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How Clarke is fiddling the £30 'affordable' ID card

Home Office figures right, apart from all the numbers

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Analysis If Charles Clarke is announcing that ID cards are only going to cost £30, then the ID Cards Bill must be due back in Parliament any day now (yup, Tuesday), and Labour Party MPs must be looking for some threadbare justification for continuing to support it. And if that's not quite enough ('Isn't £30 pretty much what they said last time we bravely gave in?') then Clarke also has a report demonstrating "strong public support for the scheme" and an "independent analysis" from KPMG backing him up on the scheme costs.

We now propose to demonstrate how Clarke, who announced the £30, the report and the KPMG analysis in a written answer to a parliamentary question on 13th October, was to all intents and purposes misleading the House. We should however note that he was not lying as such - he was merely giving his target audience on the Labour benches the tools to believe what they desperately want to believe, and the sad truth is that not many of them are going to be inclined to say, 'Er, hang on a minute, Charles...'

Clarke's answer (which we reproduce in full below), was intended to convey the impression that the price for an ID card has now been fixed at £30, that this price can be achieved within the Home Office's estimated costs for the full scheme, that KPMG says that these costs are themselves realistic, and that public opinion remains strongly in favour of ID cards. But Clarke didn't actually say any of these things, and at least some of what he said suggests that the truth will turn out to be radically different from the impression conveyed.

We'll take the KPMG analysis first - or to be strictly accurate in the way we wish Clarke had been, we won't take it because Clarke isn't about to let us (or indeed anybody) have it. We'll just have to take what he said about it instead, which was "independent analysis in a report from KPMG, a summary of which will be published shortly, has concluded that the costing methodology is robust and appropriate for this stage of development." He does not say that KPMG has said that the costs are realistic, he is simply saying here that the analysis says that the way the Home Office is currently going about tallying the costs is reasonable for a project at this stage. Clarke says no more on KPMG in his written answer, but a footnote to the press release tells us that "KPMG have recommended improvements such as extending the sensitivity analysis, revisiting the process for estimating contingency and revisiting some cost assumptions. KPMG have confirmed that the majority of the cost assumptions are based on appropriate benchmarks and analysis from the public sector and suppliers."

Which means? Sensitivity analysis is used to determine the sensitivity of outcomes of an alternative to changes in its parameters (thank you, Web Dictionary of Cybernetics and Systems), which in this case would seem to suggest KPMG may think the Home Office estimates of cost may be overly optimistic. One example (our example - we may never get to hear what KPMG's are) might be if a lot of people decided they were perfectly happy just travelling in Europe on a £30 ID card, and therefore decided not to bother with £93 for combined card and passport. The recommendation to revisit "the process for estimating contingency" is in a similar ball-park, probably meaning the estimates are too dependent on everything going according to plan, while "revisiting some cost assumptions" could reasonably be interpreted as meaning that the ones needing revisiting are wrong. Last Sunday Home Office Minister Tony McNulty offered a small hostage to fortune here by telling BBC news that the contingency is built into the cost structure of the budget for the whole project, and that this has "stood up well" in the project's Gateway Review.

Might the cost assumptions that exercise KPMG be related to the cost assumptions the LSE analysis thought were suspect? They could well be, but we may never know because Clarke will not "release the precise costs for individual aspects of the scheme because this information is commercially sensitive and could affect the Department's ability to secure value for money from the market." This commercial sensitivity is a get out of jail free card ministers deploy in order to avoid levelling with Parliament about the costs of virtually anything, not excluding office furniture. It is however clear from the little information the Home Office has dripped out that while KPMG might think the calculator the Home Office is using is OK, it has a few queries about the figures being tapped into it.

Judging from previous track record, Home Office spin doctors are working on a dodgy summary of the KPMG analysis at this very moment. This will at best be released a very short time before MPs file through the lobby, leaving no time for anyone to point out that there are no facts in it.

As far as the price of a card goes, Clarke said that it will be "affordable to set a charge of £30 at current prices for a standalone ID card which is valid for ten years. This will be affordable within current Home Office spending plans." This isn't quite a guarantee, but as the plan is to keep a low price in the public mind while distracting attention from overall scheme cost, we can be confident it won't shift significantly. This concentration on the standalone card price as a distraction from scheme cost is dealt with in more detail here.

Clarke's answer of last week even draws attention to the artificial nature of the £30 price, if you think about it a little. Although he says that £30 is "affordable" within current plans, he also says: "Our current best estimate of the average unit cost of the combined passport and ID card package is £93." So the £93 is an estimate based on how much the total scheme costs, and may still change, while the £30 is based on the same costs, but is fixed. And what, one wonders, does Clarke mean by "average" unit cost? Does this suggest the Home Office is planning different kinds of passport at different prices?

