A French company has won the contract to produce Britain’s new dark blue passports, leading to criticism from some Brexiters who had heralded the change of colour as a symbol of the benefits of leaving the EU.
Hampshire-based De La Rue currently holds the contract for producing UK passports, worth £490m over 10 years. Its final bid in this year’s tender process was less than £400m, a person close to the company said.
On Thursday, a Home Office spokesperson confirmed the government had selected a preferred bidder following “a rigorous, fair and open competition”. It said the winning bid for the 11.5-year contract would save taxpayers £120m.
The Home Office stopped short of naming the winner but said the company already had a number of government contracts, including the supply of UK driving licences. Gemalto won the contract to produce the new photo driving licence in 2012. The company declined to comment on whether it had won the contract.
Gemalto, which is in the process of being acquired by French defence contractor Thales, has a number of sites in the UK and is expected to make the new passports at factories in Fareham and Heywood.
But Priti Patel, a Brexit-backing Conservative MP, complained awarding the contract to Gemalto was “a national humiliation”, while Bill Cash, another Tory backbencher, said it was “symbolically completely wrong”.
Labour said it was “farcical” that the government had given the contract to Gemalto “at the expense of the British economy”.
“The irony is unreal,” said Eloise Todd, chief executive of Best for Britain, the anti-Brexit campaign group.
The Home Office said that since 2009 there had been no requirement for passports to be made in the UK: “A proportion of passports have been made overseas since then with up to 20 per cent of blank passport books currently produced in Europe with no security or operational concerns.”
It added that Gemalto would create up to 70 jobs in the UK. A person close to De La Rue said the British company was likely to cut a greater number of jobs as a result of losing the work.
The new contract is set to begin in 2019 to coincide with Brexit, after which the UK will start issuing the new dark blue passports based on the “old” British passport last produced in 1988.
Matt Hancock, the culture secretary, said separately on Thursday that the UK could review its procurement rules after Brexit.
British passports were made by a state-owned company until its privatisation in 1996. The company, Security Printing and Systems Limited, was bought by private equity firms, then merged with a Germany company, before eventually being acquired by US manufacturer 3M in 2006.
Shares in De La Rue were down 5 per cent at 480p in mid-afternoon trading on Thursday. The company said in a statement that it had been “undercut on price” and was considering an appeal. It also complained that it was unable to bid for the contracts to produce French and German passports, because those countries invoke national security exemptions to EU procurement rules.
In both France and Germany, passports are produced by state agencies.
Martin Sutherland, De La Rue’s chief executive, hit out at the government over the decision. Speaking on BBC Radio 4’s Today programme on Thursday morning he said: “Over the last few months we have heard ministers happy to come on the media and talk about the new blue passport and the fact that it is an icon of British identity.
“But now this icon of British identity is going to be manufactured in France.”
He called on the prime minister Theresa May or home secretary Amber Rudd to “come to my factory and explain to our dedicated workforce why this is a sensible decision”.
De La Rue’s shares had already taken a hit earlier in the week after it said profits for the year would be around the lower end of expectations and that its chief financial officer had quit. The company said it had hundreds of staff in Gateshead, Manchester and Bath involved in producing UK passports.
De La Rue nevertheless generates nearly 80 per cent of its turnover outside the UK, where 65 per cent of its staff are based.
The Home Office announced in December that Britain would phase out burgundy passports in favour of dark blue ones “in a move to symbolise our national identity”.
Guy Verhofstadt, the European Parliament’s Brexit co-ordinator, mocked the decision at the time, saying that because EU laws do not stipulate a colour the UK could have made the change while remaining in the bloc.
Additional reporting by David Keohane in Paris and Guy Chazan in Berlin
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