Data (Use and Access) Act 2025 — Impact Assessments: Digital Verification Services De Minimis Assessment

De Minimis AssessmentSelf-
Certification Template

Title of regulatory proposal Powers for digital identity and
attributes initiatives
Stage Final
Lead Department/Agency DSIT
Expected date of implementation 23/10/2024
Origin Domestic
Date 29/07/2024
Lead Departmental Contact CSDI Analysis,
csdianalysis@dsit.gov.uk
Departmental Triage Assessment Equivalent Annual Cost to Business
(EANDCB: 2014 prices) = 0

Call in criteria checklist Yes/No
Significant distributional impacts (e.g.
significant transfers between different
businesses or sectors)
No
Disproportionate burdens on small
businesses
No
Significant gross effects despite small
net impacts
No
Significant wider social,
environmental, financial, or economic
impacts
No
Significant, novel, or contentious
elements
No

Chief Economist signoffAlex Rubin Date: 9/8/2024

SUMMARY

Rationale for government intervention

Identity proofing methods which rely on physical documents can be
expensive, inefficient, and vulnerable to fraud. Digital identities can strengthen
and simplify the process.

However, the current landscape is insufficient. There is an information failure
between digital identity providers and users. It lacks standards which will
enable interoperability and does not yet command trust. In the 2019 Call for
Evidence, respondents noted that the market required government to step in
and set these standards, create mechanisms to allow organisations to prove
they follow them, and to enable checks against government-held data.

This De Minimis Assessment updates the analysis conducted for the 2021 De
Minimis Assessment1. Please refer to the original DMA for additional detail
where necessary.

The main changes to the costs and benefits are only reflecting changes to the
general price level. There have been no significant changes to the estimated
costs and benefits of our measures.

The objective of this policy is to allow people to prove things about
themselves as quickly and securely as possible. By enabling this, we hope to
achieve the following effects:
• Unlock the economic gains associated with a functioning digital
• identity system, enabling the full realisation of the digital economy.
• Protect against fraud, for both businesses and people.
• Enhance privacy and enable data minimisation.
• Promote inclusive solutions and remove barriers to inclusion

1 Digital Identity DMA, 2021, GOV .UK

Policy options

[These should include do nothing and a brief overview of the evidence
supporting the consideration and discounting alternatives for regulation.
[Maximum 10 lines]

The status-quo option would be for Government to not seek to legislate
regarding digital identity. We would still continue to develop and update the
trust framework but there would be no mechanism for a governance function
to own these requirements, and a less robust route for organisations to prove
they follow the requirements. Doing nothing would leave the UK with a smaller
and poorly functioning digital identity market which leaves efficiency gains
unmade and falls behind international partners.

Option 2 is to create a statutory governance framework to oversee the trust
framework. However, digital identities could still only be built on limited
datasets.

Option 3 is to enable checks against government-held data but not create a
statutory governance framework. Without a visible and trusted governance,
consumers would struggle to understand which organisations follow what
rules and hence which they can trust.

Option 4, the preferred option, is to combine options 2 and 3. This is the
preferred option as without enabling checks the use cases will not be usable.
However, without a strong governing framework to build trust in the market
and support the opening of more sensitive data sets, we will not be able to
fully achieve the policy objectives.
Alternatives to regulation

We considered alternatives to regulation in the ‘Do Nothing’ option as listed in
Options 2-4 above. In the 2019 Call for Evidence, respondents voiced the
need for government intervention. Option 4 was taken forward, as introducing
legislation will provide a strong statutory governance framework to enable
trusted and secure digital identity checks across the UK economy.

Past measures

This De Minimis Assessment has been produced through updating the 2021
Digital Identity DMA. The proposed measures and rationale underpinning
them are the same. We have provided updated inputs where possible.

The main changes to the costs and benefits are only reflecting changes to the
general price level. There have been no significant changes to the estimated
costs and benefits of our measures.

No PIRs of past measures are necessary prior to bill introduction.
Summary of business impact

The Equivalent Annual Net Direct Cost to Business (EANDCB) should be less
+/-£10m (new framework).

[Maximum 10 lines]

There is no direct impact on business of this legislation. The purpose of this
legislation is to create a permissive, government-backed framework of
standards and governance within which businesses can choose to operate,
and to allow government departments the option to share data with certified
and registered private sector organisations for the purpose of confirming
identity and eligibility. The only direct impact is the familiarisation cost for
affected departments, which is a public sector cost and not a private sector
cost. The EANDCB is therefore 0.

Wider impacts and transfers
There may be some wider positive impacts of our measures on inclusion.
Inclusion is explicitly mentioned in the UK digital identity and attributes trust
framework.

Although signing up to the Trust Framework is not compulsory, organisations
will need to be certified against it to prove that their products or services meet
the UK Government requirements for checking government-held records of
identity-related data.

There are not significant transfers between businesses or other sectors.

Impacts on small businesses

Due to the use cases being examined and given that most SME’s employ so
few people we believe that not many SME’s will take advantage of DI, and
therefore not incur any indirect costs.

There are not disproportionate effects on small businesses.

Problem under consideration
Current identity proofing methods can involve multiple physical documents needing
to be checked at different stages of the process. Organisations have to pay for
identity checks from scratch every time they interact with a new user. These labour-
intensive tasks can be expensive and inefficient.
Digital identities enable people to prove something about themselves — their age,
their nationality, their identity — as seamlessly as possible, simplifying this process.
A digital identity is essentially a digital representation of who a user is. It lets them
prove who they are during interactions and transactions. They can use it online or in
person. Under a trusted and secure digital identity framework, a person could
choose to prove their identity once, then have that proof trusted throughout any
process.
Use of physical documents is vulnerable to fraud, with CIFAS reporting high levels of
identity fraud in the UK; there were over 237,642 cases reported in 20232. Physical
documents are often carried around by people to access services, and they are a
legal requirement for activities such as buying alcohol or proving your right to work.
However, as the ICO notes, these documents can easily be lost or stolen3, and are
fuel for organised crime.
Digital identities can be non-physical, removing the possibility of theft or loss of
documents and thus potentially reducing fraud. By virtue of being digital, their use (in
line with data protection and privacy law) also enables more efficient checks against
fraud databases, reducing opportunities for fraudsters.
Digital identities can also help reduce other forms of fraud. For example, Authorised
Push Payment (APP) scams involve tricking a person or business into transferring
money to a fraudster while thinking the recipient is legitimate. In future, it may be
possible to make a quick and easy digital check of the recipients’ identity to prevent
such scams from occurring4.
There are also privacy considerations. To prove you are over eighteen to buy
alcohol, a person currently needs to show an identity credential containing
information like address. This is an unnecessary disclosure of personal data. Digital
identities allow a person to minimise what personal data is disclosed when accessing
a service to just what is required to access that service, thus enhancing privacy.

2 Number of cases reported to the National Fraud Database, CIFAS’s Fraudscape Report 2024
3 Identity theft, ICO, 2021
4 Digital Identity White Paper, TechUK, 2019

However, the landscape of the current digital identity market is not sufficient to
address these problems or to realise these benefits. It is fractured, lacking standards
which will enable interoperability, and does not yet command the trust of consumers
and relying parties. There is no independent way for people or businesses to know
that an identity provider can be trusted or that their identity products are based on
solid evidence. In turn this precludes the effective use of digital identity solutions.
In the 2019 Call for Evidence5, respondents noted that the market required
government to step in and set these standards. Alongside these standards,
government also must create mechanisms to allow organisations to prove they follow
them, and to monitor, oversee, and enforce the following of them. Respondents also
stated clearly that, if confidence and trust is to be instilled in digital identity products,
access to government-held data was required. Just as familiar forms of identification,
like passports, are based on authoritative government-held data, so too must digital
identities. Respondents claimed that enabling international interoperability of digital
identities ought to be a key priority of government. Allowing a UK citizen to use their
UK created digital identity to transact abroad and allowing the reverse would
facilitate trade in addition to having the aforementioned benefits digital identities
bring. However, there is no clear path to enable the UK to enter into mutual
recognition agreements for either digital identities or trust services without a
domestic digital identity framework.
Policy objectives
The objective of this policy is to allow people to prove things about themselves as
quickly and securely as possible. By enabling this, we hope to achieve the following
effects:
• Unlock the economic gains associated with a functioning digital identity
system, enabling the full realisation of the digital economy. The current
lack of widespread digital identity use in the UK is preventing end-to-end
digital transformation at scale. DSIT estimates that the Digital Sector currently
adds nearly £161bn a year6 to our economy, with 74% of people in the UK
saying they cannot live without the internet7. Individuals in the UK expect to
be able to carry out their transactions online and, as services increasingly
move online to meet demand, an individual’s ability to provide their identity

5 Digital Identity CfE response
6 Economic Estimates: Digital Sector GVA, GOV .UK, 2024
7 Onwards, The People’s Study. (File available from GDS)

digitally has become essential. In 2023, HMPO processed over 7.9 million
passport applications8.
• Protect against fraud, for both businesses and people. Identity fraud is at
a high level within the UK with just over 237,642 cases reported to the
National Fraud Database in 2023.9 Digital identity can play a crucial role in
reducing crime and fraud, both online and offline. The wide scale adoption of
secure digital identity solutions has the potential to reduce the opportunity to
steal and use stolen documents.
• Enhance privacy and enable data minimisation. Use of physical identity
documents often involves the oversharing of personal data which can then be
misused. The wide scale adoption of secure digital identity solutions has the
potential to reduce the opportunity to steal and use stolen documents. Digital
alternatives will also be able to minimise data to safeguard privacy10, reducing
the risk of data misuse.
• Promote inclusive solutions and remove barriers to inclusion. According
to the last census in 2021, 13.5% of people in England and Wales do not have
a passport11 (a key document for identity proofing). Moreover, evidence from
Switchback’s work with young prison-leavers highlighted that 25% were
released with no ID12, making it difficult for them to access benefits or open a
bank account. Digital identity presents a unique opportunity to allow people
without common identity documents to use a digital alternative. A secure way
to share basic identity information digitally could give excluded groups access
to the services most people take for granted.

Rationale for government intervention
Ensure a functioning market
The UK Government wants to ensure that the potential of the UK digital economy is
maximised. McKinsey estimates that extending full digital identity coverage in the UK
could unlock economic value equivalent to between 0.5% and 3% of GDP in 2030
through the delivery of these benefits13. Therefore, to facilitate remote identity

8 HM Passport Office data, GOV .uk, 2023
9 Number of cases reported to the National Fraud Database, CIFAS’s Fraudscape Report 2024
10 The Information Commissioner’s position paper on the UK Government’s proposal for a trusted
digital identity system, ICO, 2021
11 International Migration, England and Wales: Census 2021, ONS, 2022
12 Action needed to protect prison-leavers and the public during COVID-19, Switchback
13 Digital Identification: A key to inclusive growth, McKinsey, 2019

proofing in order to support growth of the digital economy, the UK Government wants
to foster the uptake of digital identity. However, current legislation does not facilitate
the creation of a fully functioning digital identity market, for example there is no
legislation in place to enable the private sector to check data contained within certain
government databases for identity verification purposes.
Government intervention is therefore required to overcome the current barriers faced
by the market. A sustainable rule-bound environment, with a robust governance and
oversight mechanism, needs to be created to allow the market to grow in a trusted
and interoperable way. In order to improve trust in digital identities, the Government
also needs to intervene to allow the private sector to make checks against
government-held data for identity verification purposes under specific controlled
circumstances.
Intervention by the Government is further required to affirm the validity of digital
identity solutions as methods of identity proofing. Factors such as lack of trust in the
market prevent users and the relying parties from considering digital identity a
perfect substitute to traditional ID checking, which halts a wide uptake of digital
identity. Therefore, the legislation is required to build capability and trust and affirm
the equal validity of digital identities and attributes relative to traditional identity
documents. In turn, this is expected to foster uptake of digital identity by building
confidence across guidance bodies and organisations in using the digital identity
system.
Ensure a functioning international digital identity market
Currently, there is a lack of international cooperation across various digital identity
markets due to a lack of mutual recognition. This creates barriers to both digital
identity proofing of UK citizens abroad and to allowing foreign individuals to use their
foreign digital identity in the UK. In turn, this limits the full realisation of the digital
identity market.
Intervention is necessary because unless the Government creates a domestic digital
identity framework, the current barriers to international cooperation and
interoperability cannot be overcome. The legislation will therefore set the right
landscape to facilitate the full realisation of both the domestic and international digital
identity markets. In turn, this is expected to support the growth of the UK digital
economy and maximise the potential economic benefits to the UK economy.
Furthermore, putting in place a domestic digital identity framework which permits
international cooperation will ensure that the UK is not left behind by the mutual
recognition of digital identity across other countries which could potentially harm the

