The Scottish Mail on Sunday

Passport row: UK firm ‘hiked bid to plug pension gap’

- By Jonathan Bucks

THE British firm that lost out on a lucrative contract to print the UK’s first post-Brexit passports is facing accusation­s that its bid was inflated in an attempt to fill a vast pensions black hole.

The decision to pass over De La Rue in favour of Franco-Dutch firm Gemalto last week should save taxpayers £120 million, but sparked an outcry over the Government’s lack of patriotism by handing the ten-year contract from 2019 to a foreign-owned company.

But now The Mail on Sunday can reveal that De La Rue is grappling with an eye-watering £189million pension deficit, which is almost 40 per cent of the company’s value and high enough to imperil its future, according to experts.

Last night Labour MP Frank Field, chairman of the influentia­l Work and Pensions Committee, said that in the light of the pension deficit, De La Rue must explain why its bid was so much higher than that of the winning firm.

Ardent Brexiteer Mr Field said: ‘The committee will write to De La Rue on Monday asking for more informatio­n about their pension deficit and whether it was the active policy to close the deficit that led them to getting the bid wrong.’

His concerns were echoed by pensions expert Anne-Marie Winton, of ARC Pensions Law, who added: ‘De La Rue may well have thought, “We’re going to have to price this in a way that we can fund our deficit, which is very large and won’t go away overnight.”

‘It could certainly explain why their bid was much higher. It’s something they may very well have considered.’

According to research published earlier this year by equity analyst Canaccord Genuity, De La Rue had the third biggest pension deficit of all FTSE 350 stocks, just behind the AA and Tesco. It plans to plough around £20million a year into reducing the shortfall over the next decade.

Last Tuesday – the day before De La Rue’s failure to win the contract was announced – the company’s chief financial officer Jitesh Sodha suddenly resigned and the firm issued a profits warning.

Last year, De La Rue – founded by London printer Thomas de la Rue in 1821 – printed 17.3million passports for 40 countries. In its bid, the firm pledged to ensure that 99 per cent of British passports were produced in the UK.

In 2009, the decision to award De La Rue a £400million contract to produce new passports was criticised after it emerged that a senior civil servant also sat on the firm’s board. Rival bidder 3M considered legal action based on a potential conflict of interest after it was revealed that board member Gill Rider was an influentia­l member of Cabinet Office, which directed the hiring of other top civil servants.

Last night, when asked if De La Rue was attempting to fill its pension black hole, a spokesman said: ‘This is absolutely not the case. Our pension deficit is coming down and we have a plan to reduce it further.

‘We are confident our bid would deliver value for money for the Government and the British taxpayer, in terms of world-leading security features and iconic British design, as well as to the wider UK economy, particular­ly in the North East where 200 people are currently employed to work on the production of the UK passport.’

The spokesman also confirmed the company is challengin­g the decision to award the new contract to Gemalto.

He said: ‘We will appeal. It’s a surprising and disappoint­ing decision.’

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