Let’s Privatise Digital ID
Viggo Terling
In this article, I explain why Keir Starmer’s proposed Digital ID scheme is misguided, and why even its fiercest critics should not reject the concept of Digital ID itself. Drawing on international examples, I argue that it is Sweden’s privately administered BankID — not state-run models in countries like Estonia or Australia - that best demonstrates how Digital ID can be implemented securely, affordably, and in a way that enhances both the quality of the public sector and its efficiency.
Introduction
A month has passed since Sir Keir Starmer controversially announced that it was the intent of his government to introduce mandatory Digital ID in this country by 2029. However, frustratingly for the Prime Minister, the outcry surrounding Digital ID has ceased to dissipate during this period.
Sir Keir, or his SpAds, can be forgiven for thinking this policy would be a popular one. Prior to its announcement, polling showed support for Digital ID stood at 53%. Since then, 45% of Britons now somewhat or strongly oppose its introduction, according to YouGov.
In addition, over 2.9 million people have now signed an e-petition calling for the scheme to be abandoned — the fourth most in history. As has already been quipped, the policy’s wholesale collapse in popularity has demonstrated Starmer’s “reverse Midas touch” in action.
I can sympathise with the ardent denunciation of Digital ID, and with the dozen or so campaign groups that have sprung up in opposition to it. However, while I understand the discontent, I cannot help but feel that some of the negative discourse surrounding Digital ID is driven by a misguided understanding of its potential benefits.
In this regard, the Government’s flawed scheme, and its failure to adequately address concerns have unnecessarily elevated fears over Digital ID. The loudest voices opposed to it have been allowed to monopolise the public debate, debilitating the Government’s ability to justify its case. This vicious cycle will inevitably continue to chip away at public confidence in the scheme, guaranteeing its failure. To quote former Starmer adviser Peter Hyman: at this rate, Digital ID will be “dead in the water” within six months.
And while readers may celebrate the death of Digital ID, I would mourn the passing of a policy with such promise.
The Government’s Flawed Scheme
Let me be clear: parts of the Government’s scheme are wholly unjustifiable. They are illogical, deceptive, and un-libertarian – so much so that even Palantir has rejected any involvement in it. The cardinal sin committed by the Government has been the erroneous decision to mandate Digital ID for all citizens seeking employment after its introduction. This represents a fundamental violation of the social contract — of our right to choose.
Rousseau and Locke remind us that the relationship between government and its citizens should serve the “general will” of the people, with the state acting as a neutral arbiter in resolving societal disputes. Crucially, the government derives its authority from the people it governs, who surrender their absolute freedom in exchange for the safeguarding of their natural rights.
A Digital ID mandate is directly at odds with these principles – it does not represent the general will of society, whilst also violating our individual liberty. The one saving grace is that you will at least not be prosecuted for disobeying this mandate, for now.
Moreover, the Government’s core justification behind Digital ID is also flawed. Its claim that it will be used as a tool to curb illegal immigration demonstrates that this policy has been engineered out of Labour’s anxiety over its failing narrative on the issue. The official GOV.UK site states that a Digital ID will “combat illegal working,” and Starmer himself claimed that it will help to tackle the shadow economy. These outcomes may both be seen, but it is clear that the Government is using Digital ID to play on prevailing anti-immigration sentiments. This is the exact same strategy that inspired Sir Tony Blair’s failed UK National Identity Scheme. As that policy showed, short-term reactionism should not drive any policy, especially one with the potential to so drastically transform public and private life as Digital ID.
Therefore, I am not here to tell you that your concerns over Digital ID are not legitimate. Arguments that do so, like the old maxim that “if you have nothing to hide, you have nothing to fear,” are, in my view, lame.
Instead, I aim to convince you that you must not be opposed to Digital ID in principle, for it is a fantastic societal innovation. With this in mind, the Government would do well to shift its focus from immigration. The true success of Digital ID is that when implemented correctly, it is a non-invasive way to streamline public services and create a faster, better experience for citizens. Many countries already operate such systems successfully, with the best examples not mandating their use. In functional Digital ID systems, mandates are unnecessary, as citizens naturally subscribe to them for their convenience and efficiency.
Digital ID in Practice
Australia, as a culturally and institutionally similar Anglophone democracy, provides a compelling and relevant example of Digital ID in practice. It’s myGovID system, which 73% of the population uses, allows citizens to access over a hundred government services securely without repeatedly uploading personal documents. It employs cryptographic verification and device-based authentication, ensuring that identity credentials remain under user control.
This now provides me with an opportunity to dispel our first myth about Digital ID: that it is unsafe. In a traditional system like Britain, your personal information is required across multiple systems (think: banks, utilities, employers). This means multiple institutions store your data, creating multiple breach points. By contrast, in a Digital ID, your information is aggregated into one, encrypted “vault” – often accessed through secure biometric verification like face-id. Most systems also use zero-knowledge proofs, meaning digital verifications are completed without your raw data ever being accessed.