position of the UK as a key international player in the future. Digital identity is
increasingly mentioned by potential partners in free trade agreements.
Efficiency gains to the UK economy
Currently, organisations must pay for identity checks from scratch every time they
interact with a new user. The average employer in the UK spends £3,000 and 27.5
days to hire a new worker14 which is a clear impediment to creating and filling new
jobs. We expect digital identity to allow right to work checks to take place almost
instantaneously. Therefore, carrying out paperless identity checks would allow the
resources currently spent on manual identity proofing to be invested in other
activities. These efficiency improvements will not only benefit the direct stakeholders
but also society. This is because there is a positive knock-on effect to society from
job vacancies being filled quicker as society benefits from the products and services
provided by the newly hired employee. Therefore, the legislation is necessary to
bring about efficiency gains due to a better allocation of resources which in turn
enhances productivity and economic growth.
Prevention of identity fraud
Digital identities may help reduce fraud, so there are potential economic benefits
from having a fully functioning, trusted and interoperable market for the wider UK
economy. The current, unregulated digital identity market is unable to achieve this
due to a lack of suitable legislative environment and no overarching entity in charge
of controlling it. Therefore, ensuring appropriate security standards is currently a
responsibility of the singular digital identity providers which may not have the
incentive to ensure that fraud risks are minimised.
Furthermore, Government intervention will create the correct landscape to support
fraud prevention by setting up a governance function with the powers to ensure fraud
prevention best practises are followed. The governance function will collaborate with
the trust framework participants to maximise cybersecurity through set standards to
increase prevention and promote swift action in case of suspicious activity. The body
will also implement an information sharing structure both between relevant bodies
and the framework participants and across participants. This is expected to increase
information sharing about security threats and therefore resilience within the digital
identity market to identity fraud. Government intervention is therefore required to set
standards to maximise cybersecurity and minimise fraud to reduce the risk of identity
fraud for UK citizens, whilst fostering digital identity uptake across the UK.

14 Calculating cost per hire, Glassdoor, 2020

Coordination issue and misaligned incentiveslack of interoperability and
inclusivity
Current issues across the digital identity market relate to the lack of coordination and
misaligned incentives preventing the market from meeting the needs of the UK
citizens. For instance, by not incentivising providers to invest in interoperable
products. Therefore, Government intervention is required to ensure the market is
interoperable and offers an inclusive service which considers the needs of minorities
or those with protected characteristics. Specifically, the trust framework attempts to
enhance interoperability by creating an environment that enables businesses to
collaborate and to consider inclusivity as a key priority for the business.
The Government, by promoting a digital identity market that balances the needs of
the wider public and those of the private sector, will play an important role to foster
growth of the sector by ensuring a well-functioning digital identity ecosystem. If the
service provided meets the needs of the public, individuals will be more inclined to
adopt digital identity during private sector transactions which will help the market
expand and increase digital identity uptake.
Lack of interoperability
Businesses lack incentives to invest in a suitable level of coordination across the
digital identity sector because businesses prioritise private benefit, such as profit,
over public benefit. Therefore, the free market may not prioritise in a way that
ensures that the sector is well-coordinated and that an interoperable service is
provided.
Government intervention is required because without an overarching structure there
will be no entity in place with the power to coordinate the market, making it difficult
for players to proactively cooperate. The implementation of the trust framework
attempts to tackle this issue by outlining open recommended technical standards
players in the market should follow to strengthen interoperability. Government
intervention will also oversee the creation of schemes. A scheme is a group of
different organisations that follow a specific set of rules regarding digital identities
and attributes, in addition to those set out in the trust framework. For example, there
may be a scheme in the home buying and conveyancing sector which allows
members to prove they provide identities with the requisite level of assurance. In
turn, this is expected to increase cooperation within and across schemes and
provide the opportunities to create interoperable products.

However, although we expect to see a reduction in the coordination issue, the extent
of the progress is unknown because these standards will be encouraged but not
enforced.
Lack of inclusivity
The choice to use digital identities would be of considerable value to those who lack
traditional identity documents. For instance, evidence from Switchback’s work with
young prison-leavers identified that 25% were released with no ID15, making it
difficult for them to access benefits or open a bank account. A fully functioning digital
identity market would support minority groups or those with protected characteristics
as a much wider range of datasets could be used, rather than just the typical
documents used for identity proof. This would facilitate the identity proofing process
for individuals without traditional documentation, enabling them to receive the
products, services and benefits they are entitled to. However, these benefits in terms
of increasing inclusivity in society can only be realised if there is a widespread
uptake of digital identity which will not take place without the introduction of
legislation to set the necessary rule-bound environment in place.
Furthermore, government intervention through a coordinated approach is key to
ensure that digital identity is inclusive of anyone who wants one, instead of
increasing the social and digital divide. Without a rule-bound market, promoting
inclusion will be left in the hands of the organisations who are incentivised to develop
products and services that target the market. As those at risk of being excluded from
digital identities represent a minority of the UK population, they would not be
considered a priority for private sector businesses. Instead, businesses are focused
on targeting a larger pool of potential clients when designing their digital identity
service due to profit reasons.
The trust framework attempts to foster inclusivity in the digital identity market by
requiring companies, and possibly schemes, to report the routes they provide to
access their services and how inclusion is considered in their service development to
the governance function on an annual basis However, there will not be a requirement
for organisations to collect information solely for the purposes of reporting. The
information included in the report will be designed to map the avenues to acquiring a
digital identity and encourage a diversity of avenues across the market.
The governance function aims at ensuring an adequate level of inclusivity in the
digital identity market by establishing inclusion principles and helping identify groups

15 Action needed to protect prison-leavers and the public during COVID-19, Switchback

which are potentially excluded by the market using the information in the report.
Furthermore, the trust framework provides indications to businesses on what
approach they should take to proactively address inclusion. For instance, by
encouraging providers to accept a wide range of evidence of identity and/or eligibility
proof including a ‘vouch’, which is a third-party declaration made by someone who
knows the user. However, as it is not mandated that any specific action is taken to
promote inclusion (other than completing the inclusion report) due to the difficulty
around the implementation, there are no guarantees that inclusion in the digital
identity market will reach the desired level.
Information asymmetry across UK citizens
Currently, there is a lack of trust and public awareness around digital identity which
reduces digital identity uptake across UK citizens as consumers are rightly
concerned about the privacy risks of using digital identity due to their lack of
knowledge on the subject. Some citizens that may try and find out the security
standards followed by a provider often do not have the technical skills to understand
what a safe digital identity or attribute looks like and may therefore opt out entirely.
Due to the nature of the digital identity products and services, these justified security
and privacy concerns are particularly detrimental to the uptake of digital identities
and must be tackled to ensure that the market fully functions.
The Government is therefore required to intervene to tackle the current asymmetric
information and enhance trust in the security of the market through ‘signalling’. To
facilitate the signalling process, the governance function will assign a trust mark to
the providers that sign up to the trust framework, will maintain a list of trust-marked
organisations, and will monitor the performance to ensure the standards are met. In
turn, this is expected to reassure the public that those firms follow a known and
approved set of standards and promote the uptake of digital identity across the UK
public.
Information asymmetry across UK businesses
Although to a lesser extent, the asymmetric information is also present within the
private sector as businesses are unaware of what a trusted digital identity solution
looks like, meaning they cannot be sure what they produce meets existing regulatory
requirements, such as anti-money laundering regulations. This lack of market
structure and overarching guidance, creates uncertainty for businesses and reduces
their willingness to invest in digital identity.
The UK Government is therefore required to intervene to create a landscape to
facilitate better coordination of the digital identity sector, which the private sector has

demonstrated to be unable to independently provide. The governance function will
tackle imperfect information across UK businesses by indicating the requirements
that digital identities in the UK should meet and providing a way for organisations to
demonstrate they follow these requirements. Reducing asymmetric information is
expected to boost confidence across businesses, increase efficiency, investment
and innovation within the digital identity sector, therefore fostering the growth of the
digital identity market.
Furthermore, the asymmetric information currently present in the market prevents
the market from functioning in an interoperable way. Without a common set of
standards there is a lack of trust across players in the market as organisations do not
know the processes followed by others to provide digital identities or attributes.
Therefore, an overarching governance function, which is trusted across the market
players, is required to reduce the asymmetric information by ’signalling’ which
providers within the market can be trusted. Businesses within the market will be
monitored by the body, which has the responsibility to monitor compliance also post-
certification, so they will be confident that they are engaging with businesses that are
in line with their standards. This should facilitate interactions, transactions and
information sharing within the digital identity market.

Summary of market failures
Overall, the combination of these factors prevents the digital identity market from
fully developing, placing a significant constraint on the potential of the UK digital
economy and the cost benefit opportunities of an international digital identity
ecosystem. These cannot be overcome without Government intervention. The
Government is therefore required to step in to create a rule-bound environment
which supports the market growth and fosters the uptake of digital identity checks.

Policy options

Description of options considered
Option 1: Do nothing
The status-quo option would be for Government to not seek to legislate regarding
digital identity.
We would continue to develop the UK digital identity and attributes trust framework,
a set of requirements representing best practice in digital identity which
organisations could choose to follow. However, without statutory powers being
created, there would be no mechanism for a governance function to own these
requirements. As such, there would be no robust route for organisations to prove
they follow the requirements. Similarly, there would be no lasting oversight of these

organisations so it is unlikely that trust and confidence in digital identities would
increase. The ability to share government-held data would also be very limited. This
means that it would be difficult for digital identities to be built on authoritative
government-held data, reducing trust in their accuracy. It is unlikely that datasets
vital to building inclusive digital identities would be accessible.

Doing nothing would leave the UK with a small and poorly functioning digital identity
market which leaves efficiency gains unmade and falls behind international partners.
Option 2: Create a statutory governance framework to oversee the trust
framework
This option would see statutory powers created for governance of digital identity to:
• manage the aforementioned trust framework and update its requirements to
ensure they remain fit for purpose as technology evolves;
• register certified providers on a publicly available register, allowing registered
organisations to display a trust mark on provision of their services;
• monitor compliance and performance of registered providers;
• promote consumer protection by managing enforcement, complaints, and
redress;
• consult with stakeholders and regulators where required;
• maximise cybersecurity and minimise fraud; and
• promote and encourage inclusion.
This would enable organisations to prove that they follow certain requirements and
can be trusted when they create digital identity solutions, both to protect users'
privacy and to provide a robust service to a relying party. It would give consumers
additional protection and thus promote uptake of digital identity.
However, without legislation which provides for a legal gateway which may enable
checks against government-held data, digital identities could still only be built on
limited datasets.
Option 3: Enable checks against government-held data but do not create a
statutory governance framework
This option would see the creation of a permissive legal gateway which would enable
government departments to allow checks against data they hold for digital identity,
eligibility, and verification purposes. This would allow organisations to base digital
identities on authoritative government-held data, which forms the basis of traditional
identity checks.

However, without a governance framework, departments would need to individually
set requirements for organisations to meet before allowing checks. They would also
need to set up due diligence procedures to ensure organisations can be trusted to
check people’s data for the purposes of verifying identity and eligibility digitally. This
would inevitably add cost and could fragment the market as different departments
set different standards.
Without visible and trusted governance, consumers would struggle to understand
which organisations follow what rules and hence which they can trust. Individuals
and organisations would have no central route to complain or seek redress. These
factors are likely to hinder adoption of digital identity.

Option 4Create a governance framework and enable checks against
government-held data - preferred option
This option is a combination of options two and three and is our preferred policy
option. To summarise, this intervention would:
• create a model of governance which will meet the needs of all parties while
balancing proportionate rules with security, consumer protection and trust,
according to the scale of digital identity use;
• provide a permissive legal power to allow digital identities in the UK to be built
on a greater range of trusted datasets and for government-held attributes to
be checked for eligibility, identity and validation purposes;
• build confidence in the legal validity of digital identities alongside the physical
proofs of identity that businesses and individuals already trust, as part of our
commitment to increase choice and confidence.
It would not be mandatory for digital identity companies to be part of this governance
framework or to be certified as following the requirements set out in the trust
framework. However, checks against government-held data could only be performed
by trusted organisations and certification against these requirements could provide
this trust.

