendment tabled by the right hon. Member for Holborn and St. Pancras to Lords amendment No. 70.

We all know that the acceptability of ID cards to the general public declines as cost increases. The Minister has said that he would not pay £300 for an ID card—that may yet prove to be a hostage to fortune—which is not a point of principle, but an entirely pragmatic point relating to cost. Although he will undoubtedly have moved on to greater and higher things in government, I wonder what his position will be when and if the cost hits £300.

The Minister has also told us that the model for financing ID cards follows that of the UK Passport Service, so it is clear that the cost will impact directly on the individual rather than its coming from the Government. Earlier, David Davis used the expression "plastic poll tax", which is exceptionally apposite.

Stewart Hosie has referred to the Government estimate that the cost of identity fraud and identity theft is in the region of £1.7 billion. However, that figure includes fraud associated with credit and debit cards, the bulk of which takes place online. The introduction of an identity card will make no difference to the incidence of such fraud, because biometrics are useless in relation to online transactions.

The Minister has mentioned the UK Passport Service, but the parallel is not valid, because it does not rely on the database or the register. Furthermore, the UK Passport Service does not require the installation of a reader in every public service office, which will include every benefits office, hospital and GP surgery in England and Wales—the Scottish Executive have more sense than to install such machines. Those costs, which will be significant, make quantification even more difficult.

The Minister has said that Lords amendment No. 70 is unprecedented and novel, and he is absolutely right. He has also said that it is outrageous that the Government should have to explain the cost of the measure before they implement it, because this is a manifesto Bill. If that is outrageous, the cost should have been in the manifesto to allow people to form a judgment at the polls—in that regard, we have seen the worst of Labour party manifestos in the past few weeks. The protection of the taxpayer, which is entirely unprecedented, is appropriate, because the whole Bill is entirely unprecedented. The Bill seeks to rewrite the relationship between the citizen and the state as we have always understood it in this country. If the Government want to take that course, the least they can do is tell us the cost of that step before they take it.

Lords amendment No. 70 is clear. Subsection (2) specifies that the report should contain a detailed estimate of the revenue and capital costs and that a statement of expected benefits should be produced. Subsection (3) covers the extent of the cost estimates.

I have listened to the hon. Gentleman's remarks this afternoon with great interest. Will he remind me what the Liberal Democrats did on Second Reading?

We voted against it. I am slightly thrown, as I cannot remember any stage at which our position has changed. I know that the hon. Gentleman's party has had a rather more interesting progress down the road to Damascus. As an elder of the kirk, I can say that there is great rejoicing in heaven and on earth at the repentance of the sinner. I welcome the conversion of the Conservative party on this point.

I apologise to colleagues for breaching the convention that one does not intervene a few minutes after one has entered the Chamber. Another convention is worth upholding: the principle of fairness between the parties. If memory serves me correctly, the Lib Dems have been against this Bill all along.

Order. We are wandering a little far from the amendment under discussion.

I think that we have wandered much further than this in the debate, Madam Deputy Speaker, but I take your stricture to heart.

Lords amendment No. 70 brings with it the ultimate sanction that the Bill could be implemented only after all those matters had been established to the satisfaction of this House. We should not cast that off lightly. I like the idea put forward by the right hon. Member for Holborn and St. Pancras that there should be an ongoing review of costs, but my difficulty with his amendment is that I am afraid that paragraph (4) would act as a get-out-of-jail free card for the Government.

The hon. Gentleman makes just the point that I wanted to make. I am greatly attracted by what my right hon. Friend Frank Dobson says because the problem with Government IT contracts is the ongoing costs, which, admittedly, usually come on the back of an overrun on the initial set-up costs. Such costs could be trapped by amendment (a), whereas Lords amendment 70 apparently would not do that. Does the hon. Gentleman agree?

I accept that; indeed, I have just made that point, more or less. However, if the Government are minded to proceed along the lines outlined in amendment (a), there is absolutely no barrier to them doing so without putting it in the Bill. It is always open to the Government to review such matters and to make reports in the way suggested. Neither amendment should necessarily be seen as being exclusive of the other.

The hon. Gentleman says that there would be no comeback for the Secretary of State if he held back information from his six-monthly report. However, I suggest that if he admits to holding back a piece of information in one six-monthly report and still wants to hold it back in the next such report, there would be a considerable political pain for him, providing at least that the Opposition parties were doing their job properly.

That would require us to know that the information is there and is being withheld, which is not always the case, as the right hon. Gentleman must be aware. In any event, if something is the subject of commercial confidentiality today, it will probably still be so in six months. It is difficult to see how that situation would change.

I know that the hon. Gentleman was a lawyer, but we are not talking about commercial confidentiality. The Secretary of State would have to say that

"it would be prejudicial to securing the best value from the use of public money", which is a harsher test than the generalised claptrap that all Governments have used about commercial confidentiality.

