Passport row rumbles on

Jo Francis
Wednesday, April 4, 2018

Jo Francis wonders whether the ongoing row over the UK passport printing contract is a fine example of free trade, or an egg-on-face decision for the government and its supposed industrial strategy.

Should UK tax payers pay through the nose to have our soon-to-be-blue passports produced by De La Rue?

No of course not.

Should the government simply award this contract to the cheapest bidder, then?

No of course not.

There is a much bigger picture here than being either outraged/unconcerned [delete as applicable] that Johnny Foreigner is set to produce our new blue passports.

After all, an American-headquartered company used to do them before De La Rue won the contract. The crucial difference being that 3M Security Printing & Systems did all the work in the UK – 3M having acquired the business in 2006. Prior to that, Security Printing & Systems was of course part of the state-owned Stationery Office, before that was privatised in 1996.

So, there’s a bit of a back story to where we are now. And the other part of the back story is that 3M then dissolved its UK security printing business after it lost the passport contract to De La Rue, effectively resulting in one major domestic supplier for this type of product. And there’s more – last year Gemalto acquired 3M’s $200m turnover Identity Management Business, including lots of biometric identification know-how.

It’s curious, though, that other leading economies seem to be able to keep jobs like this local on the grounds of national security. Whereas here in the UK, as one expert source lamented: “Because we’re British we seem to play far too much by the rules. We apply them assiduously to the absolute letter, and that isn’t necessarily the case among all our competitors”.

In France, they can swerve the tendering issue altogether because they still have a state-owned ‘Stationery Office’, L’Imprimerie Nationale, so they don’t have to put the work out to tender under EU procurement rules in the same way, because they have an in-house printer.

Per Martin Sutherland’s comments here, it does indeed seem incredible that Gemalto’s price can apparently be so much cheaper. France is hardly a low-cost economy. Is it because part of the work will be carried out at one of its plants in, say, Poland where costs are much lower than the UK?

Do we feel happy about that? I know I don’t.

De La Rue is employing highly-skilled people in Gateshead (and elsewhere in the country), people who pay their taxes and buy stuff here, helping the wheels of the economy turn.

The Home Office says 70 new positions will be created at Gemalto UK sites (which are in the south). We don’t know how many jobs are likely to go in Gateshead, but 200 people there work specifically on UK passport production.

It’s not clear to me if or how the government weighs up the economic advantages and disadvantages of buying something for a cheaper price, which will likely result in the tax payer then picking up the tab for additional unemployed people at home. As well as other knock-on negative effects – De La Rue currently takes on lots of apprentices, for example.

Does the MEAT (Most Economically Advantageous Tender) assessment include these factors?

Whatever, it makes rather a nonsense of the whole ‘Northern Powerhouse’ rhetoric and the government’s much-vaunted industrial strategy. Unite makes a fair point when the union questions whether there actually is a joined-up industrial strategy.

I’ve also seen various rather snitty comments in the mainstream media about the fact that De La Rue produces passports for many other countries, as if that’s somehow a reason why it’s perfectly fine that an overseas supplier should produce ours. Free trade and all that.

De La Rue is the world’s largest security printer and it’s a UK-headquartered PLC paying taxes here. Surely it is something to be celebrated that it is able to sell this expertise on a worldwide basis, not something to beat them up about?

The further obvious point being that many countries simply do not have a domestic supplier capable of carrying out such specialist, secure work, or the necessary volumes to justify such a supplier’s existence. The same applies to banknotes.

That we have a world-leading company in this sphere should surely be a source of national pride.

At the time of typing, De La Rue was poised to appeal the decision. It would certainly be useful to get some more clarity from the Home Office on the rationale, beyond simple pricing. This is a PR disaster for the government. 

Meanwhile, pity the poor De La Rue sales director on their next passport pitch.

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