The Agency faced additional costs following the implementation of the new computer system in October 1998. Higher staffing costs than forecast were the most significant item of additional expenditure. However, in 1999, the demand for passports was also significantly higher than forecast. Only those staff costs over and above those required to process additional demand could reasonably be attributed to the difficulties associated with the introduction of the new system.
The Agency sets staffing budgets at the start of the financial year based on forecast volumes of applications. Our calculation of additional costs is based on variances from those budgets once the budgets have been adjusted for the difference between forecast and the actual volume of passports issued. The figure of £6 million quoted in the text for additional staff costs allows for additional work undertaken in-house by the Agency, as well as the transfer of work out of Liverpool and Newport.