I fear that the right hon. Gentleman's expression,

"securing the best value from the use of public money" would include commercial confidentiality and much else besides. He has drawn the new clause even wider.

The problem is that we could not test the truth of the Secretary of State's decision and whether it was soundly based. That is simply indefinable.

The hon. and learned Gentleman is absolutely right.

I am trying desperately to conclude my remarks. Lynne Jones skewered the Under-Secretary with her interventions about the KPMG report. She has struck at the heart of the problem with the Government's approach. They constantly overstate and oversell the benefits and underestimate the disadvantages. There is little in the Government's history on the matter that makes me believe that I or my constituents should be prepared to trust them. I therefore hope that we shall not disagree with Lords amendment No. 70.

I welcome the Government's agreement with amendment (a). However, my problem is that large amounts of public money will be spent before we reach the inevitable point at which we have to call a halt to the terrible monster. I am more sceptical than my right hon. Friend Frank Dobson about the Government's figures. Their precision is incredible—£584 million, not £583 million or £585 million. At least the London School of Economics gave a range of estimates. The Under-Secretary did not make it clear in reply to my interventions whether the figure included set-up costs.

However, we have information about current expenditure from the United Kingdom Passport Service website. I also obtained information through parliamentary questions and from letters from the Under-Secretary. We therefore know that the cost of running the old-style passports was £219 million in 2004–05 and that the charge to people who wanted a passport was £35.60. This year, we commence the introduction of biometric passports, which will include only the facial biometric—a digital image. Yet it will cost the Government £397 million a year and people who purchase the passports will have to pay at least £57.93, which, according to the Government, is the cost of producing the passports.

In getting from old-style passports to the first phase of the biometric passport, which includes only one image, the running costs will increase by £178 million a year. Those figures are probably reliable. However, the jump from the new passport with one digital biometric to the all-singing, all-dancing biometric passport/ID card system database is supposed to entail an increase of a mere £187 million. I cannot believe those figures. I cannot believe that it costs £178 million a year to get from A to B yet it will cost only £187 million a year to get from B to C. That does not include the £93 that will have to be paid. Apparently, 70 per cent. of it is attributable to the passport, working out at approximately £65 for the passport element. I cannot believe that a passport that contains two fingerprint biometrics as well as the facial biometric will be so cheap, given that the Government have already said that the cost will exceed £57.93. Furthermore, the £93 that people will pay for the privilege or otherwise of having their details on the national identity register and being forced to have an identity card will not cover the cost of operating and maintaining the verification services. We have had no breakdown of how much of the £584 million that would account for; it is an additional cost.

I am cynical about Government computer systems. I recently served on the Environment, Food and Rural Affairs Committee, which conducted a brief inquiry into the Rural Payments Agency's computer records system. The initial cost of that system was going to be £37.4 million a year, to cover capital and revenue costs. That figure has now risen to £54.3 million—an increase of 50 per cent. If a database of only 100,000 records is costing £50-odd million a year to run, it does not seem sensible that we are going to have to pay only an extra £187 million a year to run a massive database of 100 million records, which will be interrogated and will have an audit trail—never mind the cost of the security.

What really frightens me about this scheme is that it will make me feel less secure, rather than more secure. The biometrics will have radio frequency identity chips on them, and people will have a field day intercepting them. So what security are we going to put on to the cards? In America, the biometric passports—which also have just the facial biometric—have radio frequency identity chips so that they can be read without contact. There was a furore there when people realised that anyone could intercept that identity information, and an agreement to allow the scheme to go ahead was reached only because a shield was provided in the cover of each passport to stop the signals being intercepted other than when the cover was opened for the passport to be verified at border controls or for Government purposes.

The figures simply do not stack up. They do not compare in any way with the costs of other computer systems, and the proposed system is far more complex than any other that we have seen anywhere in the world. Earlier, the Chair of the Home Affairs Committee quoted from his Committee's report. I should also like to do so. Paragraph 64 on page 23 states:

"The proposed system is unprecedentedly large and complex. It will contain sensitive personal information on tens of millions of individuals. Any failure will significantly affect the functioning of public and private services and personal and national security. Measures to ensure the integrity of the design, implementation and operation of the system must be built in to every aspect of its development . . . We will make recommendations for addressing this serious weakness later in the report."

The Committee went on to do so. It had been

"concerned about the closed nature of the procurement process", and stated that it was essential the process be open. It went on:

"Any potential gains from competing providers providing innovative design solutions are likely to be more than offset by the unanticipated problems that will arise from designs that have not been subject to technical and peer scrutiny."

To what extent, if at all, does the hon. Lady think that the Government have factored into their calculations the capital and running costs of the extra 70 high street offices that the UK Passport Service proposes to establish for the purpose of conducting interviews with first-time passport applicants? It has never been clear to me why such a provision is necessary, although Mr. Bernard Herdan is clearly keen to drive the agenda. Clearly there will be a bill to pay, will there not?