Assessment of business impact

There is no direct impact on business of this legislation. The purpose of this
legislation is to create a permissive, government-backed framework of standards and
governance within which businesses can choose to operate, and to allow
government departments the option to share data with certified and registered
private sector organisations for the purpose of confirming identity and eligibility. The
only direct impact is the familiarisation cost for affected departments, which is a
public sector cost and not a private sector cost.

Price Base
Year
PV Base
Year
Time
Period
Years

Net Benefit
(Present
Value (PV))
(£m)
Net Benefit
(Present
Value (PV))
(£m)
Net Benefit
(Present
Value (PV))
(£m)
2024 2024 10 Worst case
estimate:
1285

Best case
estimate:
6203
Central
case
estimate:
4253

COSTS
(£m)
Total Transition costs
(Constant Price)
Average Annual
(excl. transition)
(Constant Price)
Total Cost
(Present Value)
Low 543 39 869
High 2170 76 2672
Central
Estimate
1085 52 1485

Description and scale of key monetised costs by ‘main affected groups’
We expect some public sector organisations to have direct familiarisation costs as
a result of this legislation. We expect Government Departments to face indirect
costs to open their databases for private sector checks if they wish to as a result of
this legislation. There are also costs associated with the setting up and running the
digital identity governance function until it becomes self-sustainable.

We also expect some UK businesses to face indirect costs. For these businesses
there are one-off costs to familiarise with their legislation and adapt to the digital
verification system. We also expect UK businesses to face indirect annual costs in
the form of fees levied by public sector organisations to connect to government-
held datasets and to check data. These fees are intended to offset public sector
costs and maintain value for money for the taxpayer.
Key non-monetised benefits by ‘main affected groups’
We expect businesses to pay to sign up to the trust framework. We also expect
businesses to face costs to change the way they work, for instance to set up a
digital platform to carry out the checks.

BENEFITS
(£m)
Total Transition
(Constant Price)
Average Annual
(excl. transition)
(Constant Price)
Total Benefits
(Present Value)
Low 0 497 3957
High 0 850 7072
Central
Estimate
0 701 5737

Description and scale of key monetised benefits by ‘main affected groups’
We analysed the benefits in relation to the four use cases we consider in this sav
analysis. The benefits are specific to each use case but mainly focus on the
monetary value of the time and resources that digital identity checks would save to
businesses and individuals.
Other key non-monetised benefits by ‘main affected groups’
The analysis does not consider any non-monetised benefits.

Key assumptions/sensitivities/risks Discount
rate (%)
We expect the market to grow throughout the 10 year appraisal period
until it reaches its steady state. We assume that at that point the
benefits may be fully realised and the annual number of checks may
become fairly constant over time. We also expect the costs and
benefits to only impact UK medium and large businesses as we
assume that small-micro UK firms will be less inclined to carry out
identity checks digitally as their expected benefits are less likely to
outweigh the expected costs. We do not have updated estimates for
number of checks and have had to rely on 2020/21 estimates. We may
be understating the number of checks taking place annually.

3.5
Key assumptions/sensitivities/risks Discount
rate (%)
We expect the market to grow throughout the 10 year appraisal period
until it reaches its steady state. We assume that at that point the
benefits may be fully realised and the annual number of checks may
become fairly constant over time. We also expect the costs and
benefits to only impact UK medium and large businesses as we
assume that small-micro UK firms will be less inclined to carry out
identity checks digitally as their expected benefits are less likely to
outweigh the expected costs.

We do not have updated estimates for number of checks and have had
to rely on 2020/21 estimates. We may be understating the number of
checks taking place annually.

3.5

Monetised and non-monetised costs and benefits of each option
(including administrative burden)
The digital identity uptake scenarios
We have kept the same uptake scenarios as in the 2021 Digital Identity DMA as we
are modelling expected benefits from the point of legislative commencement.
Steady state:
The total number of digital identity checks we expect to take place under the steady
state is detailed in Table 3 at the end of this section, we have assumed all of these
checks will become digital and that the proxies used to estimate the number of
checks in the research project capture the majority of checks within these use cases.
For the steady state to occur requires different government data sets to be opened
depending on the use case. From discussion with policy colleagues, we understand
that the majority of use cases rely on passport data. These use cases cover DBS
checks, RTW checks, travel and ticketing, home buying and, trusted financial
transactions. The only use case that requires a different dataset is for the
qualification checking use case. Qualification checking either needs access to
professional bodies datasets or requires something simpler like a portal for uploading
qualification certificates.
Central estimate:
In the central estimate scenario, public sector bodies make the necessary technical
changes to allow the digital identity market to grow at different times. For instance
because different departments may have different levels of willingness to promptly
allow private sector checks. In this scenario, we assume that the checks that rely
only on Passport data start in year 2, those that require passport data and guidance
being updated start in year 3 and the remaining checks that rely on datasets other
than passport data begin in year 5.
Therefore, the central scenario assumes that the digital ID checks in relation to
travelling and trusted financial transactions checks and home buying are possible
from year two onwards. Whereas, digital DBS, RTW and qualification checks are
possible from year 2, 3 and 5 respectively.
We assume that digital identity uptake follows a linear upwards trend towards the
steady state level of the digital identity market. We consider the steady state level to
the point at which the estimated benefits are fully realised. This will be reached when
the required datasets are open for private sector checks and necessary rule-based

changes have been made. The speed at which the steady state is reached, which is
reflected in the slope of the trendline, varies depending on the scenario.
In the central scenario, the estimated digital identity uptake curve predicts that it may
take 7 years for the digital identity market to fully develop since the implementation
of the legislation. Therefore, we assume that 100% of the estimated total annual
costs to carry out checks and total benefits of using digital identity may be realised
from year 7 onwards.
Best estimate:
In the best case scenario, we assume that the checks that require either passport
data only or passport data and guidance being updated start one year earlier than
what assumed in the central estimate, therefore in year 1 and 2 respectively.
Whereas, those that rely on other datasets begin in year 3, 2 years before the central
estimate scenario.
Therefore, in this scenario digital checks for DBS, travel authorisation and ticketing,
home buying and trusted financial transactions begin in year one, digital RTW
checks in year 2 and the qualification checks in year 3.
In this scenario, we predict that the uptake of digital identity takes place at a speed
33% higher relative to the central scenario. Therefore, in the best estimate scenario
we assume that it takes 5 years for the digital identity market to be fully realised.

Worst estimateIn this scenario, we assume that the digital checks for DBS, travel authorisation and
ticketing, home buying and trusted financial transactions start in year 3, whilst digital
RTW checks in year 4. One year later relative to the central scenario. Whereas, we
assume that digital qualification checks, which rely on other datasets, start in year 7.
We assume that the speed of the digital identity uptake is 33% slower than in the
central scenario. Therefore, in the most conservative scenario we assume it takes 10
years for the uptake of digital identity to reach 100%.

Table 1 - First year we assume the digital ID checks take place
Type of Check Central
case
estimate
Best case
estimate
Worst
case
estimate
DBS Checks 2 1 3
RTW checks 3 2 4
Qualification checks 5 3 7
Faster employee mobility for people on short
notice periods (second order indirect benefit) 2 1 3
Productivity improvements (second order indirect
benefit) 2 1 3

Reduced fraudulent applications (second order
indirect benefit) 5 3 7
Travel authorisation and ticketing 2 1 3
Home buying 2 1 3
Trusted financial transactions 2 1 3

Table 2 - expected linear trend over time of the digital identity market towards the steady state

Years
benefits
begin 1 2 3 4 5 6 7 8 9 10
Central
case
estimate 15% 30% 45% 60% 75% 90% 100% 100% 100% 100%
Best case
estimate 20% 40% 60% 80% 100% 100% 100% 100% 100% 100%
Worst
case
estimate 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Table 3 - total number of annual DI checks at steady state by use case
Type of check Number of checks
DBS checks 7,174,588 – 9,694,57416
RTW checks 8,225,000
Qualification checks 1,727,250
Travel authorisation and ticketing 259,595,875
Home buying 8,882,775
Trusted financial transactions 860,772
Total 287,726,253

Monetised benefits of each scenario

Deloitte carried out a quantitative analysis of the potential economic value of the
annual benefits of having a fully functioning digital identity market in four specific use
cases (this report was produced in 2020 and is available upon request). For the
purpose of our analysis, we modelled the potential indirect benefits over the
appraisal period based on the Deloitte calculations. We assume that the annual
estimations offered by Deloitte assume that the steady state market level has been
reached. The monetary values used in the Deloitte analysis have been inflated to

16 Unlike for other DI checks, for DBS we have a forecast of the number of checks each year over the
10 year appraisal period. Due to time constraints, we had to rely on the forecast up to 2030-31.

2024 prices to ensure the estimated benefits are comparable with the estimated
costs.

The estimated total values of the benefits over the 10-year appraisal period in the
benefit analysis are undiscounted. The NPV has only been considered for the net
benefits. This is in line with the previous version of the Digital Identity DMA17
produced in 2021.
We modelled the benefits based on three potential scenarios to attempt to define
what the total benefits to private organisations and individuals of having a fully
functioning digital identity market may be given different assumptions. We consider
the Deloitte estimates to be the value the benefits may take when the digital identity
market reaches its steady state. Therefore, we assume it may take a few years to
achieve the estimated size of the benefits. We assume that the total value of the
benefits varies depending on the speed at which the benefits are realised. The
values we estimate increase linearly over time but at different rates depending on the
scenario.
To allow the full realisation of the market, departments need to remove the barriers
within their policy areas that currently prevent the market from fully developing, such
as allowing private-sector checks against their databases. Therefore, we expect
these benefits to arise conditional on the fact that departments make the necessary
technical changes to fully unlock the development of the market. As such these are
all indirect benefits.
Indirect benefits calculations
Employee mobility
First order indirect benefits
According to the Deloitte analysis, a fully functioning digital identity market may
positively impact employee mobility by:
• Digitising the right to work checks process: This process requires all
employers to check the identity of the individual being hired and their right to
work in the UK.
• Allowing digital qualifications checks: Refers to the process used by
employees to verify the qualifications of professionals being hired.

17 Digital Identity DMA, 2021, GOV .UK

• Allowing digital employment status checks: This is the EU Settlement
scheme process run by the Home Office to allow EU citizens to remotely
verify their identity through an app.

Deloitte examined the benefits of using digital identity to reduce friction in employee
mobility and predicted that digital identity checks may bring monetised benefits by:
• Improving delivery: New hires can reduce onboarding time by proving their
identity digitally for right to work (RTW checks), to carry background checks
and to provide proof of qualifications in a significantly faster, self-service way
and receiving a real-time response and confirmation.
• Reducing costs: Reduce administrative effort by minimising face-to-face and
document verification for RTW, DBS and qualification checks.
DBS checks: estimation
Depending on the assumptions taken in each scenario and the slope of the digital
identity uptake trendline, we estimate that the total undiscounted benefits over the
appraisal period of carrying out digital DBS checks range from £122.48m to
£188.43m. The central estimate is £164.85m, where we assume that the benefits are
first released in year 2.
Right to work (RTW) checks: estimation
We assume that the benefits of carrying out digital RTW checks may be realised in
year 2 and 4 in the best and worst case scenario respectively. Therefore, the total
estimated value of the undiscounted benefits over the appraisal period ranges from
£315.02m to £501.46m.
In the central scenario we assume that the benefits are realised in year 3 and add up
to £429.67m.
Qualification checks: estimation
The estimated year when the benefits of carrying out digital qualification checks are
realised range from year 2 to year 7, with a central estimate of year 5. Therefore, the
total estimated value of the undiscounted benefits over the appraisal period range
from £171.82m to £373.96m, with a central estimate of £285.55m.

