Following prime minister Keir Starmer’s announcement of plans to launch a new UK digital ID scheme last week, concerns have been raised about digital exclusion, data protection, and a potential threat to innovation.

Starmer said that the new smartphone ID scheme will help combat illegal working while making it easier for the vast majority of people to use vital government services.

Under the plans, digital IDs will be mandatory for Right to Work checks by the end of the Parliament.

Janine Hirt, chief executive of Innovate Finance and RegTech UK said that while government support for digital identity is welcome, the announcement raises concerns about innovation.

“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," added the chief executive. "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."

Innovate Finance also stressed the importance of the rollout supporting a competitive market, rather than 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," continued Hirt. “Design and delivery must enable multiple service providers, unlocking innovation and supporting the growth of our nascent UK digital verification innovators."

She said that while the mandatory ID could be used by verification providers to deliver a range of services, 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."

Elizabeth Anderson, chief executive of the Digital Poverty Alliance warned that the introduction of digital IDs "sets a dangerous precedent" by potentially only allowing people the right to work if they can afford and use a smartphone.

"That ignores the 19 million people who are suffering from digital poverty and lack a smartphone, connectivity or skills, creating a black hole in the labour market and a significant portion of the population who are immediately excluded even further," explained Anderson.

Matthew Holman, AI and data lawyer at top 100 law firm Cripps, said that a significant part of whether UK citizens feel able to trust the government will hinge on how effectively the government can be held to account if things go wrong with the use of digital data.

He gave the example of being fined for breaches of data protection law arising from unlawful use of digital ID cards.

"However, a significant fly in the ointment is that the UK’s state appointed data protection authority has become increasingly weak, lenient and disinclined to punish wrongdoing, especially by public bodies," added Holman. "This could result in a situation where the government is not effectively held to account for use or misuse of personal data arising from digital ID cards."

The government scheme, which will be available to all UK citizens and legal residents, aims to save time for the public by "ending the need for complicated identity checks which often rely on copies of paper records."

It says that the move will make it simpler to apply for services like driving licences, childcare and welfare, while streamlining access to tax records.

The plan also aims to combat criminal gangs who promise access to the UK labour market through illegal channel crossings but curbing their prospect of earning money.

"It will send a clear message that if you come here illegally, you will not be able to work, deterring people from making these dangerous journeys," said the government.

Prime Minister Keir Starmer said:

"Digital ID is an enormous opportunity for the UK," said prime minister Keir Starmer. "It will make it tougher to work illegally in this country, making our borders more secure.

"And it will also offer ordinary citizens countless benefits, like being able to prove your identity to access key services swiftly - rather than hunting around for an old utility bill."

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