Printed Photo ID Market

Paul Beresford Excerpts

Monday 27th February 2012 Commons Chamber

[Sir Paul Beresford (Mole Valley) (Con)]

I am particularly delighted to see the Under-Secretary of State for Transport, my hon. Friend the Member for Hemel Hempstead (Mike Penning) on the Front Bench, as he has been aware of correspondence from other hon. Members, as well as from me, on this matter, and an early-day motion. Although the subject looks obscure, it is of considerable importance to a number of MPs. Much of the correspondence has been between me and Department for Transport Ministers. As part of the complaint goes across government, I have initiated correspondence with Cabinet Office Ministers. To complicate matters, at least one letter from Ministers to me did not arrive.

As my hon. Friend will be aware, I am concerned that the Post Office is entering the commercial business of providing identity photographs for Government documents such as passports and driving licences. That is in direct commercial competition with the extensive UK printed photo ID market. In his reply tonight, I suspect he will repeat comments made in one of his letters, in which he states that

“the Department for Transport, in common with a number of other departments, has recent legal advice that suggests Post Office Ltd has to be treated fully equally with any other potential providers when bidding for government work, even though it is owned by the government. This is based on European Union Procurement Directives but since these are in place to promote competition and this is essential for us to maximise benefit to the public and customers, this is acceptable.”

If the Minister will permit me a slang phrase, may I say that I recognise that an argument on the directive is outside his portfolio and perhaps above his pay grade? Nevertheless, for me, this approach is an appalling creep back to the old days of the Callaghan Labour Government, when organisations owned by government or, even more so, by local government were able to bid for private sector work, often at a loss, supported by the taxpayer or the ratepayer, as it was in those days. Admittedly, this is narrower as we are talking here of bidding for Government work only.

I am seeking ministerial reassurance that as far as his Department is concerned there is no Post Office monopoly and the private sector can compete fairly for any contract with his Department in the UK printed photo ID market. In addition, it would be helpful if the Minister clarified why there must be a contract, which would obviously limit the outlets, particularly if the contract was won by the Post Office. Better still, in my opinion; there should be an open house on photo provision in co-operation with the Post Office to achieve the same ends.

I am sure that the Minister is aware of the commercial market’s deep concern that it will be locked out of a huge business serving the public in the provision of photographs for driving licences, possibly for passports and other photographs that might be required by the Government.

The issue has been bought to my notice by Mr Olivier Gimpel, chief operating officer of Photo-Me. The company’s headquarters are in my constituency—indeed, in my home village—and every MP will be aware of the firm as its ID photo booth is situated in the same short corridor as the cash machines, which are effectively one floor below us now. Photo-Me is not the only firm to be deeply concerned about this issue. There are 7,500 outlets in the UK providing ID photo services to the public, which include 6,600 photo booths.

The provision of ID photos represents the core business of about 900 retail outlets, including retailers such as Photo-Me, along with firms such as Jessops, Snappy Snaps and Timpsons. In addition, there are uncounted numbers of independent photographic shops and photographers. I was astonished to find the size of the market for official ID photographs: approximately 5 million to 6 million a year for passports; 2 million to 2.5 million for 10-year driving licence renewals and other new driving licence applications; and about 1 million a year for foreign residents. The market is worth £45 million to £50 million a year and it is estimated that ID photo suppliers derive approximately half of their turnover from the official ID market.

As the Minister set out in one of his letters to me, in 2008-09 the Driver and Vehicle Licensing Agency faced the prospect of processing an additional 2.3 to 2.6 million 10-year renewal driving licence transactions, which could have required capital investment and scanning as well as 300 to 400 additional staff. As a result, the DVLA decided to supplement the existing paper channel with two further ways of renewing photographs to provide customer convenience and to contain costs. The first was the development of a web channel similar to that already used for first driver applications, taking photographs from the passport database, which, to me, makes eminent sense. However, the second was the extension by variation of the existing Post Office check and send channel by adding the capture of an image to the six-step transaction already undertaken by the Post Office, which meant that it was acting as a face-to-face intermediary of the DVLA and taking the ID photos. That would have required vast sums to be spent by the Post Office combined with training to provide a service that was already and is available from the commercial printed photo ID market.

The check and send service provided by the Post Office before 2010 was charged at £4 to each consumer, whereas under the new service it will cost £4.50 to have both the check and send and to capture the customer’s digital ID picture and digital ID signature electronically. In order to deliver the service, the Post Office is investing £42 million of our money over five years with Cogent, a firm that is supplying the equipment and maintenance. The new service is to be charged to the consumer, as I have just said, at 50p. I recognise that my hon. Friend the Minister is exceptionally quick with mathematics—it is part of an Army training—but to save him the strain, my reckoning is that to generate turnover equivalent to the investment made by the Post Office would need 84 million transactions over five years, 100 times more than the demand estimated by the Department for Transport.

In effect, we therefore have a taxpayer-subsidised organisation providing a loss-making service. What makes that even more obnoxious is that the so-called efficiency plans could well run at a loss at the expense of the private sector, particularly at this difficult economic time. It is estimated that approximately 5,000 jobs are under threat and that hundreds of high street stores face partial or imminent closure if we cannot find a means of co-existence. I hope the Minister can help us with that tonight.

I am focusing on the Department for Transport because I understand that a contract is to be launched on 6 March. UK printed photo ID companies want to be assured that they will be able to bid openly, for which there must be a requirement in the contract specifications that printed ID pictures that can be scanned into a digital format may be used. The ID photo industry does not want a Government-subsidised organisation in the form of the Post Office to win a contract and continue to lose money on the provision of that contract at its expense. Furthermore, I, and I guess most people in the House, do not wish to have such a service running at a loss at the taxpayer’s expense.

If the Minister cannot reassure me and therefore the photo industry, which will be watching his response carefully, I ask him to delay the contract so that there can be further discussions. If it is not inappropriate because of the Department’s timetable I would be grateful for an urgent opportunity to meet the Minister face to face, quietly at the table, with one or two people from the UK printed photo ID market to discuss directly the opportunity of opening this market and perhaps saving me and every other taxpayer the prospect of funding the kind of losing service that I would have expected from the previous Government but not from this one.