Table 4 - Employee mobilitydirect benefits, £, millions
Type of check Benefits
Central
case
estimate
Best case
estimate
Worst case
estimate
DBS checks Annual value of the
benefits 23.55 23.55 23.55

DBS checks
Estimated year the
benefits begin to take
place
2 1 3
DBS checks
Benefits over the 10
year appraisal period
(undiscounted)
164.85 188.43 122.48
RTW checks Annual value of the
benefits 64.13 64.13 64.13
RTW checks
Estimated year the
benefits begin to take
place
3 2 4
RTW checks
Benefits over the 10
year appraisal period
(undiscounted)
429.67 501.46 315.02
Qualifications
check
Annual value of the
benefits 50.54 50.54 50.54
Qualifications
check
Estimated year the
benefits begin to take
place
5 3 7
Qualifications
check
Benefits over the 10
year appraisal period
(undiscounted)
285.55 373.96 171.82
Employee
mobility: total
direct benefits
(includes DBS,
RTW and
qualification
checks)
Annual value of the
benefits 138.22 138.22 138.22
Employee
mobility: total
direct benefits
(includes DBS,
RTW and
qualification
checks)
Estimated year the
benefits begin to take
place
2 1 3
Employee
mobility: total
direct benefits
(includes DBS,
RTW and
qualification
checks)
Benefits over the 10
year appraisal period
(undiscounted)
880.07 1063.84 609.32

Second order indirect benefits

Deloitte also expects digital identity to bring the following second order indirect
benefits to employee mobility:
• Increased efficiency in sectors with short notice periods: Employees in
industry with short notice periods or that are expected to start work
immediately (e.g. hospitality) may be less likely to miss their start date due to
lengthy and inefficient RTW checks.
• Productivity improvements: Less trips may be required to issue the
necessary documentation. This may particularly benefit shift workers with
unpredictable shift patterns who may struggle to get their documents verified
during the typical office hours.
• Reduce fraud: Hiring workers with false credentials can lead to significant
losses for businesses and consumers, especially in key sectors such as
medical professions and aviation. Digital identity checks are more likely to
detect fraudulent applications, and thus reduce the number of fraudulent
workers hired, relative to traditional right to work checks.

We assume second order benefits related to faster employee mobility for workers on
short notice periods and productivity improvements are gradually realised. The first
proportion of these benefits that is realised equals the number of DBS checks over
the total volume of employee mobility checks and is realised once DBS checks start.
This is followed by the proportion of RTW checks when RTW checks begin, and the
remaining is realised when digital qualification checks start.

Lastly, we assume that 100% of the second order benefits related to reduced fraud
are unlocked by digital qualification checks. This is because we expect that most of
the savings arising from reduced fraud will arise from recognising employees with
false credentials by carrying out digital qualification checks.

We assume that the indirect benefits begin to take place when digital DBS checks
become available. Therefore, we estimate that the total undiscounted value of the
indirect benefits of using digital identity to increase employee mobility may range
from £662.58m to £1,816.28m, with a central estimate of £1,212.77m.

Table 5 - Employee mobilityindirect benefits (second order benefits), £, millions
Estimate Description
Annual
value of
the
benefits
Estimated
year the
benefits
begin to take
place
Benefits over
the 10 year
appraisal
period, £
millions
(undiscounted)
Central case
estimate
Faster employee
mobility for people
on short notice
periods
60.68 2 414.27

Central case
estimate
Productivity
improvements 25.57 2 174.57
Central case
estimate
Reduced fraudulent
applications 110.43 5 623.93
Best case
estimate
Faster employee
mobility for people
on short notice
periods
60.68 1 478.35
Best case
estimate
Productivity
improvements 25.57 1 201.58
Best case
estimate
Reduced fraudulent
applications 153.56 3 1136.34
Worst case
estimate
Faster employee
mobility for people
on short notice
periods
60.68 3 305.18
Worst case
estimate
Productivity
improvements 25.57 3 128.60
Worst case
estimate
Reduced fraudulent
applications 67.29 7 228.79
Central case
estimate: total
indirect
benefits
Estimate 196.68 Estimate 1212.77
Best case
estimate: total
indirect benefits
Estimate 239.80 Estimate 1816.28
Worst case
estimate: total
indirect
benefits
Estimate 153.54 Estimate 662.58

Total benefits employee mobility
Overall, in the central scenario, we assume that the steady-state annual value of the
undiscounted first and second order benefits for this use case are £334.90m, while
undiscounted benefits are £2,092.84m over the entire appraisal period. The lower
and upper bounds of the estimated benefits over the appraisal period are
£1,271.90m and £2,880.12m respectively. This value includes both the estimated
benefits for private organisations and for individuals.

Benefits to private organisations and to individuals (including both first and
second benefits)
We estimate that businesses may obtain the full economic value of the benefits of
carrying out digital qualification checks.

We expect private sector organisations to gain around 30% of the total value of the
benefits unlocked by digital DBS checks and around three quarters of the value of
those related to digital RTW checks.

We assume that private sector organisations may receive the total value of the
second order benefits related to carrying out digital ID checks within this use case.

Table 6 - Employee mobilitydirect and indirect benefits, £, millions18
Benefits Description
Central
case
estimate
Best case
estimate
Worst case
estimate
Direct benefits Annual value of the
benefits 138.22 138.22 138.22
Direct benefits
Estimated year the
benefits begin to take
place
2 1 3
Direct benefits
Benefits over the 10
year appraisal period
(undiscounted)
880.07 1063.84 609.32
Indirect
benefits
Annual value of the
benefits 196.68 239.80 153.54
Indirect
benefits
Estimated year the
benefits begin to take
place
2 1 3
Indirect
benefits
Benefits over the 10
year appraisal period
(undiscounted)
1212.77 1816.28 662.58
Employee
mobility, total
benefits
Annual value of the
benefits 334.90 378.02 291.76
Employee
mobility, total
benefits
Benefits over the 10
year appraisal period
(undiscounted)
2092.85 2880.12 1271.90

18 Annual value of the benefits assumes that the Digital Identity market has reached a steady state

Travel authorisation and ticketing
According to the Deloitte analysis, a fully functioning digital identity market can
streamline the travel authorisation and ticketing process by:

• Allowing digital passport data verification when booking a flight: Refers
to the process of digital passport details collection by airlines. The airline may
integrate a remote identity verification passengers may use to submit their
details for real-time verification.
• Reducing in-journey ID verification: Refers to the process of setting up
digital identity checks to potentially reduce the numerous ID verification steps
an individual needs to carry throughout a journey (e.g. at check-in or when
renting a car). Digital identification may be used at any step of the journey,
starting from when the ticket is booked to when the luggage is collected.
Stakeholders which may be affected by digital in-journey ID checks include
travel booking agents, airports, railway stations, port authorities, airlines, car
hire service.

Therefore, using digital identity in the context of this specific use case may bring
benefits through:
1. Improved delivery: Costs for businesses and individuals may be reduced as
digital identity may allow faster and more frictionless travel. For instance,
passport information could be instantaneously validated allowing real-time
response and confirmation reducing wait times.

2. Reduced costs: Fines arising for individuals from incorrect data input may be
reduced and the interactions required throughout a journey could be
minimised (e.g. by providing an alternative to in-person passport controls)

In the central scenario we assume that the benefits take place for the first time in
year 2. Whereas, in the best- and worst-case scenarios we assume year 1 and year
3 respectively.

Given the different set of assumptions and the estimated annual values of the
benefits, we estimate that the total value of the undiscounted benefits of carrying out
ID checks related to travel authorisation and ticketing digitally in the UK over the
appraisal period may be between £1765.49 and £2716.13m. The central estimation
of the benefits over the entire appraisal period is £2376,64m, and the annual value of
the benefits across these scenarios is £339.52m. These values account for both
private organisations and individuals.

Benefits to private organisations and to individuals

We estimate that almost 90% of the total value of the benefits is expected to be
received by private UK citizens. Therefore, individuals are expected to benefit from
digital travelling authorisation and ticketing identity checks the most.

Table 7 - Travel authorisation and ticketingbenefits, £, millions

Estimate Annual value of the
benefits
Estimated
year the
benefits begin
to take place
Benefits over the 10
year appraisal period
(undiscounted)
Central case
estimate 339.52 2 2376.64
Best case
estimate 339.52 1 2716.13
Worst case
estimate 339.52 3 1765.49

Home buying

The full use of digital ID throughout the home buying process is expected to reduce
friction. The considered steps of the home buying process are:
• Setting up a savings account
• Searching the property
• Bidding for the chosen property
• Requesting and receiving the funding (e.g. mortgage application)
• Closing the contracts (e.g. mortgage contract)
• Moving in (e.g. having to change doctors or schools)
• Registering transfer of title at HM Land Registry

Specifically, Deloitte estimates that applying digital identity in the context of home
buying is expected to bring monetised benefits by:

1. Improving delivery: Digital identity checks may streamline the home buying
process and offer real-time response and confirmation of the various steps
required for home ownership (e.g. when applying for a mortgage)
2. Reducing costs: Using digital identity may reduce administrative effort from
face-to-face and document verification.

We assume that the benefits are realised for the first time between year 1 and year
3.

Given the set of assumptions of each scenario, we estimate that, over the appraisal
period, the total value of the undiscounted benefits of using digital identity to carry
out ID checks throughout the home buying process may be between £790.53m and
£1,216.20m, with a central estimate of £1064.21m.

The estimates are based on the assumption that the annual value of the benefits is
£152.03m. These values include benefits for both private organisations and
individuals.

Benefits to private organisations and to individuals
Through our calculations we estimate that carrying out digital ID checks for this use
case will mostly benefit private UK organisations as only 15.3% of the total value of
the benefits is expected to go to UK citizens.

Table 8 - Home buyingbenefits, £, millions
Estimate Annual value of the
benefits
Estimated year the
benefits begin to take
place
Benefits over the 10 year
appraisal period
(undiscounted)
Central case
estimate 152.03 2 1064.21
Best case
estimate 152.03 1 1216.20
Worst case
estimate 152.03 3 790.53

Trusted financial transactions
According to Deloitte, a fully functioning digital identity market is expected to help
ensure that financial transactions are secure by:

• Improve customer on-boarding to financial services products (e.g. bank
accounts): Refers to the process used by financial services to check the
identity of their customers during the onboarding process or when accessing a
service.
• Authenticate transactions to reduce fraud: The use of digital identity
products may allow customers to verify their identity when needed, for
instance when transacting with an institution online. It may also allow

organisations to prove to their customers that they offer a legitimate service,
for instance by being a member of the trust framework.

Therefore, according to the Deloitte analysis, using digital identity within this use
case is expected to bring monetised benefits by:

• Improving delivery: Digital identity may provide a more cost-efficient
alternative to in-person interaction during on-boarding identity checks (KYC
checks) for businesses and individuals when opening a bank account. Digital
identity gives users a self-service option for identity verification and secure
transactions, which saves time by offering a real-time response.
• Reducing costs: Using digital identity may reduce administrative effort from
face-to-face and document verification and lowers the risk of fraud through
upfront ID check.

According to Deloitte’s estimations, most of the value of the benefits arising from
using digital ID checks to carry out trusted financial transactions arises from using
digital ID checks to authenticate transactions.

In the central scenario we expect these benefits to take place from year 2 onwards.
Whereas, in the best and worst case scenario we assume they begin to arise from
year 1 and year 3 respectively.

Therefore, given the assumptions taken in the scenarios, we estimate that the total
value of the undiscounted benefits over the appraisal period for private citizens and
businesses together may be between £1,098.22m and £1,689.58, with a central
estimate of £1478.40m. The estimates are based on the assumption that the annual
value of the benefits is £211.20m.

Benefits to private organisations and to individuals
According to our estimations, we expect individuals to benefit more from using digital
identity to verify financial transactions compared to the private sector as 77% of the
total value of the benefits over the appraisal period is attributed to private citizens
alone.

Table 9 - Trusted financial transactionsbenefits, £, millions
Estimate Annual value of
the benefits
Estimated
year the
benefits
begin to
take place
Benefits over
the 10 year
appraisal
period
(undiscounted)
Central case
estimate 211.20 2 1478.40

Best case
estimate 211.20 1 1689.58
Worst case
estimate 211.20 3 1098.22

Total indirect benefits

Total benefitscentral scenario
The central estimation of the ten year undiscounted value of the benefits unlocked by
a fully realised digital identity market for the four use cases together is £7012.10m.
Whereas, we estimate that the total value of the benefits worst and best case
scenario may be £4,926.14m and £8,502.03m respectively.

Total benefits to private organisations and to individuals
Given the assumptions taken, we estimate that in the context of this specific use
case individuals and businesses are expected to benefit rather equally from digital
identity in all three scenarios.

