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UK Passport Contract

Volume 638: debated on Monday 26 March 2018

(Urgent Question): To ask the Secretary of State for the Home Department if she will make a statement on why the contract for the new UK passport has been awarded to a French-owned company.

Her Majesty’s Passport Office is currently procuring services to design, manufacture and personalise UK passports from summer 2019, when the current contract ends. HM Passport Office has undertaken a rigorous, fair and open competition in accordance with UK law, and in line with EU and World Trade Organisation rules. This process began in March 2017, at which point HM Passport Office clearly set out the requirements under which potential suppliers should table their bids.

The security of the passport and passport holders’ personal data is paramount, and the tender requirements clearly set out the high standard of security that must be met to undertake the contract. For example, under the next contract, all passports will continue to be personalised with the holder’s personal details in the United Kingdom, which ensures that no personal data will leave the UK. However, the printing of blank passports in the UK is not a new requirement. Robust processes that have been established over a number of years have determined that manufacturing passports overseas presents no security concerns. Under the current contract, up to 20% of blank passports are produced in Europe. There is no reason why overseas production should not continue in the future and, as such, a national security waiver could not apply.

While there are no security or operational impediments to outsourcing the production of passports, there are significant benefits in terms of both value for money, and production innovation and development. This procurement has identified the supplier that best meets the needs of our passport service—keeping the UK passport at the forefront of travel document security, while offering the best value for money. I am unable to confirm any details of the bids while the process remains subject to commercial and legal sensitivities. However, a public announcement to confirm the winning bidder will be made once the contract is formally awarded.

Last week, I visited staff at the De La Rue factory in my constituency who currently work on the passport contract. They provide secure, quality-assured passports with great pride. Can the Minister tell the House and my constituents what assessment has been made of the security implications of the production of UK passports by a non-UK company, or their production outside the UK? What assessment has she made of the deliverability and reliability of Gemalto’s bid, which I understand was over £100 million less than other bids, in the light of the Government’s experience of Carillion’s failure? Why was it felt appropriate for the Prime Minister to open the new headquarters of Thales—the French security and defence company that has recently taken over Gemalto, one of the bidders for the passport contract—during the procurement process? The Government must provide clarity about whether the bid was discussed at all during the visit.

In responding to press inquiries about the contract, the Home Office has drip-fed information and referred consistently to price and best value. However, does the Minister agree that best value is about more than money? It is about having a secure and reliable passport system that works for the UK. There must be questions about how Gemalto can make a contract worth £390 million work. In fact, I understand that the bid from De La Rue was significantly less than the previous price, and that it operates a gain-share agreement whereby any excess profits are returned to the Home Office.

I thank the hon. Lady for her question; she is quite right to champion the excellent staff in her constituency. However, I reassure her that the winning bidder will of course comply with the UK’s security policy framework and international security standards to mitigate and prevent internal and external threats to the manufacture and onward transportation of blank books. It was very important to the Home Office to abide by international rules, and WTO, UK and EU law, regarding the fairness of the procurement process. A great deal of financial due diligence was done on all the bidding companies, and we are of course determined to have a UK passport that will contain the most up-to-date and innovative security features, making sure that our travel document is at the forefront of security globally.

There has been a slightly childlike, jingoistic element to the debate on this issue from the moment it started, as we could have had whatever colour passports we wanted while still remaining members of the European Union. However, given that we are embarked upon this, does my right hon. Friend agree that De La Rue is a very successful British company that wins fair, international tender contracts, and earns a great deal of money for this country by printing other people’s currencies and official documents? When we negotiate trade agreements in the future, we will be pressing other countries to open up their public procurement processes to genuine, fair, international competition. It would be totally ridiculous to abandon that principle now to give into not only constituency pressures, which I understand, but otherwise nationalist nonsense that ought to be ignored.

I very much appreciate my right hon. and learned Friend’s contribution—how could I not? He is absolutely right to point out that we wish to be a global, outward-looking trading nation. All the companies that participated in this tender process provide identity documents and bank notes, and other passport providers have bid. The reality is that in a fair procurement process, we had to look at quality, security and price, and this was the contract that provided the best value on all counts.

