An idea about Pricey Passport Financing
The government has announced that the price of a passport will rise to £94.50 for adults, up from £88.50. To justify this, the Home Office has said:
“The new fees will help the Home Office to continue to move towards a system that meets its costs through those who use it, reducing reliance on funding from general taxation. The government does not make any profit from the cost of passport applications.”
Free marketeers will welcome this - those who use services should, where possible, foot the bill for what they use rather than spreading the cost over all taxpayers. Privatising the service and letting it operate under licence would, of course, be preferable. But having said that, the Passport Office is the gold standard for government offices.
A state-of-the art security document permitting travel to over 187 jurisdictions visa-free, delivered to you often within 11 days, is nothing to be scoffed at. All for the price of almost £100 for 10 years, or £10 a year, this is an excellent deal, even if fees have risen by 25% over the last 2 years. However, £100 per person is a significant barrier for many families who want to get their hands on this fabled book - recent data indicates that 26% of people earning even over £100,000 gross a year are living paycheque to paycheque.
Some rudimentary analysis of (fascinating) ONS / Census data on this matter points to the fact that poorer people tend not to own a passport - one can only assume the cost of a passport to be a primary barrier to this, especially as the budget holiday is on the rise. The data is very varied, and writing up a more detailed analysis of data is out of scope for the ASI blog, but there’s a strong correlation between income level and British passport ownership.
So, instead of charging £94.50 up front, we propose that the Passport Office should offer the option of a 5 or 10 year installment of payments for passport applicants, with an interest rate equivalent to the CPI inflation rate over this period. Failure to pay would mean the passport becomes invalid - a power already utilised by the Passport Office (see page 47 for non-payment). A 5 or 10 year financing option would significantly reduce the cost barrier to receiving a passport, whilst also protecting Passport Office expenditure.
Covering the immediate cost of passport issuance may be the only challenge to this policy idea, however a review of the cost-breakdown for a 2011 (the latest data I could find) passport shows that only 18% of the costs are for the physical production and delivery of the document. Improvements in AI and modernisation of processing could make up the immediate shortfall.
We’ve recently celebrated the virtues of RyanAir and budget airlines - we should also implement a budget deal for passports. The Passport Office is already an excellent service - let’s think big and make it greater. We have also noted that Jack Rankin, the Conservative MP for Windsor, has asked a similar question to the Home Office.
