LSE Department of Information Systems

 

 

The Identity Project

On £1billion marketing costs

Shortly after we published our main report into the UK Identity Cards scheme in June 2005, the Home Office published its critique of our alternative blueprint, including the statement that we had included an estimate of £1 billion for marketing costs:
Home Office comment

We believe this is a significant overestimate.
Our benchmarks include high profile government marketing campaigns such as:

  • Department of Work & Pensions pensions credit campaign - £15.58m in 2003/2004
  • Department of Work & Pensions bank payment campaign - £25m over 3 years
  • Department of Health tobacco education spending: £20m in 2004/2005

Due to the level of public awareness the marketing campaign is expected to cost significantly less than LSE estimate.

Our rebuttal sought to clarify this point:
LSE rebuttal

The LSE report did not set out an estimate for marketing costs or indeed for any line item of that nature. Such a figure would, however, most likely be somewhat higher than the range suggested in HO’s response document.

and in our January 2006 status report we reiterated this clarification:
LSE comment

The Home Office accuses us of over-estimating the costs for 'marketing'. We have no such line-item in our costings. We only mention the term 'marketing' twice in the 300 page report: once in reference to the Home Office hiring of a marketing manager; and second when quoting from a Home Office commissioned report that provides an estimate.

And offered a possible explanation for the confusion:

Another report from another organisation, Kable, included marketing costs within their estimates, following the example of a Home Office commissioned-study. Though we collaborated with Kable on the costings models used, even a superficial analysis of the two reports would note the absence of the £1bn line item from the LSE report.

However, on 7 February 2006, the then Junior Minister Andy Burnham repeated this claim in a letter sent to members of the Parliamentary Labour Party, shortly before the key debate in the House of Commons, stating:
Ministerial comment

The LSE has also allocated an inflated £1billion marketing budget and assumed a much higher loss/theft rate than is the case for existing documents.  In that way, the research generated headlines of the kind that read ‘£300 for an ID card’ which some may say was the object of the exercise.

During this parliamentary debate, Mr Burnham was explicitly asked about this claim:
Parlia-mentary question

Mr. Garnier: May I draw Members' attention to the Minister's letter of 7 February, which was sent only to Labour Members? In attacking the London School of Economics' report on the costs of the project, he said:

"The LSE also allocated an inflated £1 billion marketing budget and assumed a much higher loss/ theft rate than is the case for existing documents."

Was not the Minister aware when he wrote the letter that the Government had received a denial of that point on 5 August 2005 when the LSE responded to the Government response to the LSE report? Surely he was aware that the LSE status report issued in January 2006 stated that it had made no such estimate. Would he care to correct that erroneous allegation, which continues the line of ad hominem attacks that he and his colleagues have made on Simon Davies and his colleagues?

Hansard 13 February 2006 : Column 1204

However, the Minister failed to give a definitive answer.  The next day, after speaking at an event on identity cards organized by the Westminster eForum (Westminster eForum 'Implementing ID Cards' report, ISBN 1-905029-31-4), the Minister was prepared to take written questions and we sought clarification of this point.  In his answer, the minister stated:

Ministerial reply

With relation to the figures used for marketing costs, the ‘Identity Project’ report, published in June 2005 states, at the very front of their report, that a spreadsheet from the publisher, Kable, was used as the basis of their cost estimates (pg. iii). This spreadsheet was provided by Kable to the Home Office and included an estimate of £500m to £1bn for marketing costs, which is far in excess of other benchmarks.

In its initial response to the Home Office, the ‘Identity Project’ provided no explanation as to why this was incorrect when it was clearly included in the spreadsheet and the report had clearly and prominently provided an acknowledgement in the opening pages to Kable. To later argue that it did not feature as a separate line item in the cost summary in the initial report does not provide reassurance, as the line items provided in the report are remarkably broad and are much less precise than suggested best practice for business cases – thus the marketing costs might quite easily have been included under a broad line item, rather than be separately listed. Furthermore, the report offers little by way of explanation regarding what assumptions lie behind any of those figures. The Kable spreadsheet remains the most precise source document referred to in the report in relation to how its cost estimates were formed.

However, if the authors wish to insist that they have not included a figure of £500m to £1bn in their estimate for marketing costs, the Government is happy to acknowledge that insistence, as indicated by the Under-Secretary of State Andy Burnham in the House of Commons on the 13th of February.

Nevertheless, this still does not account for several other errors which inflate the report’s cost estimates in the face of reliable contradictory evidence.

To be clear, the Minister is claiming that “marketing costs might quite easily have been included under a broad line item, rather than be separately listed”.  Our detailed costings (Appendix 2 of the "main" report) provide only 8 line items where the upper bound is more than £1billion.  These are listed below for information.

