UK Discards Digital ID Plans After Public Pushback

England’s new prime minister has reportedly cancelled his predecessor’s plans for a national digital ID.

Andy Burnham confirmed for Techcrunch Tuesday (July 21) that the government would scrap the widely-criticized proposal for a digital identity card program, announced last year by former Prime Minister Keir Starmer.

The government plans to use the money saved from the jettisoned program to pay for a tax cut designed to lower household electric bills, the report added.

According to the report, Starmer had contended that a state-issued digital ID would crack down on migrants working illegally in the U.K. and modernize government service access. The program would have cost $2.4 billion over three years, though money to fund it was apparently never allocated, Techcrunch added.

Millions of people had opposed the plan for mandatory digital ID cards, causing the second-largest public parliamentary petition, with nearly three million signatures in support of rejecting the plan. Critics said the program would allow for government surveillance.

In other digital identity news, recent PYMNTS Intelligence research shows that identity programs have a significant financial impact aside from fraud losses: the number of legitimate customers who are incorrectly labeled suspicious or give up on applications after running into excessive verification hurdles.

“That dynamic raises a broader question for financial institutions, FinTechs and digital platforms: How much growth is being sacrificed in pursuit of risk reduction?” PYMNTS wrote recently.

The research suggests that each identity ownership model carries costs. The challenge is understanding which costs are most harmful to a business’ long-term health.

“One of the stark findings in the report is that internally managed identity programs consistently generate the highest levels of friction,” PYMNTS wrote.

Among companies with in-house know your customer (KYC) and know your business (KYB) operations, 43% reported excessive false positives, meaning actual customers were incorrectly identified as possible fraudsters. In addition, 56% saw rising transaction decline rates and 62% reported excessive verification checks are driving customer friction.

“Every additional document request, manual review or erroneous rejection creates an opportunity for a prospective customer to abandon the process,” PYMNTS continued. “Unlike fraud losses, which are typically measured and reported, these missed opportunities frequently remain invisible.”