In essence, we already surrender personal information freely in all aspects of public and private life. Digital ID consolidates this safely and prevents its misuse by nefarious online actors. Despite this, 63% of Britons say they have concerns regarding the storage of their data in a Digital ID scheme. Certainly, no system is perfect, but the notion that a Digital ID presents an inherent security risk is fundamentally incorrect.
Another often referenced example of Digital ID in practice is Estonia. To quote Alex Hardy from The Conversation, Estonia is often described as the “leading example of digital ID in Europe.” The Estonian system is fantastic, incorporating all features synonymous with a well-designed Digital ID: secure data protection, efficient bureaucracy, and an enhanced citizen experience. In fact, it is estimated that Estonia saves around 2% GDP annually from savings generated by its Digital ID infrastructure.
Furthermore, Estonia boasts the highest number of start-up “unicorns” per capita — technology companies valued at more than $1bn (£743m). This is a direct symptom of a digital-friendly economy — one that should greatly interest the UK, home to the world’s third-largest tech sector. Additionally, with ambitions to become a true tech superpower, Britain ought to be leading the charge in a global market projected to reach £37 billion by 2027.
Despite the successes seen in Estonia, Australia, and elsewhere, the real — and often overlooked — model worth emulating is Sweden’s.
An Introduction to BankID
I must now admit a conflict of interest. Despite being born and raised in Britain, I am of Swedish descent. This, of course, means my assessments of the benefits of Digital ID are wholly impartial and unbiased. It also means I have an intimate understanding of how personal identity is managed in both the UK and Sweden.
So why should the UK copy Sweden’s Digital ID system?
Firstly, allow me to begin by clarifying something: Sweden does not have a state-issued Digital ID. Confused? I will explain.
In 2001, after discussions with the Swedish government, a consortium of major Swedish banks formed with one goal: to deliver a “BankID”. In 2003, the first BankID e-ID was issued in Sweden.
BankID is a bank-issued digital identification system that allows individuals to verify their identity and sign documents electronically across virtually all areas of public and private life. It can be accessed by file, card, and most importantly, mobile. BankID is a decentralised, private-sector solution to creating a Digital ID. It is funded, administered, and safeguarded solely by private enterprise, hence the title of this article. In return for no cost being borne by the taxpayer, banks gain an additional revenue stream through licensing and transaction fees charged to businesses and public institutions that integrate BankID for customer authentication.
The reason it works is that banks have pre-existing and secure IT infrastructure, cultivated through decades of investment. It is for this reason that Sweden outsourced the creation of its Digital ID to the banking sector, as it was a cost-effective method to create an otherwise costly scheme.
This type of Bank-centric digital identity infrastructure already exists in the UK. As the Open Banking Expo reports, comprehensive customer due diligence checks are already applied to the 50 million owners of bank accounts in the UK, or 88% of the population. Far more people own bank accounts in Britain than have driving licenses or passports, making BankID a more applicable solution to creating a Digital ID in this country.
I should, however, mention that Sweden has a highly digitised society, which has been one of the key enablers of BankID’s success. As an example, Sweden ranked second in the Digital Economy and Society Index 2018 for the use of internet by its citizens. Nevertheless, BankID’s aforementioned accessibility by card or file means those without smartphones or internet connections are not automatically disqualified from the service, solving an issue the Government is yet to find its own solution for.
The Security of BankID
It has been said that in Britain, public infrastructure projects contracted out to private companies have been historically unreliable, and HS2 is cited as a key example of this. Nevertheless, one should not doubt the security of BankID. Like Australia’s myGovID, Sweden’s BankID is also secure, as evidenced by the fact that it is trusted by over 90 per cent of adults. This is because the development of BankID is not a contract between the government and the banking sector. Major banks are solely accountable for the development and maintenance of a BankID system, and hence, they are reputationally at risk if it fails. Thus, the major Swedish banks agreed that one excellent and secure infrastructure was better than five semi-good infrastructures. Therefore, they created a system based on tokenised verification, meaning that when you prove your identity or eligibility, you share only a unique encrypted “token” rather than your full date of birth, address, or passport number. Each interaction is digitally signed with a private key stored securely on your device and verified through multi-factor authentication. Because every token is single-use and context-specific, even if one service is compromised, hackers gain nothing that can be reused elsewhere.
The Swedish partnership model demonstrates how aligning technological innovation with private-sector accountability can produce a system both resilient to attack and trusted by the public.