It is probably easier for the Government to estimate the cost of providing buildings than it is for them to estimate the cost of providing complex computer systems. I have to accept their assurances that that is included, although I note that there will also have to be two secure facilities for the storing of the computer systems. I am not sure that the time scale that the Government say they have in mind will allow them to procure those facilities. I envisage many problems. It is clear that the Government have not recognised the need for an open procurement policy, as advocated by the Select Committee. The Committee said that the Government must

"develop an open procurement policy, on the basis of system and card specifications that are publicly assessed and agreed."

Has the hon. Lady, in the course of her diligent analysis, considered the extremely difficult problem of assessing the extent to which the wide-ranging powers in the Bill will be used or not used? There is a great deal of uncertainty about the extent to which certain powers will be used, and indeed about whether the whole process will be extended to involve designated documents. As I said in an earlier intervention, the process seems to be endless. Has the hon. Lady seen any calculation that reveals the impact of the powers if they are used? When an aircraft or a ship is being built, it is possible to see that it will end up as a product. Here, we are talking merely about a vague use of powers.

I am prepared to accept the Government's assurances that the driving licence will not be a designated document, but it is clear that the identity card and the operation of the database will go ahead. The Government are determined to use those powers, at least for the time being, until the costs emerge. They might think twice about it after that. We do not know the extent to which other Departments, or even devolved Assemblies and Parliaments, will use the database to deliver services. The costs are not included in the Government's £584 million assessment.

The UK Computing Research Committee has commented on the document on the assessment of technologies needed for a national ID card scheme. It says that the assessment is not objective, because the authors have an interest in supplying the ID technologies. Most independent experts are dubious about the Government's scope and ability to deliver. They include the London School of Economics—whose work the Government have rubbished without justification, as we learned from the letter from Brian Gladwyn to the Prime Minister—and the UK Computing Research Committee, as well as other organisations dealing with computing.

I do not think we should spend vast amounts of public money on a scheme that is highly dubious, and whose benefits, let alone costs, have not been assessed. I tabled a parliamentary question to the Department of Health on the cost of people gaining access to health services when they were not entitled to do so. The Department had no idea of the cost. We do not yet know whether it will go along with the scheme, but the Minister has said that it would benefit the NHS.

I am prepared to bet that the £584 million will prove to be only a fraction of the eventual cost if the Government insist on the scheme. The proposed six-monthly estimates are welcome. However, the Government will perhaps end up spending billions of pounds before realising the error of this approach. Instead, they should opt for the solution that all other European countries are opting for: documents that have biometrics on the card, and appropriate security precautions that are an improvement—as they will have to be—on those currently available. The Government should drop their obsession with this ridiculous national identity register, which will be costly, has severe implications for civil liberties and will prove a honey pot for international criminals and terrorists. Rather than protecting our identities, such a register will lead to everybody facing the threat of identity theft.

When I spoke on Second Reading, I expressed concern about the security of biometrics and the ability of individuals to apply for more than one document. That fear remains and the Government have had to react to such criticisms by greatly increasing the number of biometrics to be stored. Originally, they planned to have only iris recognition and facial recognition; now, they have been forced down the route of including 10 fingerprints. Even if the system proves 99 per cent. accurate, there will still be 48,000 false matches in a database of 48 million people. It will not be the ordinary citizen who will apply for multiple ID cards using the same biometrics. However, the system will not be able to know that the same biometrics have been duplicated, but with different identities. Terrorists, money launderers and international criminals will be willing to hack into the system, and they will be patient.

The police computer system is regularly abused from the inside by police officers giving information to journalists; other systems have been hacked into. Staff working in computer centres could be bribed or blackmailed into handing over sensitive data. What will happen, for example, if somebody changes the address on my database record and puts in a request for an audit trail? Such information will then be delivered securely to the alternative address. The implications are horrendous. Chips on the card will allow people to be followed wherever they go, unless the security that nations such as America are building into—

It is not right to say that chips on the cards will enable people to be followed wherever they go; that simply is not true.

As I understand it from answers given to me previously by the Minister, the cards will contain radio frequency identity chips that will send out a signal, which will be picked up by antennae. If they are to be stand-alone cards, the chips will need to be read by a reader at close proximity. However, many experts have expressed doubts about this scheme, in that, if the chips are to be read remotely, the signals could be picked up as people travel from one antenna to another. Obviously, the power of such antennae will be a factor in that regard.

The private sector will have readers and access to the verification service, so there will have to be some form of encryption. However, the fact remains that those in the private sector will have access to my identity and will be able to steal it. If the readers are stolen, other people—depending on the accuracy of those readers—will be able to steal my identity.

