A unified Digital ID system for UK citizens has been on successive government dockets for decades, first attempted by the Tony Blair Labour government. Blair’s ill-fated attempt was the introduction, in 2006, of the Identity Cards Act proposing a biometric card which corresponded to a national database. The scheme was scraped in 2010 by the incoming Conservative government and rallying support for the measure has since proved problematic, with detractors citing privacy as the principal objection.

What followed was a sorry tale of further failed attempts at some form of digital ID, all suffering from the spiraling cost and complications of implementation. In 2013, the Gov.uk Verify programme was launched with the aim to onboard 25 million users by 2020. By 2021, costs had reached £220m with none of its goals achieved.

Then came One Login, in June 2023, a single digital identity for accessing UK government services, replacing the need for multiple accounts and passwords. Some £329m has been invested, to date, with an additional £115m allocated for the 2025-2026 fiscal year, bringing the total investment to at least £444m.

In January, the Labour government announced plans for GOV.UK Wallet, building on the OneLogin programme. The plan was for digital versions of existing credentials to be held on a smartphone app, enabling secure digital exchange of information to enable public services when required. At present, only the HM Armed Forces Veteran Card can be held on the wallet.

Digital ID now supported by AI

On 26 September, the Labour government announced a plan for mandatory digital ID for all working citizens, introducing a right-to-work check element to digital ID. The new plan is given weight by The Tony Blair Institute for Global Change’s recommendations that a national digital ID system could transform the UK’s public services by streamlining anything from NHS records to the benefit system.

So why now? Though digital ID was not a direct manifesto promise, Starmer promised to transform public sector services through technology, largely focusing on AI. Damian Stirrett, UK&I general manger at ServiceNow, believes that when digital ID is supported by AI, the possibilities are huge. “The potential is there to unlock faster, smarter and more people-centric everyday outcomes across government, from health to employment, welfare, justice and beyond,” he said.

Proponents of the scheme point to the added convenience for ordinary citizens, while detractors view the centralised nature of the scheme as government surveillance overreach and a tool for law enforcement and immigration.

Though the political and ethical debate around digital ID is fierce, it is accompanied by practical issues of implementation. Despite advances in AI and compute power, the UK public sector’s dismal record of unsuccessful technology implementations remains a cautionary tale. And furthermore, the UK has a growing private sector digital ID verification market raising questions around whether the government’s new plans have taken this into consideration.

UK’s digital ID verification market

According to UK technology industry group TechUK, the UK currently hosts around 270 active digital identity companies, generating an estimated £2bn annually. Right-to-work and right-to-rent checks are already a key part of the digital identities and attributes trust framework, currently used as a certification framework for private digital identity companies.

Tech UK’s associate director for Technology and Innovation, Laura Foster, said: “Digital ID is already widely used across finance, banking, insurance, and age verification, helping people and businesses complete important tasks securely and with confidence. That already includes the right-to-rent and work.

“Government should integrate proven technologies, rather than starting from scratch. The UK has a highly credible digital ID industry that is keen to work with government on how this proposal could be taken forward. Consultation is vital as it will allow government and industry to work together and ensure any proposed models for mandatory digital ID are clear, citizen-centric and do not override tools and services people and organisations already trust to use,” said Foster.

GlobalData public sector principal analyst Gavin Sneddon noted that it is not clear at this point whether the government will continue to rely on the framework for right-to-work use cases when these become mandatory or whether it will want to introduce a new centralised approach, either built in-house or with a single provider.

“Historically, the government has made it clear it favours a ‘mixed economy’ of digital ID providers, but whether it will maintain this position under the massively increased political scrutiny that is emerging remains to be seen,” said Sneddon.

If the government maintains the current trust framework approach for digital ID verification in general, then the impact on business outside the Digital Wallet use cases is likely to be minimal, according to Sneddon.

“Digital credentials are already widely exchanged in the UK in general and the right-to-work digital ID need not impact these other use cases in the slightest. The anxiety will be that growing use of the digital wallet (which will only be used for official government documents) will come to supplant existing digital ID provision.

“The government accordingly has a challenging balancing act – it needs to trumpet the potential use-cases of digital ID outside right-to-work in order to build the political case for it, but does so at the risk of discouraging private providers who already cover these additional use cases,” said Sneddon.

Sneddon’s view is that it appears that government has looked at the work already underway for the one login and digital wallet programmes and then simply added a right-to-work use case to the scope, with the political addition of digital ID being mandatory for that new context.

“Although this probably looked straightforward enough on paper, the government will now need to manage digital ID very carefully to avoid the risk of an essentially blooming technocratic programme around single sign-on and verification getting completely derailed by political concerns,” he added.

Janine Hirt, CEO of fintech industry body Innovate Finance and RegTech UK, said: “Swift clarification is needed from the Government on design and delivery principles to prevent his announcement from freezing investment in our vibrant scale up tech firms in this sector. Reusable digital identity and verification is a critical component of the tech stack that forms the building blocks for FinTech innovation in the UK – helping to reduce fraud and enable financial inclusion.

“The decision to mandate government ID however risks the discussion being focused on civil liberty and sovereignty – rather than the utility and innovation this technology can bring to people across the UK. It is also vital that the roll-out of digital ID supports a competitive market, underpinned by a trust framework, not via a monopoly or costly state solution.

“Equally, mandating a Government issued ID could crowd out companies who have been developing innovative solutions which are accredited against the Government’s own legal framework. Design and delivery must enable multiple service providers, unlocking innovation and supporting the growth of our nascent UK digital verification innovators.

Hirt noted that if it becomes the de facto identity scheme or is delivered in a way that hands market power to a few large corporates, it will kill the UK’s innovation opportunity and undermine trust.

Digital ID to combat fraud

A public consultation is scheduled for later this year to gather views on how digital ID should be delivered. The Tony Blair Institute for Global Change highlights potential benefits, including: Additional verification checks on welfare claimants, cutting benefit fraud by £1.25bn a year and reducing identity-related fraud in the financial sector by £350m a year.

Jonathan Frost, EMEA director of global advisory at BioCatch, warns that digital ID is not a silver bullet for illegal work, informal economies, or fraud. “Just look at EU countries like France, Germany, and Belgium, which already have national ID schemes, yet still face significant challenges in these areas. Its more immediate value may lie in reducing friction in financial services and state entitlements rather than directly cutting fraud.

“The real potential could come from linking state systems, like DWP and HMRC, with those operated by banks. Connecting online activity to a digital ID could become a powerful counter-fraud tool, but its full impact, both positive and negative, needs careful consideration to ensure successful implementation,” said Frost.

According to Sneddon some high-level principles have already been agreed to address security issues. The most fundamental is that data will be held on individual user devices rather than in a central database, mitigating the significant risk of a wholesale leak.

“However such an approach creates security problems of its own, not least the risk of devices being stolen and potentially rendering users vulnerable to a higher level of identity theft. The government hopes to mitigate this risk by enabling the prompt revoking and reissue of credentials in the event of theft, but user experience of mobile banking has shown that this risk cannot be reduced to zero,” added Sneddon.