Table 10 - Indirect benefitstotal, £, millions
Benefits Annual value of the
benefits
Benefits over the 10 year appraisal
period (undiscounted)
Use case
Central
case
estimate
Best case
estimate
Worst case
estimate Value
Employee
mobility
(including
second order)
334.90 2092.8 2880.1 1271.9
Travel
authorisation
and ticketing
339.52 2376.64 2716.13 1765.49
Home buying 152.03 1064.21 1216.20 790.53
Trusted
financial
transactions
211.20 1478.40 1689.58 1098.22
Total 1037.65 7012.10 8502.03 4926.14

Differences in benefits2021 to 2024

Table 11 - Changes in value of benefits, £, millions 2021 to 2024

Change in benefits values Central
scenario
Central
scenario
Best
case
Best
case
Worst
case
Worst
case
Benefits 2024
values
2021
values
2024
value
2021
values
2024
values
2021
values
DBS checks - businesses 7.09 6.20 7.09 6.20 7.09 6.20
DBS checks - individuals 16.46 14.40 16.46 14.40 16.46 14.40
RTW checks - businesses 48.13 42.09 48.13 42.09 48.13 42.09
RTW checks - individuals 16.00 14.13 16.16 14.13 16.16 14.13
Qualification checks -
businesses
50.54 44.20 50.54 44.20 50.54 44.20
Faster employee mobility for
short notice periods (indirect
benefit)
60.68 53.06 60.68 53.06 60.68 53.06
Productivity improvements
(indirect benefit)
25.57 22.36 25.57 22.36 25.57 22.36
Reduced fraudulent
applications (indirect benefit)
110.43 96.57 153.56 134.30 67.29 58.85
Travelling authorisation and
ticketing - businesses
37.08 32.43 37.08 32.43 37.08 32.43
Travelling authorisation and
ticketing - individuals
302.44 264.50 302.44 264.50 302.44 264.50
Home buying - businesses 128.74 112.59 128.74 112.59 128.74 112.59
Home buying - individuals 23.29 20.37 23.29 20.37 23.29 20.37
Trusted financial transaction -
businesses
48.45 42.37 48.45 42.37 48.45 42.37
Trusted financial transaction -
individuals
162.75 142.33 162.75 142.33 162.75 142.33

Monetised and non-monetised costs to private sector organisations
(including administrative burden)

We carried out a stakeholder engagement exercise to attempt to define the indirect
costs19 businesses may face to comply with the legislation, both for digital identity as
a whole and in relation to the four specific use cases. We engaged with a variety of
sectors. Multiple responses came from organisations that currently operate within the
digital identity sector, such as identity service providers, or relying parties that would
use the digital identification system. Other responses came from various different
sectors. The organisations that took part ranged from micro to large businesses.

The engagement enabled us to make some qualitative and quantitative assumptions
of what costs businesses may face to familiarise and adapt to the digital identity
legislation. Averages of the estimated required resources and their cost provided by
the engagement exercise were used to estimate the potential average familiarisation
and organisational change costs per business. The engagement exercise provided
us with cost estimations in 2021 prices. We have inflated these costs to 2024 prices
in our updated model.

The quantitative estimations were then used to model the costs under the three
scenarios. We expect these costs to be rather small especially for digital identity
providers already established in the market as they believe they are expected to
undertake limited development work to adapt to the legislation. Estimation of one-off
connection fee costs and per check fee costs were provided by a piece of
commissioned research. We note that these costs, levied by the public sector on the
private sector, are intended to offset the costs incurred by the public sector in
enabling checks against data it holds, ensuring value for money for the taxpayer.
Government does not intend to profit from these fees and their amounts will be kept
in review to ensure this is the case.

We assume that only UK medium and large businesses face the costs to adapt to
digital identity because their incentive from the potential cost savings allowed by
digital identity are expected to outweigh the costs to adapt to the new technology
Therefore, the estimated costs per business were multiplied by the number of
medium-large UK businesses to estimate what the costs may be for all businesses
as a whole. We updated estimated numbers of medium and large businesses using
the 2023 ONS ‘Business, activity, size and location’ publication.20.

19 All costs to business are indirect because the legislation only allows public sector organisations the
option to open their data for private sector use. It does not mandate anything for private sectors
companies to do, not even when it comes to familiarisation.
20 Data regarding the Number of UK medium and large businesses was collected from the ONS data
release: UK “BUSINESS: ACTIVITY , SIZE AND LOCATION - 2023”, table 3.

We assume that the size of the total per check fees costs follows the estimated trend
of the digital identity market towards the steady state. This is because we expect the
number of digital identity checks carried out in the UK to be proportional to the size
of the market.

One-off familiarisation costs for businessesPer business:
Although it is difficult to precisely estimate the potential familiarisation costs at this
stage, we have attempted to model the costs businesses expect to face to familiarise
with the potential digital identity legislation based on the estimations provided by the
stakeholder engagement exercise. We assume that these costs do not depend on
the scenario as we consider these one-off costs that take place in year one
independently of when the remaining benefits and costs are realised. All of these
costs are indirect as the legislation itself only gives government departments the
option to open up their datasets. Therefore, any familiarisation by businesses is
contingent on governments opting to open their datasets.

We expect that businesses may have to pay members of the legal team to review
the legislation. We predict that, on average, it may cost businesses £1,164, in 2024
prices, for a member of their legal team to understand and review the digital identity
legislation. Furthermore, businesses may have to pay for other staff members to
spend some time familiarising with the legislation. Given our estimations it may cost
on average to businesses around £1,753 for non-legal employees to understand the
legislation.

Potential staff members which may be involved in these tasks include the CEO of the
company, product managers and operation directors. Lastly, some businesses may
require certain employees, such as a Security Officer, to carry out a
technical/security review as part of the familiarisation process. On average, firms
estimate that this task may lead to a one-off cost of £1,985.

Businesses may also have to invest in resources to train the remaining stakeholders.
For instance, businesses may have to pay a member of the legal team and a general
counsel to explain the impact of the legislation both internally and to external
stakeholders. We expect that for businesses already involved in digital identity,
familiarisation costs will be limited as they only need to evaluate how the business is
affected by the new legislation, rather than familiarise with digital identity completely.

For instance, we expect that relying parties may have to pay to train the staff
members as they are less familiar with the digital identity technology relative to
identity providers already established in the market. We also expect that using digital
identity in the context of the use cases will bring further costs to familiarise with the
legislation within the specific context. However, we expect these further costs to be
far less significant.

Overall, we estimate that, on average, familiarisation costs may add up to £4,902 for
a business. A full breakdown of the costs familiarisation costs different businesses
expect to face split by task can be found below:

Table 12 - One-off familiarisation costs to each private sector organisation
Tasks required
Average no.
employees x
Mean no. of
hours required
Gross wage per
hour, £ (including
22% overhead costs)
Total cost of the
resource
committed, per
business, £
Legal review to familiarise
and evaluate the legislation 18.5 62.9 1164.0
Technical/security review 37.2 53.4 1985.2
Review to familiarise and
evaluate the legislation by
staff members
25.8 67.9 1752.6
Total cost per business, £ NA NA 4902.8

The values of the estimated familiarisation costs over the 10-year appraisal period in
each scenario have not been discounted.

Central estimate
Multiplying the estimated familiarisation costs per business by the number of UK
medium-large businesses lead to a total familiarisation cost of £263.28 million for all
businesses as a whole. This is an increase from £227.70m in 2021. This increase is
due to an increase in total number of medium and large firms, as well as an increase
in the general price level.

Best estimate
We assume that the lower bound for the familiarisation costs is 50% of the central
estimate. Therefore, in the most optimistic scenario we assume that familiarisation
costs may add up to £131.64m for all UK medium and large firms together. This is an
increase from £113.85m in 2021. This increase is due to an increase in total number
of medium and large firms, as well as an increase in the general price level.

Worst estimate
We assume that the upper bound of the one-off familiarisation costs is twice the
central estimate. Therefore, the upper bound for the one-off familiarisation costs is
£526.6 m for all UK medium and large firms together. This is an increase from
£455.4m in 2021. This increase is due to an increase in total number of medium and
large firms, as well as an increase in the general price level.

Table 13 - One-off familiarisation costs for private sector organisations

Estimate
Estimated one-off
familiarisation costs
per company, £
Number of UK
medium-large
businesses
Estimated costs over
the 10 year
appraisal period, £,
millions,
(undiscounted)
Central
case
estimate
4902 53,710 263.28
Best
case
estimate
2451 53,710 131.64
Worst
case
estimate
9804 53,710 526.56

One-off organisational change costs for businesses:

Per businessOrganisational change costs consider the costs businesses face to adapt the
structure of the organisation, both in terms of how it functions, and the staff
employed. Examples include the cost to implement a digital identity solution, the cost
to hire new staff, or the costs to purchase or change technology platforms. Due to
the uncertainty regarding the context of the legislation, it is difficult to make precise
cost estimations and define what the impact of legislation for the organisational
structure may be at this early stage.

We carried out a stakeholder engagement exercise to gather data on the resources
which may be required by an average business to adapt to digital identity. We
assume that, on average, each business related to digital identity may take 40 hours
to carry out the expected tasks. This is the median number of hours estimated by the
respondents to the stakeholder engagement exercise for all their expected tasks. We
expect businesses already within the digital identity sector to face little to no
organisational change costs. This is because their service is already in place so we
predict they may not have to significantly adapt their firm structure to comply with the
legislation.

We adjusted the inputs from the stakeholder engagement exercise to produce our
2024 estimates. In the central scenario we estimate that, on average, UK private
sector organisations related to digital identity will face one-off organisations change
costs of £15,288 to adapt to digital identity. This is an increase from the 2021 Digital
Identity DMA which estimated a cost of £13,371. This increase is due to the increase
in the general price level. For each use case, the organisational change costs are
estimated by multiplying the estimated cost per business times the estimated

number of medium and large businesses related to the specific use case21. We
estimate the worst and best estimate to be half and double the central scenario
respectively.

These are one-off costs for businesses that are expected to take place the year that
the benefits for each specific use case are unlocked. Therefore, the exact year these
costs take place varies for each use case depending on the specific scenarios
assumptions. On average, we assume businesses invest £7,212 to allow the chief
procurement officer (CPO) or other members of the management team to adapt their
process to the legislation. We also predict that developers or the chief technical
officer (CTO) may have to adapt their technology and user experience to digital
identity. Given the available information, the expected cost of this task to be £5,769.
Whereas, the costs to comply and implement the legislation are estimated to add up
to £2,301 and involve either a compliance manager or another member of the senior
management team.

A full breakdown of the estimated costs can be found below:

Table 14 - One-off organisational change costs to each private sector organisation
Tasks required
Average No.
employees
required x
Median No. of
hours
required
Gross wage per
hour, £
(including 22%
overhead
costs)
Total cost of
the
resource
committed,
per
business, £22
Change the required technology 80 72.10 5769.2
Adapt the process to digital identity 80 90.10 7211.5
Comply with the legislation 40 57.70 2307.7
Total cost per business, £ £ £ 15288.3

We expect that only the minority of companies will hire workers to comply with the
digital identity legislation. Examples of staff members that may be hired include

21 For employee mobility we used all UK medium-large firms. For travelling authorisation and ticketing
we summed the number of UK firms in the following sectors: ‘Land transport and transport via
pipelines, ’ ‘Water transport’, ‘Air transport’ and ‘Travel agency; tour operator and other reservation
services and related activities’. For home buying we included the medium-large UK firms in the ‘Real
estate activities’ sector. For the trusted financial transaction use case we included all medium-large firms
in ‘Financial service activities; except insurance and pension funding’, ‘Insurance; reinsurance
and pension funding; except compulsory social security’ and ‘Activities auxiliary to financial services and
insurance activities’. Data Source: UK business: activity, size and location, 2023

22 The calculations may not perfectly add up due to rounding errors. The numbers displayed in the
table have been rounded to one decimal place but the full numbers were used to calculate the
estimated total cost of the resources.

developers23 to adapt their process to the digital identity technology, new
governance staff to comply with the legislation and external audits to ratify any
developed solutions. The values of the estimated organisational change costs over
the 10 year appraisal period in each scenario have not been discounted.

Central estimate
Given the estimated costs per business to adapt the organisation to digital identity, in
the central scenario we estimate that the one-off organisational change costs for all
UK medium-large businesses together may add up to £821.14m over the 10 year
appraisal period. This value is undiscounted.

In the central estimate all medium-large businesses face organisational change
costs in year 2 when digital DBS checks begin to take place as we assume all
medium-large businesses will want to use digital identity to carry out DBS checks.

Best estimate
Given the assumption that some digital ID checks, for instance digital DBS checks,
start in year 1, all medium and large UK businesses face the organisational change
costs at the same time in the first year of the appraisal period. We estimate that
these one-off costs add up to £410.6m.

