Private sector could face ID card costs

Companies may end up footing some of the bill for the government's biometric identity card plans if they want to use the system to prove the identity of their customers or staff.

The government said the £584m running costs of the scheme will be recovered through fees for issuing passports and ID cards, issuing replacements of lost documents and through charges to organisations that want to use the verification service.

Employers could use the system, for example, to prove that new staff were entitled to work in the UK. The Identity Card Bill includes powers to charge for this service but the government said it has not yet decided whether to apply charges. Financial services companies may also want to use the system to check the identity of customers before agreeing to a big loan.

The government's regulatory impact assessment on the legislation said: "Employers and financial and other private service providers will need to weigh up the costs, risks and benefits of changing current practices to incorporate the use of identity cards."

Junior Home Office minister Andy Burnham told silicon.com there would be advantages for organisations using the service to cut levels of identity theft: "They will pay for a verification service because they want to provide the highest standard of security to their customers."

As well as cutting ID fraud the cards could save money by streamlining processes, the government said. It gave the example of money laundering regulations which require banks to check the identity of customers on major transactions.

Online verification of an ID card could be quicker and easier than keeping photocopies of documents such as passports, and the transaction could also be automatically recorded on the bank systems.

The government will decide on the fee structure before the first cards are issued but the system cannot be used to raise net revenue for the Treasury.

The government estimates card readers for access to the verification service will cost between £250 and £750. But it predicted that by the time ID cards will be widely held, the chip and PIN readers in use by banks and retailers now will be due to be replaced, and is looking for "shared technical opportunities" with the chip and PIN infrastructure. Employers and financial and other private service providers will need to weigh up the costs, risks and benefits of changing current practices to incorporate the use of identity cards.

If the replacement readers can also read the ID cards then the additional cost to businesses could be negligible, it said.