If the Government are concerned about identity fraud, they should not go down this route. There are much simpler and less costly ways to address identity fraud. In the US, for example, when somebody wishes to access consumer reference information, they have to obtain the permission of the individual. In that way, the individual will know if someone is applying for credit or carrying out financial transactions in their name. The Government could introduce such measures and ensure better security than will be achieved by this expensive scheme. The Government claim that it will make us more secure and deal with terrorism and immigration, but immigrants will not have to have identity cards. The Government should reconsider and move towards having biometrics on passports, as other countries are doing. They should abandon the database and the costs that will be associated with it.

It is important that we get this right for two reasons that the Minister gave earlier—first, because we now have a scheme that will be compulsory and, secondly, because, as the Minister has said, the bulk of the costs will be covered by fees. If costs go up, fees will go up. The cost of the scheme will be borne by our constituents. It is therefore important that we have as much information as possible about what the scheme will mean to the people whom we represent.

I do not believe that amendment (a), tabled by Frank Dobson, would do what it is claimed it would do. I suspect that the very reason that the Minister is prepared to accept it is because he knows that it is the dog that will not bark. It will not even growl or whimper. The Minister is bound to like the amendment because it will not provide any ability to stop the scheme in its tracks. We will not have the information that would allow us to make a considered decision until it is too late. The right hon. Member for Holborn and St. Pancras said that it was better than the Lords amendment because it allowed us to look at the ongoing costs, but we know that the Minister will be able to hold back information on that under subsection (4). It states that information may be held back if it is

"prejudicial to securing the best value from the use of public money".

That is the very basis on which the Minister has held back the full capital cost of the scheme. We are told that it would breach commercial confidentiality and stop us getting the best value. So in his six-monthly reports, the Home Secretary will be able to hold back the very information that would enable us to make an assessment of the costs. Amendment (a) would not do what is necessary.

We have heard a lot of hocus-pocus economics this evening. It must be down to my experience in local government, but I always get worried when a report goes into minute detail. As Lynne Jones said, the Minister can pinpoint the cost as £584 million a year. But when we start asking the big questions, everything becomes vague and we are told that for reasons of commercial confidentiality the capital costs cannot be revealed. In my experience of local government, that usually means that no one is quite sure how much the scheme will cost at the end of the day. When I encounter that approach, I begin to be wary.

The Minister, again in answer to the hon. Member for Birmingham, Selly Oak, said that the capital could either be paid in a lump sum or annualised and added on as running costs. He gave an assurance that it would not be more than the annual running costs according to the present estimate, but if the amount was equal to the running costs the annual cost would double. Will that be added to the fees that the public pay for the card? The Minister gave no indication.

I did not say that the set-up costs would be absorbed in the £584 million; they are additional. The baseline for the UK Passport Service is included in the £584 million. I said that the increment—the additional amount in respect of ID cards—was in the region of £200 million a year. That is the increment for the annual running costs; the set-up costs will be much less than £584 million a year.

The hon. Member for Birmingham, Selly Oak asked how the costs of the scheme would be paid. One of the options was that it would be on an annual leasing basis, but would that be included as part of the cost of the card? If so, the cost of the card would increase.

The right hon. Member for Holborn and St. Pancras said that, due to the six-monthly reports, the amendment would put chocks under the wheels—the scheme could be stopped—but there are no sanctions in the amendment, so I do not know how that would happen. Reference has been made to many public sector schemes this evening, and we are all familiar with the Child Support Agency on which £400 million was spent, yet three years on, we are still considering what to do about it. Once the capital investment in the technology was made, it was felt that we had to try to make it work. I suspect that will be the case with the ID card scheme. Once the capital investment has been made, and the scheme is up and running and a large number of people have bought the cards, the argument, regardless of the costs, will be, "Well, we can't drop it now. People have paid for the cards and we've bought the technology, so we've got to make it work". If that means extra costs, that is what will happen.

The amendment will not put the chocks under the wheels. All it will do is enable us to observe, on a six-monthly basis, the increase in the costs of the scheme. I do not know whether it will cost £24 billion or £5.8 billion, but from my experience of local government, the Policing Board or central Government, the one thing I know is that IT schemes of that nature never run out at the original cost. The amendment will enable us to watch the costs increasing, but we shall be unable to stop the bandwagon rolling. For that reason, I shall not support it.

I shall try to focus on the amendments. I have quite a lot of sympathy for the Lords amendment, although in many respects it is not perfect, so I shall not endorse it. Nor shall I endorse the amendment tabled by my right hon. Friend Frank Dobson, for reasons that I shall give in a moment.

The Lords amendment is rather too narrowly written. I tabled a new clause on Report that attempted to set out the kind of things that I would expect the Government to produce before they authorised substantial expenditure on such a project. Unfortunately, that new clause was not selected, but it focused first on the fact that the Secretary of State ought to set out properly the reasons for such a proposal. We have seen a number of documents so far that, frankly, make limited reading indeed in explaining why the proposal is a good idea, why it will produce the sort of benefits that have been vaguely referred to and why we should endorse it. I do not share some colleagues' views that the Bill is a terrible threat to civil liberties. I have never thought that. My instinct is that it might be a terrible threat to our public purse. That has been the focus of my concern throughout.

