2nd September 2026
Digital ID Is Dead. Or Is It? The Government May Have Cancelled the Scheme, But the Problem Hasn't Gone Away
The Government may have cancelled its plans for a single digital identity, but the problem it was trying to solve has not disappeared.
In fact, the National Audit Office has delivered a rather timely warning about what happens next.
Its new report on managing digital identity is not a simple argument for or against digital ID. Instead, it exposes just how complicated the whole idea has become.
The basic proposition sounds straightforward.
Why should someone have to prove who they are again and again when dealing with different parts of government?
Why should we have to remember different passwords, provide the same information repeatedly and go through separate identity checks for services that already know who we are?
A properly designed digital identity could make all of that much easier.
But, as the NAO points out, making it work across government is a very different proposition.
Britain already has digital identities
One of the interesting aspects of the report is that Britain is not starting from scratch.
There are already digital identity services, legislation, standards and systems in place.
The problem is that they do not necessarily fit neatly together.
Different parts of the public sector have developed their own systems over many years. They hold different information, use different identifiers and operate on different computer systems.
HMRC has one set of records. The NHS has another. Other government departments have their own systems.
A digital identity can establish that you are who you say you are.
That does not necessarily mean that every government computer can correctly identify which records belong to you.
That distinction is crucial.
The real challenge is not simply creating a digital ID.
It is connecting Britain's enormous collection of existing systems and databases without creating new mistakes, security vulnerabilities or privacy problems.
The Government's cancelled scheme was only part of the story
The Government announced in July that it would not proceed with its proposals for a single government-issued digital identity.
That might have suggested the digital ID debate was over.
It isn't.
The NAO says the question of how people can securely and conveniently prove who they are, or prove something about themselves, remains relevant.
And technology is moving on anyway.
People increasingly use their phones as wallets, tickets, banking devices and repositories for important information. Digital credentials are becoming more familiar.
The possibility of carrying some form of verified identity on a smartphone is therefore unlikely to disappear simply because one Government scheme has been cancelled.
Indeed, other countries are already moving ahead with digital wallets and identity systems that can potentially be used across different sectors.
Britain therefore has another decision to make.
Does it develop its own infrastructure?
Does it rely heavily on private-sector companies?
Or does it attempt some combination of the two?
And here comes the trust problem
There is another issue which may ultimately prove more important than the technology.
Do people actually trust it?
The NAO points out that countries without a long history of compulsory identity systems tend to have greater success when people voluntarily adopt digital identity because they find it useful.
That is an important lesson for Britain.
People are unlikely to embrace a digital identity simply because the Government tells them that it is modern and efficient.
They will want to know what it does for them.
Can it make applying for a service quicker?
Can it prove their age without revealing unnecessary personal information?
Can it replace the endless process of filling in forms?
Can it reduce fraud?
Can it make it easier to deal with several government departments?
And, perhaps most importantly, can people be confident that their information will not be misused?
Those questions will determine whether digital identity succeeds far more than the quality of the software.
The danger of building the technology first
This is probably one of the most important warnings in the NAO report.
Governments can become very enthusiastic about technology.
There is always a temptation to announce a major digital programme, commission a system and then try to fit the existing public sector around it.
The NAO says that is the wrong way round.
The objectives need to be clear first.
Government needs to understand its business processes, its data, its old computer systems and the difficulties of connecting them.
Only then should it decide what technology is required.
That may sound obvious.
Government has nevertheless spent decades discovering that old computer systems are much harder and more expensive to replace than they appear when viewed from a ministerial speech.
There is a huge privacy question too
The attraction of digital identity is convenience.
The danger is that convenience can encourage organisations to collect more information than they actually need.
There is a fundamental difference between proving that you are over 18 and handing over your full identity details.
A well-designed digital identity system should ideally allow people to prove only what is necessary.
But that requires careful standards, strong security and clear rules about who can access what information.
Once identity information becomes widely connected, a security failure could potentially have consequences far beyond a single government department.
This is why the NAO puts such emphasis on governance, accountability and trust.
The private sector is already involved
Another point that may surprise some people is how much digital identity already involves private companies.
Banks, technology companies, mobile phone providers and other businesses already play important roles in establishing identity online.
The Government therefore has a choice.
It could attempt to build a much larger public-sector identity capability itself.
Or it could allow private-sector providers to play a greater role within a regulated framework.
Neither option is entirely straightforward.
Too much reliance on private companies could raise questions about commercial power, access and accountability.
Trying to build everything inside government could be enormously expensive and technically difficult.
The NAO is effectively saying that these choices need to be made deliberately rather than allowing the system to evolve by accident.
The biggest mistake would be to think the debate is finished
There is a temptation to regard the cancellation of the Government's digital identity plans as the end of the story.
It may actually be the beginning of a more sensible one.
The Government now has an opportunity to step back and ask what it really wants digital identity to achieve.
Rather than starting with the question, "What digital ID system should we build?", perhaps it should start with a more basic question:
"What problems are we actually trying to solve?"
If the answer is reducing fraud, making public services easier to use, cutting bureaucracy and allowing people to prove things about themselves securely, there may be several ways of achieving those objectives.
A single national identity card or Government-controlled digital wallet is not necessarily the only answer.
The choice facing Britain
The NAO's report is ultimately a warning against simplistic thinking.
Digital identity is not one piece of software.
It is an ecosystem involving government departments, private companies, databases, standards, mobile phones, security systems and, most importantly, millions of people who have to trust it.
Get it right and dealing with government could become dramatically easier.
Get it wrong and Britain could spend billions trying to connect incompatible systems while creating a new layer of privacy and security risks.
There is also a wider lesson here about government technology.
The public sector cannot simply buy its way out of decades of fragmented computer systems.
The hard work is often not the new technology. It is cleaning up the old data, changing outdated processes and getting organisations to work together.
That is far less glamorous than announcing a new digital wallet.
But it may be much more important.
The Government has cancelled its digital identity scheme.
The NAO is effectively saying that it has not cancelled the problem.
And as more of our lives move onto our phones, that problem is only going to become more important.
Read more about the National Audit Department report HERE