8. Fees for adult and child UK passports rose ahead of inflation between 1998 and 2006, from £21 for an adult passport and £11 for a child's passport in 1998, to £66 for an adult passport and £45 for a child's passport from October 2006. Passport fees could be set to increase substantially over the next five years to fund the introduction of second generation ePassports. Larger capacity chips will be needed to hold the basic data and fingerprint image; and more locations and additional staff will be needed to collect biometric data from adult applicants (When second generation ePassports are introduced all applicants, including renewal applicants, will need to attend in person to provide their fingerprints and facial image under the supervision of an Identity and Passport Service member of staff). In addition, the gradual move to interviewing all 600,000 first time adult passport applicants, which began in 2007, is forecast to cost around £180 million to 2010, including the establishment of 69 additional offices at which to conduct interviews.[10] Figure 3: Adult and child UK passport fees have risen sharply since September 2003

Figure 3: Adult and child UK passport fees have risen sharply since September 2003
Passport fee (£)

Source: National Audit Office analysis of Identity and Passport Service data

9. The direct costs of producing a passport more than doubled in the 13 years between November 1992 and November 2005 (Figure 4). From December 2005, the cost of processing each application rose by almost £4, and anti-fraud initiatives cost each applicant £14.51 (28% of the then application fee of £51). By October 2006, when the application fee increased to £66, around a third of the cost (£21.76[11]) of producing a passport was attributable to anti-fraud measures and the Authentication by Interview project. The Identity and Passport Service told us that these anti-fraud measures included the cost of Fraud Investigation Units based in each of the regional offices; the checking of applications for fraud and taking follow-up action; ongoing anti-fraud change initiative projects; security enhancement projects; and management and fixed costs.[12]

10. Rather than wait to hold a competition when its current contract expires in 2010, the Identity and Passport Service negotiated a new contract for the production of ePassports with its existing passport supplier. The agency judged that introducing the ePassport by the US deadline, thereby achieving continued participation in the US Visa Waiver programme, was of significant economic benefit to UK citizens and the UK economy. The provision of the chip units was subject to competition,[13] but the introduction of ePassports might have cost less if there had been time to tender the whole contract.

11. The main reasons for the £15 increase in the cost of an adult passport in October 2006 were the increase in the cost of production of the passport book (up £7.25), the cost of Authentication by Interview (£5.88),[14] and an increase in the cost of anti-fraud initiatives (up £1.37). The Identity and Passport Service tested the market and concluded there was scope to increase fees further if it could convince the public of the benefits arising from the improvements to the security and integrity of the document.[15]

12. The decision by the Identity and Passport Service to use consultants to meet tight ePassport deadlines, rather than employ permanent civil servants to do the work, has meant that the skills and experience it requires for subsequent projects have not been fully retained within the organisation. The Identity and Passport Service recognised that it should strengthen its internal capability rather than buying in non-technical expertise from outside, and that a greater proportion, particularly of the administrative and project management roles of its large projects, should be completed by permanent civil servants who were cheaper to employ and easier to retain. The Identity and Passport Service had aggressive timescales to meet, however, and operated in a competitive market for technology and project management skills, so it was not always possible to recruit people of the required calibre when it needed them. It was currently recruiting to increase the size of its technological and programme management group from around 80 to a group of about 200 during 2007.[16]

Figure 4: Full data is not available on the historical composition of passport fees

	Fees 22/11/92 to 27/3/98	Fees 28/3/98 to 15/12/99	Fees 16/12/99 to 29/11/01	Fees1 30/11/01 to 20/11/02	Fees 21/11/02 to 03/10/03	Fees 04/10/03 to 30/11/05	Fees 01/12/2005 to 4/10/06	Fees 05/10/06 to 03/10/07
Application processing	£13.05	£15.32	£21.27	£21.41	£9.82	£10.16	£14.02	£14.49
FCO consular protection2					£9.40	£9.65	£9.65	£9.65
Book production3					£5.00	£5.00	£5.00	£12.25
Secure delivery4						£3.00	£3.00	£3.00
Anti-fraud initiatives5							£14.51	£15.88
Subtotal	£13.05	£15.32	£21.27	£21.41	£24.22	£27.81	£46.18	£55.27
Administrative costs	£4.95	£5.68	£6.73	£8.59	£8.78	£14.19	£4.82	£4.85
Authentication by Interview6								£5.88
Total	£18.00	£21.00	£28.00	£30.00	£33.00	£42.00	£51.00	£66.00

Notes:

1  Prior to November 2002, costs were only split between direct passport production (application processing) and indirect overhead (administrative) costs.

2  The proportion of the fee which is passed to the Foreign and Commonwealth Office (FCO) to fund the provision of consular services for British travellers overseas was only formalised in 2002-03. Prior to this a surplus agreed with the Treasury was made and credited to the FCO.

3  Prior to 2002-03 the cost of passport book production was included in application processing costs.

4  Secure Delivery was introduced in 2003-04 and earlier distribution costs are included in application processing.

5  The cost of anti-fraud initiatives has only been isolated from 2005-06. Previous data is not available.

6  Authentication by Interview project costs began to be incurred from 2004-05.

7  The standard adult passport fee will increase to £72 from 4 October 2007.

Source: Identity and Passport Service

13. The Identity and Passport Service plans to fingerprint passport holders every ten years, requiring repeated personal attendance at a Passport Service office and substantial fee increases to cover the costs of gathering and processing this data. All applicants, except those in remote communities, are intended to be within one hour's travel time of one of these centres. The network of interviewing offices will need to be expanded when fingerprint data is required from 2009 for second generation ePassports. The Identity and Passport Service had not factored in the financial cost and time required to make these journeys for those in outlying rural areas, those reliant on public transport or on low incomes, or the physical burden of travel for the elderly and the disabled. [17]

14. The core validation process which seeks to establish that applicants are who they say they are and that they are entitled to the document applied for will be exactly the same for identity cards as for ePassports. It is estimated that around 70% of the estimated cost of the national identity scheme would be incurred anyway as the UK moves to incorporate fingerprints into second generation ePassports, and that the specific costs of producing an ePassport or an identity card document will be a small part of the total cost. The Identity and Passport Service is expected to set fees so as to break even on its passport service, but it receives central government funding for the development of the national identity card project, as does the Border and Immigration Agency for the eBorders project. The Identity and Passport Service is revising its regular cost reports setting out the expected cost of delivering the national identity scheme, to give more detail on the respective proportions of costs which relate to passports to identity cards.[18]

15. The national identity card will entail significant additional costs for the high proportion of the UK population that already holds a passport. The Identity and Passport Service told us that the national identity card is intended to fulfil a different role from the passport, and will have the capacity to prove identity using chip and pin technology. The identity card will be valid for travel in Europe in lieu of a passport, but not for travel to the US under the Visa Waiver programme. The ePassport therefore offers broader utility in terms of global travel.

11   Anti-fraud initiatives of £15.88 and Authentication by Interview costs of £5.88; Ev 22 Back

12   Ev 22 Back

13   Qq 77, 101,105, 150, 151 Back

14   A breakdown of expenditure on Authentication by Interview for 2004-05 to 2006-07 and budgeted costs 2007-08 to 2009-10 can be found in Table 4 of the Supplementary Evidence ; Ev 23 Back

15   Qq 58, 113-117  Back

16   Qq 6, 7, 17, 18, 131-134, 143, 144 Back

17   Qq 92, 95, 99, 155, 157 Back

18   Qq 16, 96-98, 168, 169, 171, 176,  Back