Secondly, I would expect the costs and benefits to be set out in reasonable terms. This is not the time at which one could certainly demonstrate the cost with any authority. As I have remarked in my interventions, frankly, the LSE proposals are based on its own concept of how an ID card system might work. They may be valuable in those terms, but they have no authority since they bear no relationship to what the Government may be attempting to do.

The Government have set out their ideas in such vague terms that, frankly, it would be impossible for a professional contractor to produce anything other than fairly speculative estimates of how much those ideas might cost. That is why I have remarked on the KPMG report. I do not know how much was spent on it, but to be honest, it will do what most consultants will wisely do: it will cover their bases very carefully and certainly not end up by giving a great deal of authority to a figure that most professionals would say could only be speculative at this time. I suspect that, if the full report were made available, one would probably see those caveats written in rather larger type than in the summary. I would expect the costs and benefits to be produced, but when procurement was about to proceed. That was the point of the new clause that I tabled on Report.

Thirdly, I would want the assumptions behind any savings to be properly set out. I intervened on my hon. Friend the Minister about the buy-in of other stakeholders in the project. I referred particularly to the private sector, but I could equally have touched on the role of other Departments. Even given the rather vague business case that has been produced to date, the private sector obviously has an important role to play. It is understood that the project may be crucial in reducing fraud in our financial system. If so, one might expect that many of our financial institutions would be putting up their hands now, saying "We wholeheartedly endorse this project, and we wish to see it proceed as fast as possible."

I drew my hon. Friend the Minister's attention to the fact that those statements of faith have, as yet, not been made. When I questioned officials and IT professionals, they gave a rather sunny and optimistic reason for that and suggested that people were waiting for the Bill to be passed and would then dive in very quickly. They genuinely do not know whether they are buying a pig in a poke, exactly what the project involves and what meaning it may have for their businesses. For that reason, they are most unlikely to put a buy-in together. I would expect the stakeholders—whether private sector partners or those in other aspects of government, such as the agencies and Departments, which must clearly play a part—to make a much more coherent statement of the benefits when procurement is about to proceed.

My hon. Friend Lynne Jones referred to the Department of Health, and that is a very good example. We would expect it to participate in the scheme, but I doubt whether it has even the vaguest idea of how the scheme might apply to what it does.Much of the information will be required at some stage in the future. I do not expect the documents that the Government have produced so far to refer to it in detail, but I would expect there to be a point at which we have an opportunity to review the details before further substantial sums of public money are committed.

I also want a much more rigorous examination of the risks in the project—one or two of them have been touched on in the debate—and how they are likely to be mitigated. Risk mitigation means cost. Dealing with perceived events and working out their likelihood of threatening a project of this kind require steps to improve its security. Such steps may deal only with a one-in-a-million circumstance but, in a project as central as this, a one-in-a-million circumstance may well be what we have to deal with.

I often remark that our tolerance of error rates for people flying airlines or performing complex surgery is much lower than it would be for someone performing a less critical function. We expect people carrying out high-risk functions to take steps to reduce the risks either through the intervention of technology or additional human support. Those certainly cost money. I am not clear how the risks have been analysed and how costs have been applied to reducing those risks.

I have described the points that I would like to have seen covered but, unfortunately, the Lords amendment is rather more narrowly drawn. If they choose to consider what happens tonight, they may want to reflect on that should they return the issue to us.

I have already referred to the importance of transparency for all our benefit in the project. A number of reports have been pulled together by agencies outside and inside government to assist us in judging whether it is the right thing to do. We have had the KPMG report. Although I would not want to read it in considerable detail, its full publication would have been helpful to us at this time. The Office of Government Commerce gateway process that the project will go through on a number of occasions at various points in its life also provides a useful indication of risk. One of its major focuses is to say what risks have been anticipated in the running of the project and how we might deal with them. From the little glimpse that some civil servants kindly gave me the last time the process was carried out, it is not surprising that it is regarded as extremely high risk with a number of flashing amber lights indicating that steps need to be taken to deal with possible failure in the future. That would not surprise anyone, but it would be useful to have the risks more clearly defined so that we can understand them and can start to put money towards dealing with them.

I also wish to refer to the concept viability report that the industry has been asked to produce. I believe that it has actually been produced and the Minister told me earlier that it would be published at the procurement point. I would rather see it now, so that I can understand the industry's reaction. Those in the industry that I have spoken to have broadly said that most of them would love to take part in such a project because it looks like serious stacks of money are involved.

About £20 billion.

Whatever the figure is. The right hon. Gentleman has not been present for this debate, but he will know that I have cast doubt on all the estimates that have been made. That is one of them.

