UK Politics

Six reasons why Brexiteers need to calm down about “passport gate”

BY Olivia Utley | tweet OliviaBUtley   /  22 March 2018

Arch Brexiteers, surprise surprise, are up in arms. Britain’s post-Brexit blue passport, intended as an icon of the UK’s regained independence from Europe, is set to be manufactured by a Franco-Dutch firm, Gemalto, after the company undercut its British rival, De La Rue (current holders of the contract) by £50 million.

Tory MP Sir Bill Cash, chairman of the Commons European Scrutiny Committee has branded the move “completely wrong and unnecessary”, and Priti Patel has dubbed it a “national humiliation”.

Here are six reasons why they need to calm down.

1. The decision was free, fair, and in line with WTO rules

According to both Single Market and WTO rules (of which Brexiteers are usually so fond), procurement decisions should be made on a procurement basis, without favouring domestic firms or shutting out foreign firms. For simple contracts (eg goods), this means procurements should be on a lowest price basis, and for more complex contracts, the tender should be on a “most economically advantageous tender” (MEAT)

The manufacture of the British passports went out to tender (according to EU & WTO procurement rules) and Gemalto submitted the MEAT.

This was a free and fair competition conducted under well-established procurement rules. If the British company, De La Rue, had submitted a better tender, deemed to be the MEAT, it would have won the contract. It did not.

2. It’s saving the British tax payer £120 million

If legality isn’t a good enough argument for you, perhaps because you don’t think the UK as a sovereign country should have to follow any kind of international rules, the economic angle may resonate more.

By opting for Gemalto instead of De La Rue the UK government is saving the tax payer an estimated £100m-£120m over the first five years of the contract. For anyone who believes in the basic principles of the free market (as the majority of Tory Brexiteers do), this, very simply, is a win.

3. 80% of De La Rue’s revenue comes from outside the UK

De La Rue earns 80 percent of its revenue outside Britain and supplies passports to 40 countries. If we adopted the protectionist policy of opting for a UK firm when a foreign one could do the same job cheaper, who’s to say that those 40 countries wouldn’t retaliate and do the same? As Peter Thal Larsen, EMEA editor for Reuters, puts it “arguing that the UK should only order passports from a home-grown supplier is either the height of hypocrisy, or very stupid.”

4. De La Rue is a big company and will not collapse because it lost this one contract

On BBC Radio 4 this morning, an irate Martin Sutherland, CEO of De la Rue, invited May or Rudd to go and explain to his staff in Gateshead why new British passports will be made outside the UK. The implication was that the treacherous Prime Minister wouldn’t be able to look them (nor, one assumes, their starving children) in the eye.

It’s a tear jerker for sure, but it doesn’t actually wash. De La Rue is not a family run, local stationer. It is a large, thriving company with offices in Kenya, Sri Lanka and Malta (where, incidentally, 10% of British passports are currently made), and it is listed on the London Stock Exchange. As well as providing 40 countries with passports, it also sells high-security paper and printing technology for over 150 national currencies.

Its shares may fall temporarily, but this is no different to winning or losing any other tender. If they win another foreign contract (after which Martin Sutherland must presumably go and look his competitors’ starving children in the eye), they will rebound. This is by no means a death warrant.

5. If we want a good trade deal with the EU, we’d have to abide by EU procurement law anyway

It’s all very well saying that the decision was made under EU rules and is an example of why we’re leaving. But realistically, if we want a tariff free, barrier free deal with the EU (which we do) a level playing field on competitive tenders is obvious an trade off – and would almost definitely be the focus of any trade deal.

6. The French are our neighbours and our friends

Snubbing a French company purely out spite (especially when that snub would have a negative economic impact on us) doesn’t seem like a very “outward-looking” way to begin the next chapter in Britain’s story.


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