Worst estimate
The organisational change costs are assumed to add up to £1,642.3m in the most
conservative scenario and take place in year 3 for all medium and large UK
businesses, when we assume some of the digital ID checks may start.

Table 15 – One-off organisational change costs for private sector organisations
Estimate
Estimated
one-off
organisational
change costs
per
company, £
Estimated year the
one-off
organisational
change costs may
take place
Number of
UK
medium-
large
businesses
Estimated costs over
the 10 year appraisal
period, £, millions,
(undiscounted)
Central case
estimate
15,288 2

53710
821.14
Best case estimate 7,644 1 53710 410.57
Worst case
estimate
30,577 3 53710 1642.27

One-off connection fee for service providers

23 One survey respondent stated it may need to hire 5 full-time developers, each with a gross annual
wage of £105,000.

Per businessWe assume that organisations wishing to perform checks against government
controlled data may have to pay a one-off fee upfront. Based on research
outsourced by government, which used industry engagement to estimate the
expected number of checks which may be performed, and the fee charged by the
Document Checking Service pilot, we assume that the value of the fee may range
from £3,900 to £7,400 with a central estimate of £5,650. Inflated to 2024 prices, this
central estimate is £6,460. These estimations remain constant over time.

We assume that 100 identity service providers may pay this fee and does not vary
over time. This is a standard assumption taken to calculate the potential total costs.
The number of firms that may pay this connection fee is constant in all scenarios.
This is a one-off cost which is expected to be paid the year that the technical
changes are applied and digital identity checks can therefore be extensively used.
Consequently, the year these costs take place varies depending on the scenario.

TotalThe total value of the connection fee costs is calculated as the estimated connection
fee price times the number of service providers we expect will pay it.

Based on the assumptions we have taken, the undiscounted value of the total
connection fee costs over the 10 year appraisal period for service providers may be
between £0.45m and £0.85m.

The central estimate is £0.65m and it is calculated based on the assumption that the
fee per company is £6,460.

Table 16 - One-off connection fee costs for service providers over the 10-year appraisal period
Estimate
Estimated one-off
connection fee
costs per
company, £
Estimated year
the one-off
connection fee
costs may take
place
Estimated
number
of service
providers
Estimated costs
over the 10 year
appraisal period,
£, millions,
(undiscounted)
Central case
estimate
6460 2 100 0.65
Best case
estimate
4459 1 100 0.45
Worst case
estimate
8461 3 100 0.85

Certification fee for service providers
Per business:
We expect service providers to pay a certification fee to be certified against some
given standards. In 2021, we estimated the certification fee per business to range
from £5,700 to £14,250, with a central estimate of £9,975. These estimations are
based on the costs of the ISO 27001 certification which is similar in size and effort as

we expect digital identity certification scheme to be. The cost of the fee varies
depending on the number of employees. Therefore, larger providers will face higher
certification fees. We inflated these figures in our 2024 model, producing a range
between £6,518 and £16,294, with a central estimate of £11,406.

Despite the certification fee being one-off, providers are expected to also pay on
going certification costs. We assume that providers may have to pay for
recertification every 18 months, which we estimate may lead to a repeat cost the
same as the connection fee. This is based on the advice of policy colleagues and we
believe it to be a conservative estimate that is likely an overestimate.

TotalOverall, assuming that there are 100 service providers, we estimate that the
certification fee for all service providers over the appraisal period may add up to
between £2.77m and £4.08m. This fee is paid the year the digital identity checks
begin.

Given the assumptions taken in the best-case estimate, where the digital identity
checks begin in year 1, the overall estimated cost is actually higher than in the worst
case estimate. This is because the lower one-off certification fee is outweighed by
the higher total value of the annual costs over the 10 years as the recertification
costs kick in sooner compared to in the most pessimistic scenario.

Table 17 - Estimated certification fee costs for service providers over the 10 year appraisal
period
Estimate
Estimated
certification
fee per
company
in
yr 1, £
Estimated
certification
fee per
company
to
recertify, £
Estimated
year the
one-off
certification
fee costs
may
take place
No. of
times
recertified
over the
appraisal
period
Estimated
number of
service
providers
Estimated
total
certification
fee cost over
the
appraisal
period for all
businesses,
including
recertification
costs, £,
millions
Central case
estimate 11406 5717 2 5 100 3.64
Best case
estimate 6518 5717 1 6 100 4.08
Worst case
estimate 16294 5717 3 4 100 2.77

Annual membership fee for service providers
We expect certified service providers to pay the governance function an annual
membership fee.

Per businessWe assume that organisations wishing to perform checks against government-
controlled data may have to pay an annual fee. Research outsourced by DCMS in
2021 assumes that the annual value of the fee may range from £4,625 to £6,425
with a central estimate of £5,525 and is constant over time. For the 2024 model we
have a range of £5,288 to £7,347, with a central estimate of £6,317.

We expect this annual cost to start taking place the year that digital identity checks
begin and to then take place every year. Therefore, the year it starts being paid
varies depending on the scenario.

TotalThe total value per year of the membership fee costs is calculated as the estimated
membership fee price times the number of service providers we expect will pay it.
Based on the assumptions we have taken, the undiscounted value of the total annual
membership costs over the 10 year appraisal period for service providers may be
between £5.29m and £5.88m. Whereas, the central estimate is £5.69m.

Table 18 - Annual membership fee costs over the 10 year appraisal period
Estimate
Estimated annual
membership fee
per company, £
Estimated year the annual
membership fee costs may
begin to take place
Estimated
number of
service
providers
Estimated costs over the 10
year appraisal period, £
millions (undiscounted)
Central
case
estimate
6,317 2 100 5.69
Best case
estimate 5,288 1 100 5.29
Worst case
estimate 7,347 3 100 5.88

Costs to carry out digital ID checks for each use caseAnnual cost
of per check fees for businesses

We assume that UK businesses wishing to make digital identity checks against
government-held databases may have to pay a fee to carry out each check. These
costs may start to be incurred when the responsible Government bodies allow the
private sector to access their databases to make the ID verifications. We calculate
this annual cost as the annual total expected number of checks times the expected
price per check.

We estimate the per check fee may range from 15p to 50p, with a central estimate of
25p per check. The central estimate is based on advice from policy teams after
having reviewed the current Document Checking Service pilot with HMPO and GDS.
Whereas, the lower estimate is a 50% reduction on the central estimate and the

higher estimate uses directly the current charge from the pilot. In the 2024 model, we
have assumed that these costs are the same as we have no additional evidence to
suggest that these costs per check would increase in line with inflation. Instead, as
number of checks increase for each provider, average cost per check may decrease.
Maintaining the current costs provides more conservative estimates where we lack
additional evidence.

It should be noted that these are estimates and not commitments to any particular
price point. In addition, certain data is likely to cost more than the central estimate as
the cost of providing it is higher. For example, a yes/no passport check supplied
through the Data Verification Application (DVA) is currently priced at 35p and that
price may remain, with any wider attribute provision likely being priced higher. All
prices will be subject to periodic review to ensure best value for money for the
taxpayer.

We expect the number of digital ID checks to increase over time until the digital
identity market reaches its steady state. This is because we assume that there may
be a positive correlation between size of the digital identity market and annual total
number of digital ID checks. Therefore, we estimate that the total estimated costs to
carry out the checks increase over time depending on the size of the digital identity
market, which in turn follows the estimated trend of the market towards its steady
state. The rate of change of this trend varies on the chosen scenario.

To calculate the annual cost of carrying out checks we multiplied the annual volume
of checks related to each use case estimate by Deloitte by the estimated price per
check. We were unable to produce updated estimates for annual volume of checks,
and have relied on the same data as estimated by Deloitte.

Table 19 – Annual volume of checks estimated by Deloitte
Type of check
Annual volume of
checks estimated
by Deloitte, millions
DBS checks 7.17 – 9.6924
RTW checks 8.23
Qualification checks 1.73
Travel authorisation and
ticketing
259.6
Home buying 8.88
Trusted financial transactions 0.86

This annual cost also varies depending on the year that the required datasets
become available for digital identity checks. The estimated years are displayed
below. These are the same years we assume the benefits may begin to occur.

24 Volume of DBS checks used was a forecast for 2021-2031 using data from DBS, not Deloitte

The total costs over the 10 year appraisal period do not equal the annual costs
multiplied by 10 because we assume that it takes a few years for the market to reach
its steady state. The estimated total value of these costs over the 10 year appraisal
period have not been discounted.

DBS checkstotal per-check fees costs
Based on the assumptions we have taken in each scenario, we estimate that the
total cost over the appraisal period of per-check fees to carry out DBS checks
digitally may be between £10.36m and £23.15m.

The central estimate for the annual cost is £2.42m, assuming the steady state level
of the market, which leads to a total estimated value of £15.31m over the 10 year
appraisal period.

Due to the annual number of checks and estimated cost-per-check remaining the
same as in the previous model, the estimates for costs for DBS checks remain the
same.

RTW checkstotal per-check fees costs
Based on the set of assumptions we have taken in each scenario, the estimated total
cost of the fees to carry out RTW checks over the appraisal period may be between
£9.62m and £20.15m.

Whereas, in the central scenario the total estimated annual value is £2.06m once the
digital identity market reaches its steady state, which results in a total value over the
appraisal period of £13.78m.

Due to the annual number of checks and estimated cost-per-check remaining the
same as in the previous model, the estimates for costs for RTW checks remain the
same.

Qualification checkstotal per-check fees costs
Given the various assumptions taken in the most optimistic scenario, the total cost of
the per-check fees over the appraisal period may be £1.92m. In the most
conversative scenario the estimated value is £2.96m.

The central estimate scenario assumes that the annual cost once the market has
reached its steady state is £0.43m for all businesses together. Whereas, the
estimated total value over the appraisal period is £2.44m.

Due to the annual number of checks and estimated cost-per-check remaining the
same as in the previous model, the estimates for costs for Qualification checks
remain the same.

Employee mobilitytotal per-check fees costs
Adding together the three different ID checks related to this use case, the central
estimate of the total cost of per check fees over the appraisal period is £31.53m.
We estimate that, over the appraisal period, this value may range from £21.90m to
£46.23m depending on the scenario.

Table 20 - Employee mobilityper-check fees costs
Type of check Description Central case
estimate
Best case
estimate
Worst case
estimate
per-check fee,
£ Description 0.25 0.15 0.50
DBS checks Annual estimated
number of checks
7,174,588 -
9,694,574
7,174,588 -
9,694,574
7,174,588 -
9,694,574
DBS checks Annual estimated costs,
£, millions 2.42 1.45 4.85
DBS checks
Estimated year the
digital ID checks begin
to take place
2 1 3
DBS checks
Estimated costs over
the 10 year appraisal
period, £, millions,
(undiscounted)
15.31 10.36 23.15
RTW checks Annual estimated
number of checks 8,225,000 8,225,000 8,225,000
RTW checks Annual estimated costs,
£, millions 2.06 1.23 4.11
RTW checks
Estimated year the
digital ID checks begin
to take place
3 2 4
RTW checks
Estimated costs over
the 10 year appraisal
period, £, millions,
(undiscounted)
13.78 9.62 20.15
Qualifications
checks
Annual estimated
number of checks 1,727,250 1,727,250 1,727,250
Qualifications
checks
Annual estimated costs,
£, millions 0.43 0.26 0.86
Qualifications
checks
Estimated year the
digital ID checks begin
to take place
5 3 7

Qualifications
checks
Estimated costs over
the 10 year appraisal
period, £, millions,
(undiscounted)
2.44 0.00 0.00
Employee
mobility, total
Annual estimated
number of checks 18,386,831 18,386,831 18,386,831
Employee
mobility, total
Annual estimated costs,
£, millions 4.91 2.95 9.82
Employee
mobility, total
Estimated costs over
the 10 year appraisal
period, £, millions,
(undiscounted)
31.53 21.90 46.23

Due to the annual number of checks and estimated cost-per-check remaining the
same as in the previous model, the estimates for total costs for employee mobility
remain the same.

Travel authorisation and ticketingtotal per-check fees costs

Given the set of assumptions we have taken in each scenario, the total costs of per-
check fees over the 10 years is £311.52m in the best case scenario and £674.95m in
the worst case scenario.

Whereas, the annual estimate in the central scenario, assuming the steady state
market level, is £64.90m. Therefore, the central estimate of the total cost of per-
check fees over the appraisal period of £454.29m.

Due to the annual number of checks and estimated cost-per-check remaining the
same as in the previous model, the estimates for costs for travel authorisation and
ticketing remain the same for our 2024 estimates.