People in the industry are keen, but I think that they share my concern at the rather muddled presentation and the possibility that it will lead to a complex and poor quality specification that will not necessarily get the buy-in of all the critical players. That is at the root of failed IT projects. I shall not go down the route taken by my right hon. Friend the Member for Holborn and St. Pancras, who chose to cast a great deal of blame on IT companies. Of course, they fail and do things wrong. However, the critical thing that normally goes wrong in such projects happens right at the start. It is necessary to get the specification of what is being done absolutely straight before driving the project through with narrow-minded rigour. A critical test is thus the quality of project management, which would indicate whether costs could be managed effectively. However, although I have met one or two of the people involved in the project, I have seen no evidence to date of the rigorous project management disciplines that would be required to deliver a project that was a tenth as difficult as the identity card scheme will be.

For the reasons that I have outlined, I take no great comfort from the debate. I have given all these pieces of advice in private, so it is a little sad to find that little progress appears to have been made. I am surprised that the Government have chosen to support the amendment tabled by my right hon. Friend the Member for Holborn and St. Pancras because while I accept the caveats that have been cited about the possibility of evading various responsibilities due to the amendment, the provision will give rise to a process of terrible Chinese water torture because some poor Minister will have to produce a report every six months. The Minister might well say, "I can't reveal them this and can't tell them that," but the reports will prompt ongoing repetitive debate on the merits and purpose of the scheme. I am not worried about that, but I am puzzled by the Government's insistence on taking that route to reassure people about the project, rather than the route that I would have commended, which would be a more rigorous attempt to nail things down right at the start. That remains my preferred strategy, so I still hope that the Government will adopt it. I am sad that I will not be able to give the Government my support on these matters tonight.

I want to take the Minister back to his opening remarks when he mentioned fraud worth £1.7 billion. Such fraud is central to the debate because it determines whether the Bill is a proportionate response to the problem. I have no doubt that the figure of £1.7 billion was put in the public domain to give the impression that when the ID card system was fully deployed in the public and private sectors, a problem of such magnitude could be resolved, but I question that assertion. I also wish to focus on the fraud because it is the only argument in favour of the identity card scheme that the Government have consistently used from the outset—they abandoned all their other justifications at various points along the way.

There are many components to the £1.7 billion figure. Although I will not bore the House by going through them all, I shall outline several because it is genuinely important that I make this case. The Association of British Insurers says that the estimate of financial loss due to identity fraud is £22 million. If the biometric system and ID cards are to tackle such fraud in the insurance system, every insurance policy will have to be linked to a biometric card and its holder. Every time an assessor checks water or fire damage against a policy, the holder's biometric card will have to be verified so that there is a link between the person, the card and the policy. That is the only way in which the scheme could help to tackle fraud in the insurance system, but the process would be expensive, and no doubt the full cost of it would be passed on from the insurers to the citizen.

The Association for Payment Clearing Services says that £504.8 million is lost due to plastic cards being used by criminals who are not their rightful owners. It has been said several times that the cost of fraud due to payments made when a card is not present is £150 million. If a person buys a plane or cinema ticket with a plastic card, both that card and the ID card could be presented at the aircraft or cinema for checking to prove that the person had made the purchase. However, if people buy goods by mail order that are simply delivered by a man with a white van, the scheme will provide no assistance whatsoever because goods can be delivered when people are not at home and the man is not going to have a biometric scanner in the cab of his van. That part of the £1.7 billion figure cannot be dealt with by the biometric register or the identity card.

According to the Building Societies Association, £3.1 million is lost to identity fraud, but the same applies to building societies as it does to insurers. Every building society account would have to be linked to a person with a biometric profile and every time a transaction on that account took place, fraudulent or otherwise, the person involved would have to verify their card against the central database and the central database against their account. That is the only way in which the proposed system could prevent fraud in the building societies sector, but it would be disproportionate and highly expensive, and the full costs would be passed on to the citizen and the customer.

CIFAS, the UK's fraud prevention service, says that the cost of identity fraud to the retail sector is £2.3 million. Much of that involves stolen cards being used in corner shops or supermarkets. It is inconceivable that there would be a biometric scanner at every till in Sainsbury's or Tesco's or—even worse—at the till in every corner shop. It is unlikely that the biometric register and the ID card could tackle that type of retail without placing a massive cost burden on the consumer and the citizen.

The Driver and Vehicle Licensing Agency and the Driving Standards Agency say that the cost of preventing identity fraud—not of fraud itself—in their sectors would £2.5 million and £1.2 million.

indicated dissent.

Well, perhaps the Minister can intervene and tell me by how much that cost of prevention will be reduced and what savings the consumer and the citizen will gain if the new system is introduced. I have paused, but the Minister is staying shtum—that is okay.

The list goes on. The Finance and Leasing Association estimates that

"identity fraud arising from the provision of motor finance" costs £14 million. Does the Minister seriously expect an identity card system to stop that sort of fraud? Does he expect every second-hand car dealer that pulls out a set of financial agreements to be signed in a portakabin somewhere to use a biometric scanner before allocating them to the person who has come in to purchase a car? That would be the only way in which the ID system and the biometric register could solve that problem.