The Societal Benefits of BankID
In Sweden, BankID is used twice daily on average. It now has 8.6 million users, or 81% of the population, which rises to 99.9% among adults aged 18-67. As a result, 7500 services, both public and private, have incorporated BankID. This has grown from 3200 in 2019 – showing how quickly a digital ecosystem can be adopted when the benefits of it are realised.
On that point, it took 13 years from launching the first BankID to having all major banks in Sweden on board, and approximately the same time to see a widespread adoption of it. However, Sweden was the first country to attempt to implement such a system. The Danes, who effectively copied it a decade later, achieved its implementation in half the time. Moreover, their rollout was faster, with 60% of the population subscribing to “MitID” in 9 months. This shows that a BankID system has been replicated and delivered quickly. Britain ought now to follow in Denmark’s step.
In Britain, satisfaction with public services has dropped from 79% to 68% over the past decade. Perhaps one reason for this is that there are currently 191 ways for people to set up online accounts with public services, with 44 different sign-in methods. 47% of the central government still lacks a digital pathway, and the DVLA processes around 45,000 letters daily.
By contrast, a unified digital verification system creates more efficient and user-friendly public and private services — as evidenced by the transformation of Norway’s banking sector under BankID. An Arkwright Consulting report found that in Norway, albeit a worse version of BankID, yielded tremendous improvements in public and private sector service delivery. 8 out of 10 consumer loan applicants now complete their applications when using BankID, as opposed to 5 out of 10 normally. For car loans, the ratio is more significant: 7 out of 10 for BankID users, compared to only 2 out of 10 for non-BankID users. Moreover, a digital mortgage application takes 1 day in Norway (with zero paper filings or shipments required) as opposed to the 16-day wait time, 9 shipments, and 70 pieces of paper the traditional route demands.
The difference is clear and is seen across all areas of society. BankID allows you, with one tool, to file your taxes, access healthcare services, and sign rental contracts, among many other benefits it provides.
The Economic Benefits of BankID
Estimates have placed the cost of the Government’s Digital ID plans as high as £1bn, followed by £100m in annual, recurring administrative costs. The Prime Minister claims this will be repaid by preventing fraud, but wouldn’t the optimal solution be to prevent fraud and not have to pay a penny in doing so?
That is what BankID infrastructure facilitates. In essence, the Swedish Digital ID produces all the benefits seen in comparative countries like Estonia, but without the cost to the taxpayer.
Regarding fraud, the McKinsey Global Institute estimated that the government could reap $5.7bn in savings through Digital ID-related fraud prevention alone. While its robust biometric authentication methods make identity theft difficult, its use of bank-verified data means the modern Frank Abagnale’s of the world are unable to fake documentation and personal photos using artificial intelligence. However, the economic gains do not end there.
As is well known, we have a productivity crisis in this country – part of which stems from a lack of administrative efficiency. In the same report, McKinsey found that productivity gains realised through implementing a Digital ID would be equivalent to 3% of GDP (circa £60 billion for the UK).
An additional $9.3bn in administrative costs would be saved just from the NHS, and $35 billion in additional tax revenue would be seen by 2030 through an expansion of the tax base and reductions in errors and evasion in tax filing.
Clearly, the economic opportunities and societal benefits of Digital ID are immense. So why, therefore, have we not implemented it yet in the UK, when an EU-backed Europe-wide Digital ID is set to be rolled out by the end of 2026, and many other countries already have one?
The Issue of Trust
In Sweden, we ultimately trust our government more, especially with the storage and use of our personal information. For example, the Swedish Government has collected a blood sample from every child born in the country since 1975. As a result, we now have one of the most comprehensive DNA databases in the world. Members of Big Brother Watch may shudder at such a thought, but this database has functioned as a jewel for the scientific community, allowing Sweden to become one of the first healthcare systems in the world to integrate whole genome sequencing into routine diagnostics for rare diseases, among other things.
This high degree of trust stems from a history of government transparency. Our Freedom of the Press Act 1766 is widely considered the oldest piece of freedom of information legislation in the world.
Of course, I cannot expect the people of this country to adopt the Swedes’ childlike confidence in government. However, let us not pretend that we do not have reason to trust the British state; that Britain did not play a vital role in the codification of natural rights. Must I remind you that the Magna Carta was signed in Runnymede in 1215?
Nevertheless, the debate about the trust we place in government is irrelevant. Widespread distrust of government only strengthens the argument for BankID as it better places banks to facilitate the digitisation of our society and our transition to Digital ID.
Two Important Innovations
BankID requires two practical innovations. Firstly, to function effectively, it needs a comprehensive population register, as every Digital ID must be able to correspond to a verified person. In 1947, Sweden introduced the personal identity number (PIN), a unique identifier that linked the name, date of birth, address, family relations, and tax details of every Swedish resident to a single national database.