Table 21 - Travel authorisation and ticketingper-check fees costs

Estimate
Per-
check
fee, £
Annual
estimated
number of
checks,
millions
Annual
estimated
costs, £,
millions
Estimated
year the
digital ID
checks
begin to
take place
Estimated
costs over the
10 year
appraisal
period, £,
millions,
(undiscounted)
Central case
estimate 0.25 259.60 64.90 2 454.29
Best case
estimate 0.15 259.60 38.94 1 311.52
Worst case
estimate 0.50 259.60 129.80 3 674.95

Home buyingtotal per-check fees costs

Based on the assumptions in each scenario, we estimate that the cost of the per-
check fees to digitally carry out the ID checks over the appraisal period may range
from £10.66m in the best case scenario to £23.10m in the worst case scenario.
Assuming that the digital identity market reaches the steady state, the central
estimate of this annual cost is £2.22m. This translates into an estimated total cost
over the 10 years of £15.54m.

Table 22 - Home buyingper-check fees costs
Estimate Per-check
fee, £
Annual
estimated
number of
checks,
millions
Annual
estimated
costs, £,
millions
Estimated
year the
digital ID
checks begin
to take place
Estimated
costs over the
10 year
appraisal
period, £,
millions,
(undiscounted)
Central
case
estimate
0.25 8.88 2.22 2 15.54
Best case
estimate 0.15 8.88 1.33 1 10.66
Worst case
estimate 0.50 8.88 4.44 3 23.10

Due to the annual number of checks and estimated cost-per-check remaining the
same as in the previous model, the estimates for costs for home buying remain the
same.

Trusted financial transactionstotal per-check fees costs
The cost over the 10 year appraisal period to carry out the expected volume of digital
ID checks related to financial transactions may range from £1.03m in the most
optimistic scenario to £2.24m in the most pessimistic scenario. The central estimate
for the total annual cost to carry out the checks, given that the steady state market
level is reached, is £0.22m. This leads to a central estimate of the total cost of the
per check fees of £1.51m over the appraisal period.

Table 23 - Trusted financial transactionsper-check fees costs
Estimate Per-check fee,
£
Annual
estimated
number of
checks,
millions
Annual
estimated
costs, £,
millions
Estimated
year the
digital ID
checks begin
to take place
Estimated
costs over the
10 year
appraisal
period, £,
millions,
(undiscounted)

Central
case
estimate
0.25 0.86 0.22 2 1.51
Best case
estimate 0.15 0.86 0.13 1 1.03
Worst case
estimate 0.50 0.86 0.43 3 2.24

Due to the annual number of checks and estimated cost-per-check remaining the
same as in the previous model, the estimates for costs for trusted financial
transactions remain the same.

Total indirect costs to private sector organisations
The estimated total costs include the estimated total cost of the per check fee for all
four use cases, one-off familiarisation costs, one-off organisational change costs for
the relying parties and one-off total connection fees and membership fees for service
providers. The central estimate of the undiscounted costs to UK private sector
organisations is £1,597.26m over the 10-year appraisal period. We estimate that the
lower and upper bound of the total undiscounted costs all medium and large
businesses together may face over the appraisal period are £897.13m and
£2,924.84m respectively.

The increases in total indirect costs to businesses compared to the 2021 model
result from the increases in the general price level for one-off familiarisation costs,
one-off organisational change costs for the relying parties and one-off total
connection fees and membership fees for service providers.

Table 24 - Private sector coststotal over the 10 year appraisal period, £, millions
£, millions Central
estimate
Central
estimate
Best
estimate Best estimate Worst
estimate
Worst
estimate
Costs
Annual
estimate
d costs,
£,
millions
Estimated
costs over the
10 year
appraisal
period, £,
millions,
(undiscounted
)
Annual
estimate
d costs,
£,
millions
Estimated
costs over the
10 year
appraisal
period, £,
millions
,(undiscounte
d)
Annual
estimate
d costs,
£,
millions
Estimated
costs over the
10 year
appraisal
period, £,
millions,
(undiscounted
)
Employee
mobility: per
check fee
costs
4.91 31.53 2.95 21.90 9.82 46.23
Travel
authorisation
and ticketing:
per-check
fee costs
64.90 454.29 38.94 311.52 129.80 674.95

Home
buying: per-
check fee
costs
2.22 15.54 1.33 10.66 4.44 23.10
Trusted
financial
transactions:
per-check
fee costs
0.22 1.51 0.13 1.03 0.43 2.24
One-off
familiarisatio
n costs
N/A 263.28 N/A 131.64 N/A 526.56
One-off
organisation
al change
costs
N/A 821.14 N/A 410.57 N/A 1642.27
One-off
connection
fees costs
for service
providers
N/A 0.65 N/A 0.45 N/A 0.85
Certification
fees cost for
service
providers
N/A 3.6 N/A 4.1 N/A 2.8
Annual
membership
fee for
service
providers
0.63 5.69 0.53 5.29 0.73 5.88
Total, £,
millions N/A 1597.26 N/A 897.13 N/A 2924.84

Costs for public sector organisations

We engaged with three public bodies to try and estimate the costs25 public
organisations may pay to adapt to the potential digital identity legislation and thus
allow the digital identity market to fully develop. For instance, we gathered some
information on the potential costs public sector bodies may face to understand the
legislation or make the organisational changes required to allow the private sector to
check the databases they hold. We expect public sector organisations to face some

25 All costs to Government bodies are indirect because the legislation only allows public sector organisations the option to open their data for private sector
use. It does not mandate anything for public sector organisations to do.

rather significant costs to adapt to the legislation, especially to allow the private
sector to make checks against the Government-held datasets.

We define the worst case estimate as the scenario based on the assumptions that
lead to the highest expected costs. We predict high costs for all public sector bodies
in a high digital identity uptake scenario where more Departments invest resources
to familiarise and adapt to the digital identity system. For digital identity to fully
develop a high uptake across public sector bodies is required. Therefore, the worst
case cost estimate is not necessarily unwelcomed.

For the worst case scenario we have assumed that all departments that may hold
significant identity or eligibility data, 9 in total26, will face these costs. For the central
and best case scenario we have assumed that only Home Office, DVLA, DWP,
HMRC, and DfE27 in line with the four digital identity use cases analysed.

Familiarisation costs for public sector organisations
Based on our assumptions we estimated in 2021 that, on average, public sector
bodies may face a one-off cost of £43,637 to ensure that members of the policy
teams familiarise with the legislation. However, these are rough estimates based on
a small sample size so should be considered indicative only. We expect public sector
bodies to involve both members of the policy and legal teams in the familiarisation
process. For instance, according to HMPO one member of the Bills and Legislation
team may spend roughly 150 hours researching the policy whilst another member of
the same team may spend a similar number of hours on policy approval and
governance.

Due to lack of raw data, we were unable to adjust unit costs to 2024 prices. We
therefore adjusted the total expected familiarisation cost of £43,637, generating an
estimate of £49,896 as a one-off familiarisation cost. We note that this means the
overhead adjustment is slightly higher than 22%, resulting in a slightly more
conservative estimate.

Depending on the set of assumptions we take, we assume that the one-off
familiarisation costs for public sector bodies may range from £0.22m to £0.47m, with
a central estimate of £0.22m.

Table 25 - One-off public sector familiarisation costs over the 10 year appraisal period

26 The 9 Departments are: Home Office, DWP, HMRC, DVLA, DfE, HM Land Registry, DHSC,
Companies’ house, and MoJ
27 These are the Departments that are required to open their databases in order for digital identity
checks to be carried out in the four use cases.

Estimate
Estimated
one-off
familiarisation
costs per
Department,
£
Number of
Government
Department
Estimated
costs over the
10 year
appraisal
period, £,
millions,
(undiscounted)
Central case
estimate 49896 5 0.25
Best case estimate 49896 5 0.25
Worst case
estimate 49896 9 0.45

Indirect costs to public sector organisations

Cost to allow private sector access to Government-held datasets for public
sector organisations
We expect Government Departments to face costs both to allow the private sector to
make checks against their data and to maintain the system in place. The costs
estimated are baseline and in practice will be subject to iteration. The total estimated
cost in the 2021 DMA was £3.30m. More detail on the calculation can be found in the
2021 Digital Identity DMA28. Adjusted to 2024 prices this estimate becomes £3.77m.

According to DWP the costs arise mainly from creating the external facing API portal
and arranging a suitable level of protection and monitoring, alerting and support
systems. Employers that may be involved in completing these tasks include software
engineers, user researchers and business analysts. The Department expects to face
a one-off cost of c. £3.30m to set up the system for private sector checks. Therefore,
it expects the costs to be rather substantial.

Just like for the public sector familiarisation costs, we have assumed that the
organisational change costs are faced by 5 departments in the central and best
cases and 9 Departments in the worst case estimates. Due to uncertainty around the
figures and given the GDS technical work ongoing on the ‘one login for government’
we have adjusted how much of these costs can be allocated to our intervention. For
the worst case scenario we have chosen to be conservative and assume 100% of
the proposed organisational change costs will accrue to our intervention. For the
central and best case scenarios we assume that half of the costs can be allocated to
our intervention. Given the set of assumptions we have taken, we estimate that over
the appraisal period, the public sector may have to invest between £9.43m and
£33.96m to allow the private sector to make checks against their databases.

28 https://assets.publishing.service.gov.uk/media/6229f6b6e90e0747a822e57c/Copy_of_OFFSEN_-
_Digital_identity_and_attributes_-_De_Minimis_Assessment__DI_DMA__-_LIVE.pdf

Table 26 - One-off public sector organisational change costs
Estimate Estimated one-off
organisational change
costs per Department,
£, millions
Number of Government
Department
Estimated one-off costs
over the 10 year appraisal
period, £, millions,
(undiscounted)
Central case
estimate
1.89 5 9.43
Best case
estimate
1.89 5 9.43
Worst case
estimate
3.77 9 33.96

Costs to government departments to maintain the system
In 2021, DWP estimates the recurring costs it may face to maintain an adequate
system, most of which are similar to those required to set up the system in the first
place. According to their estimations the costs to maintain this system in place may
add up to roughly £5.79m a year. An example of a recurring task which may be
required is investing in additional monitoring, alerting and support. This task may
require the full time commitment of 8 employees (e.g. software engineers, user
researchers) and is likely to cost roughly £4.10m per annum to the
department.

DWP estimates that on top of recurring staffing requirements to allow the private
sector to make checks against their data, it may face costs to maintain a suitable
infrastructure. This is estimated to cost c. £0.20m per year. Due to uncertainty, we
have taken the same approach as the one-off organisational change costs, that is
that the worst case scenario has full cost, and both the central and best cases have
half cost.

Given the assumptions we have taken, and adjusting the values to 2024 prices, we
estimate that maintaining the system may cost the public sector between £16.55m
and £59.58m every year. With a central estimate of £16.55m.

Table 27 - Public sector costs to build and maintain the system over the 10-year appraisal
period
Estimate
Estimated
annual
maintenance
costs per
Department, £
millions
Number of
Government
Department
Estimated annual costs over the
10 year appraisal period, £,
millions, (undiscounted)
Central case
estimate
3.31 5 16.55
Best case
estimate
3.31 5 16.55

Worst case
estimate
6.62 9 59.58

Therefore, adding together the one-off and annual organisational change costs for
the public sector leads to an estimated value over the appraisal period of between
£141.84m and £570.22. The central estimate is £158.39m.

Table 28 - Public sector costs to build and maintain the system over the 10 year appraisal
period
Estimate
Number of
Government
Department
Estimated costs over
the 10 year appraisal
period, £, millions,
(undiscounted)
Central case estimate 5 158.39
Best case estimate 5 158.39
Worst case estimate 9 570.22

Costs to set up and run a governance function
The digital identity market may function in a trusted and interoperable way
conditional on the fact that there is an effective governance function overseeing the
market. For instance, we expect the governance function to ensure trust in the
market by checking that the members of the Trust Framework meet the required
standards. Therefore, we assume that without functioning governance the benefits of
a fully functioning digital identity market may not be realised.

The governance function may require one-off costs to be set up (though these are
expected to be marginal) and will require annual costs in order to be maintained. At
this early stage it is difficult to estimate what these costs may add up to. We will aim
over time for governance to move towards a self-funding model.