The Minister will be aware of the concern among supporters of every party in this House and none about the prospect of a British passport being printed by a Franco-Dutch company. The Government cannot be allowed to hide behind EU procurement rules. They must take responsibility for the potential fallout on workers, their families, the community and the Government’s wider industrial strategy. Does the Minister accept that it was wrong that the workers at De La Rue were not directly informed of the Government’s decision, but instead heard from the media that their jobs were at risk? Is this what senior Ministers in the leave campaign meant by “taking back control”?

Far from taking back control, it seems we cannot control where our passports are printed. We understand that passports may be manufactured partially in the UK, but it is telling that for security reasons—security reasons that the Minister does not appear concerned about—in countries such as France state-run companies make the passports. What is the total cost of the switch to blue passports? We read reports of savings of £120 million made in the allocation of the contract. Last December, the then Immigration Minister estimated the cost to be £500 million. We are now told that it is £490 million, so the original estimate seems to have been almost exactly correct.

Finally, the Minister must understand why the public see this whole episode as a farce. Labour Members call on Ministers to re-examine this decision and to meet De La Rue, the trade unions and others to ensure that this industry, the quality of the jobs that come with it and our security are protected. Ministers have to understand that the cheapest is not necessarily the best.

I gently point out to the right hon. Lady that it was in 2009 that the rules were changed to enable the British passport to be made overseas and that 20% of blank passports are already printed abroad—[Interruption.] She refers repeatedly from a sedentary position to taking back control. Yes, we are: we are taking back control by awarding a contract within procurement rules—WTO rules as well as EU rules, which are embedded in UK law—and it is imperative that we have the most secure and up to date passports at the best value for money.

I am concerned for the De La Rue plant in Bathford in my constituency, which produces the very high-quality security paper used in Chinese passports, among others. Would it be possible for the Franco-Dutch consortium to buy its secure paper from Somerset, which would of course be De La Rue paper and of very high quality?

My hon. Friend has done well to point out that De La Rue already prints documents for many different countries. Quite rightly, as with any British company, we wish it to be outward looking and global in its perspective. He makes an important point about paper milling in his constituency that I am sure the successful bidders will have heard.

I am sure that everything in North East Somerset is of the very highest quality, and often rather refined.

The Scottish National party sympathises with the workers whose jobs are threatened by this decision but, to be frank, the issue of where the new United Kingdom passport is printed as a result of the Government’s handling of Brexit is the least of our worries. Getting a dark blue passport—as the right hon. and learned Member for Rushcliffe (Mr Clarke) said, we could have had one all along, had we wanted it—will be little consolation for the loss of our EU rights, including the right to travel freely for work, study or pleasure, the right to free healthcare, and the rights protected by EU law and the Court of Justice. What benefits will we get from the dark blue passport to outweigh these losses? How many British citizens lucky enough to have a parent from another EU member state are, like me and many of my constituents, applying for an Irish, French or German passport so that they can hang on to those EU rights?

The hon. and learned Lady appears to have focused on the colour of the passport and Brexit rather than the issue at hand: the need to obtain the best possible value for money in the new passport contract, and also to ensure that whatever the outcome of Brexit, we have one of the most secure travel documents in the world, with a range of innovative features.

The French Government own 26% of Gemalto, and De La Rue was not allowed to compete for the making of the French passport. Is my right hon. Friend aware of any soft loans or subsidies that have been supplied to Gemalto by the French Government, and will she make public the financial assessment of this £120 million so-called saving?

This procurement is still subject to the full legal process, and I have no intention of making public anything that might jeopardise that. My hon. Friend has pointed out that 26% of Gemalto is owned by the French Government. Having their own national provider enables the French to get around EU procurement rules and, indeed, World Trade Organisation rules. What matters to me is that Conservative Members believe in both fair competition and global trade. We should welcome the fact that we have in De La Rue a company that trades successfully around the globe and secures contracts for all sorts of identity documents and, of course, banknotes. We should welcome the fact that we are not going to nationalise that company.

Given the policy of taking back control, will the UK have its own procurement policy for large contracts such as this one for passports separate from the Official Journal of the European Union process? Will that also mean that British firms will be less able to compete for public sector contracts in other EU countries in the many ways in which they can now?

The right hon. Gentleman is right to point out that there will be all sorts of opportunities post Brexit for the UK to determine its own rules, but I should gently point out to him that this is subject to WTO rules, by which I think we should look to be well guided.

