Original URL: http://www.theregister.co.uk/2005/09/13/id_costs/
UK.gov ID card costings fit on back of (small) envelope
Mathematics of the madhouse
Analysis Earlier this year the home secretary condemned research from the LSE and Kable which costed his proposed ID card proposals at three times the government’s preferred numbers.
Charles Clarke described the figures as "mad" and naturally backed the Government's "best estimate" of £93 per ID Card. It follows that the £93 figure must be a robust one and not one which could be the result of a trivial calculation that many 14 year old school pupils could perform.
Unfortunately, as we explain below, it is possible to perform one such calculation to get within 0.5 per cent of the Government's "best estimate".
The starting position of the calculation is the information provided by the Government in its response to the LSE paper and the Passport Agency's published business plan. The Home Office response to the LSE research states that the Passport Agency would issue ID Cards, and that this would involve additional costs (eg "extending the scheme beyond the 80 per cent of those aged 16 plus who have passports"; "recording biometric information"; "providing online verification service", and "materials associated with the manufacture of the cards").
The published "corporate and business" five year plan (2005-2010) for the Passport Agency shows that it is supposed to be self financing (eg the costs of running the Passport Agency are to be recovered by revenues such as passport fees). The official Passport Agency plan predicts £4bn of income in the decade starting 2006 so, if we assume that the Passport Agency achieves financial balance, it follows that the projected costs of the Passport Agency is also £4bn over the next decade.
We also know from Government statements that the ID Card is also supposed to be self financing and that the Passport Agency will issue the ID Card. So it is reasonable to take the £4bn cost of the Passport Agency per 10 years and assume that the passport and ID Card will be wholly integrated. Since the Government state that there are about 20 per cent of the population not having a passport, it is possible to scale up the costs of Passport Agency costs for the 10 years by 20 per cent. This gives you a figure of £4.8bn over the next decade.
However, the additional costs of ID Cards (eg providing a verification service etc) can be estimated to be about 30 per cent more than biometric passport (this can be deduced from the fact that the Government compare a sum around £70-£75 for the passport as against £93 for the ID Card).
Again if we assume that passport staff will do the work, we can increase the cost of the combined passport/ID Card office by another 30 per cent from the £4.8bn figure. This gives £6.25bn for the decade.
If one divides £6.25bn by £93 - the Government "best estimate" for the cost of an ID Card - then you arrive at the number of cards issued. This suggests 67.2 million cards issued which then can be compared with the Government's own official number for the number of ID Cards issued. The published figure is 67.5 million (paragraph 8, page 132, of CM5557 - Home Office publication on Entitlement Cards and Identity Fraud).
So our 300 word cost calculation – which does not extend over 30 pages, unlike the costings in the LSE Report – arrives at a figure which is 0.45 per cent out from the Government "best estimate". Of course, this could be a mathematical coincidence - as the Government has not published its costings nor how it arrived at its "best estimate". But such a calculation does open up the possibility that Home Office Ministers have criticised detailed research and cost analysis from the LSE and Kable and prefer a "back of the envelope" calculation.
Not only this - the calculation also assumes that the Passport Agency type database IS the same as ID Card database. This obviously can't be correct as the costs of the equipment needed by hospitals, police, public authorities, banks etc to access the database is obviously missing (eg when one registers with a GP, the cost of the GP equipment to perform the check does not feature in our calculation).
One hopes that this trivial calculation does not represent the way Government worked out its "best estimate". If it is, it lends weight to the argument that the LSE and Kable Report have been trashed not because its research is biased but because the research raises issues which the Home Office do not want to consider.®