The research report which Clarke says "demonstrates strong public support for the scheme" will no doubt come as a relief to Labour MPs who'd seen support ebbing in recent opinion polls. Their relief should however be tempered by the fact that although the report is dated on the Home Office web site as October 2005, it's based on research conducted first in January-February 2005, with the addition of a smaller scale 'refresher' in July 2005. And it's also somewhat twisted to see the report as a level playing field test of public support for the ID scheme; effectively, those surveyed were told that the scheme was going ahead, and then asked about the extent to which they were prepared to put up with this fait accomplit.

A few weasel words from the report illustrate this. The analysis approach used allowed the researchers to offer "a more realistic choice situation because participants are asked to choose between carefully chosen sets of complete products" (so who's doing the choosing here, exactly?) and for many people "demand for the card will be 'derived' demand arising from their need for a designated document such as a passport". That is, your 'demand' for an ID card stems from your being willing to pay £93 for a passport because that's what you have to pay to get a passport. Those surveyed were presented with "a Base-case concept' based on a consumer price of £93 for a combined ID card or £50 for a stand alone ID card."

Here, we take a 'base case concept' as being a non-negotiable bottom line.* Amusingly, the researchers tell us that the 75 per cent "demand" produced by this 'base case concept' "holds up well compared to today's 77 per cent of passport penetration." So when (not if, when) the price of a passport goes up from £42 to £93, almost all people who currently have passports will still feel they need passports. The non earth-shattering nature of this discovery is reinforced by the researchers' discovery that even if a passport cost £250, 63 per cent of respondents would still renew their passport. The report seems to interpret this as demonstrating the firmness of "support" for ID cards, as opposed to being merely a statement of the bleedin' obvious. Essentially, all the report tells us about "demand" is that most of the public is prepared to cough up the non-negotiable price, and is not at this juncture going to feel driven towards the advocacy of violence in support of political change, which presumably won't have appeared as an option. This is no doubt enough for most Labour MPs these days, and it's a few years still until the next election. ®

* The author does not regard what he may or may not have taken at university 30 years ago as having any relevance to the content of this article; therefore in general he declines to comment on such matters. The approach taken by the Home Office's researchers however triggered a disturbing flashback to a student party where a swivel-eyed Trot lecturer explained the principles of something he called 'Romanian marketing.' This, he explained, was far more efficient than the capitalist practices of the West, and hinged on close linkage between marketing and manufacture. Thus, one year might be the 'year of the fridge', the next the 'year of the cooker', and so on. What this meant was that in, say, the year of the fridge the factories only made fridges. Thus, consumers bought fridges because that's all there was to buy, they hadn't been able to buy fridges last year because none were being made, and they wouldn't be able to buy any next year because there wouldn't be any being made ('No call for them, comrade'). Romanian marketing could therefore be tightly targeted, and indeed must have been incredibly cost-effective, given that stimulating demand couldn't have been exactly hard. Romanian marketing now appears to be doing contract work for the Home Office.

Clarke's answer: "It will be affordable to set a charge of £30 at current prices for a standalone ID card which is valid for 10 years. This will be affordable within current Home Office spending plans.

"This figure has been arrived at following careful scrutiny of the costs of the ID cards scheme over the summer by the Home Office, in full consultation with Treasury and other Government departments.

"We are unable to release the precise costs for individual aspects of the scheme because this information is commercially sensitive and could affect the Department's ability to secure value for money from the market. However, independent analysis in a report from KPMG, a summary of which will be published shortly, has concluded that the costing methodology is robust and appropriate for this stage of development.

"We are also developing plans to roll the scheme out faster using registration with the criminal records bureau as well as passport application to enrol people into the ID cards scheme. This would lead to faster issuing of the card and improved outcomes and budget savings for the criminal records bureau.

"We remain confident that further significant savings to Government and the private sector will be identified as plans are developed. In particular, Tony McNulty MP now chairs a cross-Departmental Ministerial committee to identify transformational benefits and efficiencies which the ID cards scheme can deliver to other Government departments.

"Our current best estimate of the average unit cost of the combined passport and ID card package is £93; around 70 per cent of these costs would be incurred anyway because of the worldwide move to biometric passports. We expect that most people will still choose to get their ID card alongside their new biometric passport as this will be the most convenient way to participate in the scheme and will give people the full benefits of having the most secure travel documentation.

"I am also publishing today a research report 'Identity Cards: an assessment of awareness and demand for the Identity Cards Scheme' which demonstrates strong public support for the scheme."

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