It is highly unlikely that anything approaching £1.7 billion will be saved. Earlier, the Minister suggested a lower annual saving. He suggested a range, but even the low end of his forecast would be achieved only if all the measures that I have described were implemented. Such savings could not be achieved within the set-up costs and the ongoing running costs of the system covering passports and ID cards alone that the Secretary of State spoke about earlier.

It is certain that the real cost to the citizen will be far higher than the costs that the Government have already specified—the running costs and the set-up costs, which are still unclear. Those costs will be higher than has been suggested, because if identity cards and the central biometric database are to solve problems of fraud, scanners linked to the database will be required in every shop, supermarket and filling station, and in every bank, building society and insurance broker. The police will need portable scanners in their police cars, and insurance assessors likewise. The costs of all that would be fully passed on to the consumer.

It is incumbent on the Government to tell us not their set-up costs and the Home Office running costs, but the real and full costs of the measure, including a best-guess estimate of the costs to the private sector. It is incumbent on Ministers to tell us whether businesses will be expected to bear the costs or whether they can pass them on wholly to the citizen, or by how much the Government will have to increase taxes to pay for the scheme if they believe that ending some of these fraudulent measures would be worth while and cost effective. Either way, with a project of such a scale and complexity, we cannot be expected to buy a pig in a poke.

I want to support a robust announcement of the costs—the detailed development and running costs, including those in the private sector—but that is not an option in either amendment. However, Lords amendment No. 70 is more robust, not least because amendment (a) in lieu has the 10-year rule, which would allow large hikes in capital expenditure or early revenue to be averaged out and hidden over the 10 years for which the figures are reported. If we vote on that—it is not yet clear that we will—the Scottish National party will back the Lords amendment.

I hope that the Minister and others on the Labour Benches will take cognisance of the feeling on the subject. We need genuine detailed information up front. We need no obfuscation. We need to be clear of the set-up costs, not just for the Home Office, but for the whole scheme, and of the running costs not just for the Home Office, but for every Department. In the private sector, we need best guesstimates so that we understand exactly what the cost to the citizen and consumer will be if the identity fraud played up by the Government is genuinely to be tackled.

It is nice to be able to return to the subject of the cost and benefit of ID cards. I was fortunate enough to have question 1 this afternoon, as you might remember, Mr. Speaker. It was on the cost of ID cards per person. The answer from my right hon. Friend the Secretary of State was that the cost of a stand-alone ID card would be £30 for 10 years—£3 per person per year. It is important that we subject the issue to a simple analysis of cost and benefit. We know that the cost is £3 per person per year—

The hon. Gentleman knows that, does he?

I do. The £30 has been announced. It is to be over 10 years. Even my arithmetical capability is up to doing that division sum: it is £3 per person per year. The Home Office has estimated the benefits. Estimates are bound to be rough, but no one has seriously challenged its figures. In fact, they have hardly been mentioned. I get the impression that no one has read the document put out at least a year ago on the Home Office benefits overview.

As someone who certainly read the setting out of the Government's position—such as it was—there is no evidence from any private sector source on the supposed savings and benefits that may be achieved. A figure is named, but no one sets out any evidence on how it was calculated, based on real experience.

I am happy to provide my hon. Friend with the answer. Although the figures are published by the Home Office, they are taken from APACS, CIFAS, banks and all the financial institutions that have provided estimates to the Home Office, and it has reprinted them. Hon. Members may cast doubt on those, but the figures have been arrived at by the people who will make use of the ID system.

The combined effect of all the estimates, including those from Departments, is a benefit of up to £1.1 billion. I am sure that hon. Members can work out that the figure of £1.1 billion divided among about 38 million ID card holders is a benefit of £29 a person. So there is a cost of £3 and a benefit of £29. [Laughter.] Hon. Members may laugh because so many figures of billions of pounds have been poured over the House. The simple truth is, however, that the best estimates show that that is the value of the ID card.

There are those whose main concern is civil liberties and the police, although they will have no additional powers.

The Bill does not give the police any extra powers. However, does my hon. Friend agree that although the police will not be allowed to stop someone and request an ID card on spec, the Bill does not stipulate that they cannot stop someone and ask for biometrics on spec? I hope that he can he confirm that they cannot do so under the Bill, as it would result in an electronic form of the sus laws which, we all know, disproportionately affect black and minority ethnic people?

That is my understanding of the Bill, and I would not support it if I thought that it was a device to give the police powers to stop people in the street and ask them for their ID cards. From the very beginning of this debate four or five years ago, it was made clear in the Government White Paper and the consultation document that the Government did not want to consult on—indeed, they did not even countenance—the introduction of an ID card that people must carry at all times. Some European countries require the carrying of ID cards, but that option was excluded from the start. I do not believe that the police should be able to stop people and ask them for details of biometrics or anything else for which they cannot already ask.