This was the first system of its kind to store data so comprehensively on an entire resident population. In 1967, it was expanded to the modern digital format, with the PIN being standardised and computerised nationwide, making Sweden once again a global pioneer in establishing a fully centralised digital population register. Since their inception, these identity numbers have been maintained by the Swedish Tax Agency (Skatteverket) and are now securely integrated into BankID’s encrypted digital verification system.
Therefore, BankID is underpinned by the Swedish personal identification number. To replicate BankID in Britain would mean a requirement for similar infrastructure to be created. Luckily, it already exists.
The Government is yet to confirm whether National Insurance numbers will be integrated into a Digital ID credential. Instead, it has stated that a photo will form “the basis for biometric security.” This is nonsense, as it has been tried in Sweden, unsuccessfully.
The BankID Digital ID card was launched in June 2023, containing two verification features, one of which was a headshot. Despite a rapid uptake, it has quickly fallen into disuse because of its unreliability. Simply put, headshots do not form the basis for secure biometric verification despite the Government’s claims.
Therefore, instead of photographic biometric authentication, the government should universalise the use of the National Insurance number. In the UK, National Insurance numbers are already automatically issued to citizens registered for Child Benefit shortly before their 16th birthday, while residents who move to the UK must apply for one manually once they become eligible to work or pay tax.
This is not dissimilar from Sweden, in which the PIN is assigned to all citizens at birth, and residents intending to stay for 12 months or more must manually apply for one at their local Tax Agency office.
In this regard, it is well and truly time for the National Insurance number, which has undergone little change since its introduction in 1911, to be reformed. Assigning National Insurance numbers at birth would mean that the United Kingdom can have its own national ID register for, without one, BankID is impossible.
This leads me to the second necessary innovation. A national ID register would be the first step to making Britain comfortable with interoperability – the ability of computer systems or software to exchange and make use of information. Easily accessible and shareable data aids interoperability, but what matters most — both to it and by extension Digital ID — is a common digital framework through which all software operates.
Swedish public and private services are harmonised because they function under one agreed framework that is monitored by our Agency for Digital Government. Once more, however, this infrastructure already exists in Britain. In September 2024, the Government published its digital identity and attributes trust framework, described as a “set of rules and standards that show what a good digital identity looks like.”
Thus, with the foundations for interoperability and a national identity register already in place, the stage is set for Britain to develop its own version of BankID.
Conclusion
To truly win the debate on the necessity of Digital ID in Britain, I must dispel one more myth about it: it is not draconian, nor an attack on liberty or a “tool of suppression” as Nigel Farage has claimed.
Opposition to Digital ID on this front draws cross-party consensus – it may be the one issue on which Nigel Farage and Sir Ed Davey agree. At the Adam Smith Institute, a famously neoliberal think tank, I am myself somewhat of an outlier in supporting it. However, I believe a passionate opposition to creeping state overreach should not blind us to a genuinely positive innovation.
Fundamentally, I believe all non-mandatory Digital ID is not in conflict with libertarian values. If it were a country like Israel, which you would be hard-pressed to describe as culturally dystopian, it would not have a Digital ID from the age of 16.
However, this argument is even more applicable to a decentralised and privatised BankID. It provides all the benefits that I have outlined in this article, without the involvement of the state being necessary. As a foreign-born Swede, I have witnessed these benefits firsthand. My foreign-born status meant that I was ineligible to reap the benefits of BankID until my 18th birthday. This meant a passport renewal took months rather than the few days that it does now.
Therefore, I can confidently say that a properly designed Digital ID — particularly one modelled on Sweden’s BankID — could save billions in administrative costs, cut fraud, and make public services faster, more secure, and more user-friendly. It could unlock new efficiencies across the NHS and tax system, boost productivity, and empower individuals to manage their information safely and conveniently. Britain already has the infrastructure, the expertise, and the need; what is missing is the political will, or competence, to deliver it.
Starmer is aware of these benefits. His tirade of tweets last week, featuring statements like “Digital ID will bring the UK into the modern age,” demonstrates this. With bureaucratic and administrative reform being long overdue in Britain, Digital ID offers the necessary technological upgrade. Importantly, to realise this vision, we must grow comfortable with the prospect of true e-Government. On this question, Britain cannot afford hesitation; indecision would mean falling behind the rest of the world. Yet e-Government cannot exist without Digital ID — and the only model that works is one built and maintained by the private sector. As ever, the free market can be trusted to provide the best solution.
My final thought on the issue of Digital ID is this. The one criticism I would have of the BankID system is how difficult it made things for me (i.e. a non-resident). But if a Digital BankID makes life tough for non-residents, is that not what those seeking a solution to our migration crisis, like Starmer, want?
Viggo Terling is a Research Associate at the Adam Smith Institute and a member of Chatham House’s Common Futures Conversations