Making new passports abroad may cost £162m in lost tax, warns peer

HANDING the contract for Britain’s post- Brexit blue passport to a foreign company will cost £162million in lost taxes, a senior Tory peer warned Theresa May last night.

In a letter, Lord Naseby called for the decision to award the work to Franco-Dutch group Gemalto rather than UK rival De La Rue to be reversed.

He said that although the foreign bid is £120million cheaper, Britain will be left worse off because of lost tax.

His claim is based on analysis by a leading London investment house which estimates that £162million in tax would be raised in a decade if De La Rue printed the passports – compared to just £25million of UK taxes that would flow in from the Gemalto contract.

More than 323,500 Daily Mail readers have signed a petition demanding a U-turn on the decision to give the contract for the new blue passport to a foreign company.

The Unite union has also waded into the row, warning that the economy would forfeit £7.4million in wages if the 200 jobs at the De La Rue factory in Gateshead relying on the contract were lost.

Tory peer Lord Howard of Rising also commented: ‘ These figures clearly show the Government hasn’t done its homework.

‘And there is also the issue of such an important national document being done in this country. It should not go to a company overseas with a dubious reputation.’

De La Rue has held the contract since 2009 and makes around eight million passports a year.

The Home Office says giving the contract to Gemalto would save millions each year as it offered to make the blue passports for less.

But the analysis sent to Downing Street by Lord Naseby lists the tax revenues which would be lost. It is estimated that De La Rue would pay £7million a year in VAT and £1million a year in corporation tax. Another £1million would come from other taxes such as on dividend payments. The taxman would also be in line for around £6million a year in income tax and national insurance contributions from wages paid to staff plus £1.2million in VAT from workers spending their wages.

This amounts to around £16.2million a year or £162million over a decade. In contrast, the analysis suggests that Gemalto will generate just £2.5million for the Exchequer – or £25million over a decade – because most of the taxes owed will be paid overseas.

That means the taxman would be £13.7million a year worse off – a loss of £137million over a decade.

This would be greater than the estimated £120million the Home Office is thought to be saving by giving the contract to Gemalto.

The Mail petition was handed over to Downing Street this week amid revelations about flawed ID cards produced by Gemalto.

The company supplied Estonia with up to 750,000 ID cards with security flaws and is also accused of bungling work on high-tech e-passports for Peru.

Gemalto is being bought in a £4billion deal by French defence firm Thales which faces corruption charges in South Africa. It has been caught up the fraud case against ex-president Jacob Zuma over an arms deal in the 1990s.

Lord Naseby, who as Michael Morris was MP for Northampton South from 1974 to 1997, said: ‘The security side of Gemalto is questionable as we see from Estonia.

‘Conversely, we have a good British company that has done superb work. They deserve very much to be given the contract.’

Unite national officer Louisa Bull said its figure came from examining De La Rue accounts and called for an ‘urgent rethink’.

The analysis piles pressure on ministers to come clean over the tax implications of the Gemalto deal. The figures in Lord Naseby’s letter have not been verified by either firm or the Government.

But they highlight the fact that the savings championed by the Home Office may not materialise.

De La Rue declined to comment last night.

‘Company with a dubious reputation’