My right hon. Friend can be reassured by the fact that in 2010, when I was doing her job, the Labour MP Michael Meacher complained bitterly about the awarding of the contract to De La Rue because it had been taken away from a firm in his constituency. What was interesting about that firm was that it was an American firm, which had been given the contract by the previous Labour Government. Does my right hon. Friend agree that there is a degree of chutzpah in the modern Labour party’s saying that the British passport contract needs to be given to a British firm, given that when Labour was in power, it gave that contract to an American firm?

As ever, I can rely on my right hon. Friend to get straight to the point. There is a long history of British passports not necessarily being printed by UK companies. What is important to me is that we award contracts within the rules, that the Government do not seek to circumvent those rules, and that the process is handled fairly.

When the Prime Minister said that we would have a red, white and blue Brexit, we did not think that she was referring to the Tricolour. Why is protecting British jobs not a priority for this Government?

Seeking to protect British jobs in the way in which the hon. Lady outlines would be protectionist. I want British companies to be able to bid on a global stage for all sorts of contracts, and to be able to compete fairly throughout the world.

My right hon. Friend is right to call for a fair and open competition on a level playing field, but is she confident that there will be a level playing field, given that 26% of Gemalto is owned by the French Government? Is she confident that Gemalto’s bid, which was significantly lower than others, is sustainable in the long term?

As my right hon. Friend might expect, there has been close scrutiny of all the bids received—that has included a significant amount of financial due diligence—to ensure that the bidders can deliver on this contract, and deliver in a way that provides a British passport with the most up-to-date and important security features to be found in any travel document anywhere in the world.

Order. If we had one-sentence questions, most colleagues would get in, but before I go further, I would be inclined to say, “Are those pigs that I see flying in front of my very eyes?”

I have a great deal of sympathy with my hon. Friend the Member for Blaydon (Liz Twist) as she stands up for her constituents, but does the Minister agree that a lot of young people in this country will look at this debate with absolute bafflement? They never had blue passports; I never had a blue passport. What this actually represents is taking away rights as European Union citizens, which we discussed at great length the other day. That is the real damage in this situation.

I reassure the hon. Gentleman that this is not about taking away rights; it is about awarding a contract within the rules.

The EU leadership group is in turmoil: it is worried about the British passport being made in France, because when the French people see this symbol of freedom and independence and realise that the British people are gaining control of their borders, money and laws, they will rise up and want to leave the EU. What does the Minister have to say to the French?

My hon. Friend tempts me to say something I am really not going to say. What I welcome as part of this whole process is that we have companies in this country and abroad that can take part in a fair bidding process, where the best quality, the best security features and the best value for money wins, regardless of nationality.

An awful lot of the De La Rue staff in Gateshead live in my constituency, although the plant is in the Blaydon constituency. Has the Home Office carried out any assessment of the loss of revenue from national insurance, corporation tax and income tax to the Exchequer when this contract goes to a French Government-owned company?

It is important to reflect upon the fact that the new bidder will be providing new facilities and new jobs in the UK. We will of course seek to work with any company that experiences issues regarding the redundancy of staff, as any responsible Government would, but it is also very important to us that we make sure that we get best value for money for the British taxpayer.

My constituents in Harlow will welcome a saving of £120 million to the taxpayer, but may I put in an early bid by asking my right hon. Friend to spend that £120 million on the NHS by putting it towards scrapping hospital car parking charges?

I never fail to be impressed by my right hon. Friend’s ability to raise the issues about which he rightly campaigns and cares a great deal. Of course we need to consider how we spend any saving to the taxpayer in the best possible way. It is worth reflecting on the fact that the Immigration Act 2016 enables us to use any income received from passport fees to contribute not just towards the costs of the passport, but to securing our borders and making sure that there is easy and safe passage for British citizens through the border.

It is important to reflect on the fact that we do not believe in a protectionist policy. I can tell the hon. Lady that we anticipate that 70 jobs will be created in the UK as a result of the award of this contract, but this is about making sure that we get the best deal for the taxpayer, that we have the most secure and up-to-date travel document and, of course, that we abide by the rules and do not seek to implement protectionist policies in this country.