My hon. Friend said that some people were concerned about civil liberties. There are anxieties that the amount of information on the register that is limited under schedule 1 to name, date of birth, place of birth, gender and address will creep up and increase. Can he confirm that before additional information is included in the register primary legislation must be introduced?

That is my understanding. Only six items of personal information will be included on the register—name, address, date of birth, place of birth, sex, nationality and, for people from overseas, information about their work permit. The legislation does not allow any further information to be added to the register. I believe one or two items should be added to ID cards, including organ donor information and medical information which, in an emergency, could make the difference between life and death. However, even that information, which could save someone's life in hospital, cannot legally be added to the register.

May I clarify something in response to the question asked by my hon. Friend Ms Butler? I can confirm that the Bill does not extend police powers, as my hon. Friend Martin Linton rightly said. It would only provide power of identification in the case of arrest, but obviously the police already have such a power. The Bill does not create the situation feared by my hon. Friend the Member for Brent, South, but it would ease police bureaucracy in the case of ascertaining identity.

I thank my hon. Friend for that reassurance.

The total quantified financial benefits are estimated by the Home Office—anyone is welcome to challenge the figures, but it is significant that in six hours of debate few Members have chosen to do so—to be £1.1 billion. That figure, as I said, was agreed with the banks and the organisations that will use the scheme. More than half the expected savings are expected to come from savings on ID fraud alone, and they will amount to £570 million. The more efficient running of public services will account for £385 million—£85 million from the reduction in crime and only £39 million from the reduction in immigration offences.

The database will be an active database containing the audit trail and a record of every time the verification service is used. Does that not cause my hon. Friend concern? With reference to the question from our hon. Friend Ms Butler, the police will not need to access the card if they have readers, because the person will be present and they will be able to check the biometrics against the register.

As I understand it, the organisations that seek verification from the register will be able to do so only with the consent of the individual, and they will get verification only of the details that they give. Only the police and the security services, when investigating a crime, will be able to get the audit trail. I am happy to be corrected by my hon. Friend the Minister if that is wrong. The audit trail is available for the investigation of crime.

We should concentrate on the massive cost of identity fraud, which has increased, as we know from last week—

The hon. Gentleman was asked by Mr. Khan whether he could confirm that schedule 1 could be altered only by way of primary legislation. He confirmed that that was the case. Has he considered the effect of clause 3(5), which states:

"The Secretary of State may by order modify the information for the time being set out in Schedule 1"?

Does he wish to reconsider the answer that he gave to his hon. Friend?

I am sure that my hon. Friend the Minister will intervene if I am wrong. At the very least, the subsection that the hon. Gentleman quotes is an indication that the schedule could not be changed without the approval of the House.

All hon. Members must know someone who has had their card stolen and their identity stolen, perhaps by someone going through rubbish and picking out their credit card numbers. That is one of the fastest growing crimes. Quite apart from the effect on the individual whose identity is stolen, the average time taken to sort out the financial problems caused by identity theft is 60 hours, and in some cases goes up to 240 hours. Individuals who are victims of identity crime may be compensated by the banks, which are held responsible, but the banks must recover their costs from us in bank charges. The average person in the UK pays at least £25 or £30 a year through bank charges to cover the cost of ID fraud.

Wednesday sees the introduction of chip and pin to make savings on fraud, but the savings to be made from reducing ID fraud through the ID card are far greater. If those who make the cost argument were to succeed, they would have to argue that the cost of the card is nearly 10 times higher than the Home Office says. All the indications are that the costs of ID fraud are rising. The benefits of curbing it are likely to be higher. The Minister announced from the Home Office this week that the cost to the country of ID fraud has increased from £1.3 billion to £1.7 billion.

In the time assigned to me, I shall make two points. I am delighted to say that having been a critic on the basis of the costs of the exercise, I find myself in agreement with my right hon. Friend the Home Secretary. We will look carefully at the figures.

My second point is about a matter on which I feel strongly. I am sure that my hon. Friends the Ministers will listen, as I have lobbied them in the past. It is a great shame that we have not reached the Liberal Democrat amendment on accessibility. There is an issue that is not financial in terms of costs and benefits, but concerns how individuals can be persuaded to take up biometric passports, and ID cards in due course, and that relates to the need for people to be able to get easily to places where they can give their biometric details. I would argue strongly that only one body meets that requirement, and that is the Post Office. I have lobbied Ministers on this and I make no apology for finishing this particular set of debates on that—

It being Ten o'clock, Mr. Speaker put forthwith the Question already proposed from the Chair, pursuant to Order [this day].

The House divided: Ayes 314, Noes 261.

Question accordingly agreed to.

Lords amendment disagreed to.

Lords amendments Nos. 68 to 70 disagreed to.

Amendment (a) in lieu of Lords amendments Nos. 1, 68, 69 and 70 agreed to.

Lords amendment No. 4 disagreed to.