Table 1 Extract from LSE detailed costings (pages 301-303), where high estimates for line items are more than £1billion

    Estimate (All figures in £millions)
  Line Item Low Medium High

Passports (Based on Passport Service Figures)

 

     
  Total cost of issuing existing booklet passports 1994 1994 1994
  Total cost of issuing new passports
- Personal interviews for first time applicants
- Changing passport-centric system to passport-holdercentric system
- Placing digital photograph on passport
- Basic UKPS staffing costs
1814 1814 1814
National Identity Register        
  Deployment and Adaptation of Systems
- Establishing ‘pull’ from various Government systems required for basic information verification
- Adaptation of first-round Government systems for ‘push’ of information, in accordance with the Bill (various Home Office information systems, Police Databases, Department of Work and Pensions systems)
1261 1871 2481
Managing the National Identity System        
  Running costs (maintenance, overheads)
- Property leasing and mobile registration centres
- Property servicing charges
608 810 1013
  Servicing verification
- Verification queries from a variety of public sector organisations, in accordance with the Bill
- Verification queries from employers
- Call centre management
203 500 1013
  Verifying biographical footprint of enrolees
- Contacting various public sector databases
- Contracts with private sector data aggregators and credit bureaux
- Document vetting and verification
- Verification of individual’s prior circumstances, including through verification of biometrics at
registration centre
- Verification of the veracity of the corrected information
675 878 1013
Specific Other Staff Costs Over a 10-Year Period        
  Enrolment Staff
- Staffing of registration centres for the initial roll-out
- Training for use of systems
- Security training
- Background checks
- Management
838 838 1118
  Staff for the National Identity Register
- Security training
- Background Checks
- Call centre employees
- Staff for face-to-face meetings to verify changes to the register
- Full public interface (taking into account non-cooperators)
813 2433 4056


The minister's answer also included a series of points of concern with our report, which we respond to below:
Minister's question LSE reply

Why is research by the UK’s National Physical Laboratory, Germany’s BSI institute and Cambridge University that shows that the stability of biometrics are sufficient to allow re-recording every ten years apparently discounted? The Identity Project report produced costs based on re-recording every five years, thereby increasing staff and operational costs significantly but provides scant reasoning for this;

We don't 'discount' this research, rather we provide three scenarios.  Our worst case (high) estimates are based on the possibility that re-recording does need to take place more frequently than the best case scenario.

These next two items relate to cost corrections, however, our January 2006 status report noted that the LSE research team "had hoped to publish a second edition of our work in full. However, the government's refusal to disclose important information, coupled with new, conflicting evidence, has made it impossible to do so at this time. As a result, the LSE's research team is presently unable to provide further assessment of the costs and potential benefits of the government's identity cards proposals. We do, however, stand by the figures published in our first report and believe these are the best available estimates of the true cost of the scheme". 

We do not believe it is particularly helpful to make cost corrections to minor parts of our estimates whilst the available information for the majority of the scheme is so limited and we look forward to hearing the detailed cost assessments of the Home Office on these items.

Minister's questions LSE replies

Why was no cost correction made when the report’s estimate of biometric enrolment failures was reduced by nearly 830,000, a 97% reduction on the previous figure, despite the fact that the report originally noted that dealing with such cases would be a “significant administrative burden”?;

This was an error in the main report.  Nevertheless, we remain concerned about the administrative burden associated with dealing with failures to enrol, whatever the number.

Why does the report estimate the cost of electronic background checks at up to £20 per check when this is at odds with similar electronic checks by credit reference agencies or against birth, deaths and marriage records cost in the pence, not the pounds?

This item was initially unclear as we had understood that it would be a manual process.  We note in our status report that the Home Office intends this to be largely automated and so the cost per check should be reduced accordingly.

What is the basis of the report’s figures for the volume of information updates? Figures from the Office of National Statistics (ONS), the Government Accountability Office (GAO) and other government departments indicate lower figures than their assumptions. The report states that the procurement documents for the Identity Card Scheme corroborate the figures provided. They do not – the source provided in the report is a page on a procurement questionnaire and neither that page nor the document as a whole refers to any record update volumes at all;

This was a minor typographical error in the status report.  The reference should be to slide 11 of the procurement strategy market soundings document rather than the procurement strategy questionnaire.  This states: "Each registration record (and Identity Card) is currently anticipated to be renewed every 10 years"

Why has no correction (cost or otherwise) been made for admitted errors that inflated biometric error rates? For example, both the interim and final report confused the iris and retina and this was acknowledged by an author at a public debate at the Institute for Advanced Legal Studies in November. However, this is not acknowledged in the ‘report on the original report’ in January.

This claim, which was also made by Dr John Daugman, in his submission to the House of Commons Science and Technology Select Committee, is inaccurate.  As we noted in our response to Dr Daugman's written submission, "We have previously acknowledged that, in our interim report our lack of specific expertise in this area meant that we did confuse the two . As a result of feedback on this point we sought specialist advice and made many corrections before issuing our main report in June 2005. The two reports were substantially different. The interim report was 116 pages. The main report was 305 pages. Indeed, our main report only mentions retinas twice (once in conjunction with the US Real ID proposals where the Act explicitly states that retina scan identification will not be used and once quoting from a Cabinet Office report on Identity Fraud). The claim that we confuse iris and retina in our main report and that this distorts our cost assumptions, is incorrect".

Unlike many Home Office documents, we fully reference the studies that we draw upon which we draw.

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Page last updated 2 August, 2006
Copyright LSE Department of Information Systems 2005