If the cap fits.

The Identity Cards Bill passed its second reading with a majority of 31 and, unsurprising, the Government have moved a programme motion – otherwise called a ‘guillotine’ – restricting debate at the committee stage of the Bill to 19th July and leaving no time for either the Public Accounts Committee or Home Affairs Select Committee to examine the detailed costs of the Bill.

Translation – Rush job with as little time for debate/scrutiny as they can get away with.

Better still, Charles Clarke has announced that he will cap the cost of ID cards to the public, although he won’t say to how much at this stage.

How? How will he do that given the Government’s track record on delays and cost overruns on large scale IT project, where a doubling of costs to get the system working – if it works at all – is not so unusual.

Now I’m no economist – maybe if Tim Worstall pops by then he could critique what follows – but the Home Office’s position is ID cards have to be self-financing. There’s no Treasury bail-out in the offing if it does go pear shaped, at least not right now and possibly not ever as we can take it as read that if the Treasury is not going to put up any money for this system then, privately at least, Gordon Brown is unlikely to be much of supporter.

So with a cap in place, what happens if there is a cost overrun, and a big one. Where, if that happens – and past experience suggests that its more a case of ‘when’ and ‘how much’ than ‘if’ – will the money come from to cover the costs of the system?

After all, if the cost to individuals is capped then, presumably, the only other way to make the system pay is going to be either by –

a. ‘losing’ some of the implementation costs in other budgets by recharging part of the total cost to those Government departments and public sector agencies who make use of identity verification. So if the DWP want to use identity verification on welfare benefits claimants or the NHS want in to ascertain individual ‘entitlements’ to services or even just identify people who ship up in A&E unconscious in order to find their medical records in its own, hugely expensive – and over budget – system, then they have to pay for the equipment and services like any other third party user…

…except that if you lay off the cost that way then you’re taking additional money out of departmental budgets which means that the Treasury either has to give them more money – and raise taxes – or they will have to make cost savings in other areas, which generally means a reduction in services.

OR

b. increase costs to other third party users of the identity verification service, most of whom, like banks, building societies, insurance companies, etc. are in the private sector.

Ah, but now you start taking a few risks.

Price your services too high and the cost to the private sector could limit the uptake of these services. This is basic ‘bottom line’ market economics – business will only pay for a service if the benefits of the service to its business outweigh its costs.

And even if the private sector does pay the increased costs well then the other bottom line in business kicks in- whatever business has to pay gets passed on to us in increased prices so that they recoup their costs.

It doesn’t matter how you slice it, we end up paying the bill – the full bill – for ID cards and the National Identity Register. The only thing we don’t know at this stage is either how big that final bill will be and how much of it will it obvious that we’re paying in direct charges as opposed to what we end up paying for indirectly in either increased taxes, reduced services or higher charges when we but goods and services from businesses.

That’s what ‘self-financing’ really means – we, the citizen, pay for everything one way or another…

…and on the basis of a simple ‘back of a fag packet calculation’ using the Home Office’s figures – £6bn split amongst 44 million adults and no concessions, so pretty much about as good as their own figures which look to have been pulled of Charles Clarkes arse for all they reflect the real costs – that comes to around £130-140 per person rising to double or even treble that figure is the LSE is anywhere near close in its estimates.

Assuming everyone pays – which I won’t be – so that’s already an extra £140 that you lot whole support this hideous bill are going to have to find between you for starters – assuming it even works in the first place.