New blue UK passports to be £120m cheaper with European firm

Taxpayers will save £120m as a result of the decision to have Britain’s blue post-Brexit passports printed abroad, the Guardian has learned.

Government sources say awarding the job to Franco-Dutch firm Gemalto will be £120m cheaper over the five years of the contract.

Brexiters have reacted with anger to news that the high-profile job will not go to British firm De La Rue, with the pro-Brexit former cabinet minister Priti Patel calling it “perverse”, while trade unions have warned of potential job losses. But Whitehall sources suggested the decision was a simple question of value for money.

The British firm De La Rue has lost out on the contract to make them, its chief executive confirmed on Thursday morning. It is understood that Gemalto, which is listed on the French and Dutch stock exchanges, won the race for the £490m printing job.

Speaking to BBC Radio 4’s Today programme on Thursday morning, the chief executive of De La Rue, Martin Sutherland, challenged the prime minister or the home secretary to “come to my factory and explain to my dedicated workforce why they think this is a sensible decision to offshore the manufacture of a British icon”.

He said he would appeal against the decision, and he refused to guarantee that no jobs would be lost at the Gateshead plant the firm uses to produce the burgundy version.

Sutherland acknowledged that his firm had been beaten on price in an open competition, but he said that was unfair. He said that in France, as a foreign-based firm, De La Rue would be barred from bidding to produce the French passport.

The Labour MP John Spellar said “no other EU country behaves like this”, claiming others “support their industry”. Such decisions had driven the Brexit vote, he said.

The Home Office said on Wednesday night that no final decision had been made on where the new passports would be printed. A spokeswoman said: “We are running a fair and open competition to ensure that the new contract delivers a high quality and secure product and offers the best value for money for customers.

“We do not require passports to be manufactured in the UK. A proportion of blank passport books are currently manufactured overseas, and there are no security or operational reasons why this would not continue.”

May’s spokesman said he could not comment in detail on the issue, as the tender was still taking place, but stressed the need to provide value to taxpayers.

“As you know, we’re still in the process of running a fair and open competition to ensure that the new contract delivers a high-quality product which offers the best value for money for the taxpayer,” he said.

“But I hope you appreciate that I am restricted from commenting in detail on a procurement process which is still ongoing.”

The procurement process was expected to be finalised in the next few weeks, he added.

Eloise Todd, of anti-Brexit campaign group Best for Britain, said the Brexiters were being inconsistent. ”It seems the so-called free market Brexiters are just the political wing of the flat earth society who want free trade when it suits them and when the mask slips they are just petty protectionists,” she said.

Theresa May told the House of Commons in February: “It is right that from autumn 2019 we will issue new blue and gold passports, which have always been the UK’s colours of choice for our passports. It is absolutely right that after we leave the European Union we return to deciding the colour of passports that we want, not that the EU wants.”

De La Rue issued a profit warning on Tuesday, telling investors its profits for the coming year were likely to be “at the lower end of the current consensus range”, without giving further details.

The Liberal Democrats’ Brexit spokesman, Tom Brake, said: “The blue passport saga is turning into a farce. First it was established that we did not have to leave the EU to have blue passports. Now we learn that the passports will be printed by a foreign company. And to add insult to injury, we will pay over the odds for them because the value of the pound has fallen since Brexit and they will have to be imported.”

Gemalto offers what its website calls an “end to end ePassport solution”, and is involved in the production of 30 countries’ passports.

Under EU competition rules, large public procurement contracts must be offered to companies across the the bloc.

It is unclear how the government’s approach may change after Brexit, but countries seeking to strike new trade deals with the UK are likely to seek enhanced access to public contracts.