I absolutely support what the Minister has said, but can we perhaps move forward? What plans does the Home Office have for having not a paper passport, but a piece of plastic rather like our driving licence?

The new passport will incorporate a polycarbonate page, which is the most up-to-date security feature, but there will still be paper pages, so the new passport will not look so radically different from what my right hon. Friend expects, although it is important that new security features are contained the whole way through it.

Many of my constituents who work in the Royal Mint in Llantrisant are proud of the fact that they produce not only British coinage, but coinage for 60 other countries around the world, so we do not want to throw the baby out with the bathwater here. However, it is extraordinary that the only argument the Minister has so far advanced for the French being allowed to protect their French-made passports for French-made people is that the company is state owned, because that is just an argument for nationalising De La Rue, is it not?

I do not think that I have at any point advanced an argument for state ownership. To be quite frank, we know that that produces poor value for money and higher prices in general. I am old enough—just—to remember the great British invention of British Leyland’s Allegro, and that was hardly a triumph.

At a time when President Trump is clearly looking to go down the road of protectionism, may I say how welcome it is to hear a Government Minister robustly defending free trade? She has our strong support in pursuing competitive tenders that are in the public interest and the taxpayer’s interest, rather than sentimental jingoism.

My hon. Friend is absolutely right. There is no place for sentimentalism. I am as sorry as anybody that we do not have a British company at the top of this process, but the reality is that, as a Minister, I have to reflect on value for money, quality and security. Those were our main considerations when determining where this contract should be awarded.

May I bring the Minister back from the fantasy land of free trade to the real world, where countries look after their own industries and their own workers? It is interesting that she says she is unable to tell us any details, given that Government spokesmen are briefing the media on the exact financial details. Will she take the opportunity to do so when she makes the announcement? Will she make the announcement to the House, or is she hoping to do it during the parliamentary recess?

The right hon. Gentleman will be aware that we are at a standstill point in the process, and I intend to make no announcement until that is well and truly over. He paints a picture of protectionism and a little Britain that I do not recognise. I want us to be an outward-facing, global country in which our companies can have the confidence to bid on the world stage.

I am rather disappointed by the outcome of this process, because a company in my constituency known as Morpho was going to invest hundreds of millions of pounds and create hundreds of jobs. When the Minister finally winds up this process, will she let that company know exactly where it has fallen short, because I do not believe that it would have done?

As part of the procurement process, it was important that we scored issues such as quality, our confidence in the ability to supply, security features and value for money equally. When this is over, we will of course seek to inform all companies as much as we can within the law.

In Perth, there have already been spontaneous demonstrations, with placards abound, and there are even rumours that the Daily Mail has sold out. Does the Minister agree that the billions of pounds of Brexit pain and international isolation will be all for nothing if we cannot have this new symbol of British freedom—the blue passport—British made?

Well, if the Daily Mail has sold out in the hon. Gentleman’s constituency, I have indeed done well, haven’t I? What matters in this process is that we have the best possible passport made at the best possible value to the taxpayer, and that we ensure that we award the contract fairly and, indeed, within the rules.

May I tell my hon. Friend the Member for North East Somerset (Mr Rees-Mogg) not only that they make excellent paper down there, but that they make very good plastic notes at De La Rue? May I tell the Minister that my constituents feel that passports are already too expensive and that the last thing we should be doing is choosing a contractor that is not competitive. She is doing the right thing.

I think that that question was rhetorical. No more than a single sentence is required in reply, and not even that, if the Minister does not want to respond.

I have constituents whose jobs are at risk as a result of this decision. The Minister says that this is a question of value for money, but my understanding is that the new contract represents a considerable reduction compared with the present arrangements, and I believe that De La Rue has been aggressively undercut by what might turn out to be an unviable bid. Would it not be better to award the contract to De La Rue, secure the jobs in the north-east, and enter into a gain-share arrangement so that the taxpayer can benefit from any efficiencies?

We had to consider financial due diligence and ensure that all bidders were capable of delivering the contract within the quality standards set out and, indeed, with the new security innovations that will be included in the new passport. Ultimately, I believe in free and fair competition, and that is exactly what this result has shown.

Order. We have had over 20 inquiries on this matter, so we will now move on to the statement by the Prime Minister.