UPDATED: £1 billion cut from ID card scheme

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Home Secretary Jacqui Smith has announced a massive cost cut to the identity scheme, and outlined plans to allow people to choose between a card and a biometric passport.

She said £1 billion pounds will be cut from the £5.6 billion ID card budget. "When we publish our next Cost Report in May, I expect to see almost £1bn removed from the headline costs," she said in her speech to the Demos think-tank.

"That is a genuine reduction in the costs of the scheme - and means that we can maintain our commitment that identity cards will cost no more that £30 when they are introduced."

The cost savings will come through changes to the rollout, which include giving people a choice between having a card or having a biometric passport.

Smith told the BBC this morning that the first ID cards will go to foreign nationals, as previously announced, but also to airport workers next year. "We will start by introducing ID cards for people in sensitive locations like airports," she told BBC Radio 4.

She added in her speech: "And I am keen to take forward discussions with other groups who operate in positions of trust in our society, which could include Olympics security employees and those involved in protecting our national infrastructure, such as power stations."

The following year, in 2010, the cards will be offered - not forced upon - younger people such as students, who are more likely to need to prove their identity to open bank accounts, she said.

The UK-wide rollout will not happen until the year after - which pundits have noted is clear after the next election. It is expected that the government will slowly phase the cards in, and not make them compulsory until the bulk of the population already has them.

This is a change from the previous plan, which would have made them compulsory when UK citizens renew their passports. Now, Smith said such people will be given a choice of an ID card or a biometric passport, which has some saying this is the first step in a turn-around on the scheme.

The controversial scheme has been slammed by opposition parties as well as independent lobby groups, especially following last year's loss of records pertaining to 25 million people by HM Revenue and Customs. "One of the reasons why we worry about our details being lost, whoever it's by, is because at the moment if somebody has what we call your biographical details - your name, your address, your date of birth - actually they can quite easily go and open a bank account in your name, or commit a crime using your identity," Smith told the BBC.

Rather than a turn-around, Smith said it's about getting the cards out more quickly. "I want as many people as possible to enjoy the public good of the identity scheme, as quickly as is practicable," she said in her speech. The changes in the rollout plans will mean the scheme is fully implemented by 2017, two years ahead of schedule.

"I am convinced that our increased awareness as a nation of the dangers of data loss and identity fraud makes the case for participation in the national identity scheme more pressing, rather than less," she said, in defense of the scheme after it came underfire following the HMRC data loss.

The NIR and the card won't just protect against identity and benefit fraud, but against terror, too, she claimed: "Most of the terrorists convicted in recent years have routinely used multiple passports, bank accounts and other forms of identity."

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