As set out in the response to the digital identity and attributes consultation, we have
decided to establish an interim governance function within DSIT while we actively
seek a permanent location for the governance function as the market develops and
we gather data on the challenges associated with its operations. Our estimates for
the central and low funding scenarios for the cost of governance come from FTE
requirements which DSIT will incur as part of this, with the difference between the
scenarios reflecting potential reductions in FTE for some functions. The high funding
scenario is based on costs submitted by the ICO to government as the ICO’s
estimated cost of fulfilling the governance function. All of these inputs were provided
in 2021 and therefore have been adjusted to 2024 estimates.

The cost of these scenarios in year three, when we expect the function to be fully set
up and functioning, are laid out below:

Table 29 - Governance function costs over the 10 year appraisal period
Scenario Estimated annual
Governing Body
cost, £, millions,
(undiscounted)
FTE Estimated total costs over
the 10 year appraisal
period, £, millions,
(undiscounted)
Medium Funding (Central
case estimate)
1.36 17.0 12.73
Maximum Funding (Best
case estimate)
4.47 33.0 40.71
Low Funding (Worst case
estimate)
0.67 9.5 7.08

Total indirect costs to public sector organisations
We estimate that, based on our assumptions, the costs public sector bodies may
face over the appraisal period to fully realise the digital identity market may range
from £171.37m to £577.75m. The central case estimate for the estimated public
sector costs is £199.35m.

Table 30 - Public sector coststotal over the 10 year appraisal period, £, millions
Estimate Central case
estimate Best case estimate Worst case estimate
Estimate
Estimated costs
over the 10 year
appraisal period, £,
millions,
(undiscounted)
Estimated costs over
the 10 year appraisal
period, £, millions,
(undiscounted
Estimated costs over the 10
year appraisal period, £,
millions, (undiscounted
One-off
familiarisation
costs
0.25 0.25 0.45
Organisational
change costs 158.39 158.39 570.2
Governance
function funding
costs
12.73 40.71 7.08
Total, £, millions 171.37 199.35 577.75

Total indirect costs to private and public sector organisations
The central estimate of the undiscounted costs to UK private and public sector
organisations is £1,604.55m over the 10 year appraisal period. We estimate that the
lower and upper bounds of the total undiscounted costs all organisations together
may face over the appraisal period are £932.80m and £2,926.50m respectively.

The per check fees and the one-off connection fee which are both indirect private
sector costs are intended to recover public sector costs to ensure value for money
for the taxpayer. Therefore, when calculating the total cost, we must deduct per
check fees and the one-off connection fee from the public sector cost by up to but
not exceeding the cost that is incurred. We do not deduct these fees such that the
public sector cost becomes negative because the government does not intend to
make a profit. In reality, these fees will be determined with thought by the respective
organisations and they will be under constant review to ensure the fees are for cost
recovery purposes. Similarly, the annual membership fee is intended to offset the
governance function funding cost.

Table 31 - Total costs over the 10 year appraisal period, £, millions
Type of cost Central case
estimate
Best case estimate Worst case estimate
Private sector costs 1597.26 897.13 2924.84
Public sector costs 171.37 174.35 505.28
Total per check fees -502.87 -345.10 -746.52
One off connection fee -0.65 -0.45 -0.85
Annual membership fee
for service providers
-5.69 -5.29 -5.88
Total, £, millions 1604.55 932.80 2926.50

Value for money
We expect digital identity to bring value to the UK economy under best, worst and
central assumptions and the NPV of the benefits unlocked by a fully functioning
digital identity market over the appraisal period is positive under these scenarios.

Overall, given the assumptions we have taken, we assume digital identity to add
value to the UK economy as the estimated benefits outweigh the estimated costs for
public and private sector organisations.

Table 32 - Value for Money - 2024
Estimate Year checks
start
Estimated net benefits value
over the 10 year appraisal
period, £, millions
(undiscounted)
NPV benefits over
the 10 year appraisal
period, £, millions
Central case
estimate
2 5,407.55 4253
Best case
estimate
1 7,569.55 6203
Worst case
estimate
3 1,999.64 1285

2021 estimates

Table 33 - Value for Money - 2021
Estimate Year
checks
start
Estimated net benefits value
over the 10 year appraisal
period, £, millions
(undiscounted)
NPV benefits over
the 10 year
appraisal period,
£, millions,
Central case
estimate 2 4677.15 3678
Best case
estimate 1 6581.71 5394
Worst case
estimate 3 1675.17 1068

Where we have adjusted the input prices and updated data sources where possible,
our resultant figures now have a larger range. The main changes to the costs and
benefits are only reflecting changes to the general price level. There have been no
significant changes to the estimated costs and benefits of our measures

Even so, digital identity will still continue to bring economic value to the U.K.
economy across all three scenarios.

Central case estimate

In the central scenario the value of the discounted net benefits of using digital
identity is £4,253m. Therefore, the expected benefits outweigh the expected costs
over the appraisal period.

This is an increase from the 2021 estimate of £3,678m.

Best case estimate
The estimated upper bound for the value of the NPV of the benefits is £6,203m. This
is an increase from the 2021 estimate of £5,394m.

Worst case estimate
In the worst-case estimate, we estimate that the NPV over the appraisal period to be
£1,285m. This is an increase from the 2021 estimate of £1,068m.

Non-monetised costs to businesses
Employee mobility
We expect businesses to face some costs to adapt their organisation in order to
carry out real-time digital verification for DBS, RTW and employability checks. For
instance, businesses may be required to set in place a platform which determines
the requirements based on nationality and work location. Consequently, new hires
may be invited to complete a self-service right to work check and may be able to
provide the necessary attributes through a digital identity service to complete the
checks. We expect businesses wishing to use digital ID checks to carry out these
checks to have to pay for the required platform. The payment will most likely be on a
subscription basis but were unable to estimate these ongoing costs at this early
stage.

Travel authorisation and ticketing
Verifying passport data when booking a flight and reducing in-journey ID verification
We expect businesses to shoulder costs to use digital identity to reduce in-journey ID
verification. For instance, businesses may need to integrate a remote identity
verification solution through a platform that passengers may use to submit their
passport details for real-time verification. We expect businesses to outsource the
required platform and pay it on a subscription basis, therefore creating an ongoing
cost for the business. However, we are unable to estimate what these costs may add
up to at this early stage.

Costs to align with industry initiatives on passenger identification (e.g. ICAO's
OneID)
We also expect businesses to take actions to align with industry initiatives on
passenger identification to streamline the journey of passengers by creating an
interoperable system between airports, airlines and governments. We are currently
unable to estimate what these costs may add up to.

Home buying
Cost to extended ID verification to witnesses
We assume businesses may have to take actions to extend remote ID verification to
witnesses to facilitate identity proof throughout the home buying process, where
necessary. Currently, the real estate market relies significantly on witness proofing,
which in turn may require the identity verification of the involved witnesses. Unless
the steps taken to digitise the identity verification system of the home buyers is
extended to witnesses, the market will be unable to fully function digitally and the
benefits of using digital identity will not be maximised. We are unable to predict such
costs at this early stage.

It is also possible that the requirements for witnessing of certain deeds may change
in future. In particular the use of Qualified Electronic Signatures, in conjunction with

the digital identity trust framework, is something which can be explored further as a
means of replacing existing requirements for witnessing.

Reducing friction in the home value chain
We assume that businesses may have to adapt the ID checking process required
throughout the entire house buying process to the digital identity verification system.
We believe that these steps are essential in order to use digital identity across the
multiple identity verification process required throughout the home buying process.
Unless all identification steps are digitised, the real estate market will not be able to
fully function using digital identity.

We considered the following steps• Setting up a savings account
• Searching the property
• Bidding for the chosen property
• Requesting and receiving the funding (e.g. mortgage application)
• Closing the contracts (e.g. mortgage contract)
• Moving in (e.g. change doctors or schools)
• Registering transfer of title at HM Land Registry

Businesses are expected to face costs to create and maintain the system for any
potential platform required to remove the friction in the home value chain.
Businesses may incur costs to adapt to closing contracts digitally. However, due to
the level of uncertainty we are unable to estimate these costs.

Trusted financial transactions
Businesses may pay to adapt their organisation in order to digitally prove the identity
of customers throughout financial transactions. Businesses may either outsource or
build and maintain the platform in-house. However, we are currently unable to
estimate what these costs may add up to.

Further potential costs to public sector organisations

Digitisation costs for public sector organisations
We consider the digitisation of most Government-held datasets to be considered
business as usual. This is because the vast majority of personal data which may be
used as part of attribute checking is already held in a digital form by Government
Departments. On rare occasions we expect some Government Departments to incur
some digitisation costs of personal data in a paper-only format. For instance, the
General Register Office for England and Wales (part of HMPO) would have to
digitise birth records dated from 1937 to 2009, marriage records dated from 1946 to
2011 and death records dated from 1970 to 2009 to use them as part of the attribute

checking process. These are currently not available in digitised form. Further detail
can be found in the 2021 Digital Identity DMA29.

29 Digital Identity DMA, 2021, GOV .UK

Risks and assumptions
The full detail on risks and assumptions in the original analysis can be found in the
2021 Digital Identity DMA. The table below presents additional considerations in the
updated analysis.30

In updating the Digital Identity analysis, due to time constraints, we were not able to
undertake new engagement exercises to gather updated cost and benefits
estimates. Instead, we have converted most of the input data into 2024 prices.
Without up-to-date evidence, there is a risk we are over or understating potential
costs and benefits.

As the Digital Identity market grows, we will gather new evidence on costs and
benefits.

Table 34 - Assumptions
Central estimate
scenario Best estimate scenario Worst estimate
scenario Risk assessment
Wage estimation Wage estimation Wage estimation Wage estimation
In the 2024 estimates,
our public sector
estimates have been
inflated to 2024 prices,
including overhead
adjustments.
In the 2024 estimates, our
public sector estimates
have been inflated to
2024 prices, including
overhead adjustments.
In the 2024
estimates, our
public sector
estimates have
been inflated to
2024 prices,
including overhead
adjustments.
No sensitivity
analysis has been
undertaken
Estimated cost
values Estimated cost values Estimated cost
values
Estimated cost
values
The cost estimations
provided by the
engagement exercise
in 2021 have been
adjusted to 2024
value.
The cost estimations
provided by the
engagement exercise in
2021 have been adjusted
to 2024 value.
The cost
estimations
provided by the
engagement
exercise in 2021
have been adjusted
to 2024 value.
No sensitivity
analysis has been
undertaken
We have continued to
use ONS' 2019
average number of
working hours in a
week.
We have continued to use
ONS' 2019 average
number of working hours
in a week.
We have continued
to use ONS' 2019
average number of
working hours in a
week.
The change in
average over time
is minimal
Number of
businesses Number of businesses Number of
businesses
Number of
businesses
We assume that only
medium and large UK
businesses will take up
digital identity as their
benefits will
significantly outweigh
We assume that only
medium and large UK
businesses will take up
digital identity as their
benefits will significantly
outweigh the transition
We assume that
only medium and
large UK
businesses will take
up digital identity as
their benefits will
We updated these
figures from the
2020 publication
and no sensitivity
analysis has been
undertaken.

30 Digital Identity DMA, 2021, GOV .UK

the transition costs.
Data regarding the
Number of UK medium
and large businesses
was collected from the
ONS data release: UK
“BUSINESS:
ACTIVITY, SIZE AND
LOCATION - 2023”,
table 3.
costs. Data regarding the
Number of UK medium
and large businesses was
collected from the ONS
data release: UK
“BUSINESS: ACTIVITY,
SIZE AND LOCATION -
2023”, table 3.
significantly
outweigh the
transition costs.
Data regarding the
Number of UK
medium and large
businesses was
collected from the
ONS data release:
UK “BUSINESS:
ACTIVITY, SIZE
AND LOCATION -
2023”, table 3.
Organisational
change cost
Organisational change
cost
Organisational
change cost
Organisational
change cost
Cost estimates from
the 2021 DMA have
been adjusted to 2024
values. This includes
the overhead costs.
Cost estimates from the
2021 DMA have been
adjusted to 2024 values.
This includes the
overhead costs.
Cost estimates
from the 2021 DMA
have been adjusted
to 2024 values.
This includes the
overhead costs.
N/A
Cost per check Cost per check Cost per check Cost per check
We have kept the cost-
per-check the same.
We have assumed
they will not have
increased in price due
to very low cost-per-
check.
We have kept the cost-
per-check the same. We
have assumed they will
not have increased in
price due to very low cost-
per-check.
We have kept the
cost-per-check the
same. We have
assumed they will
not have increased
in price due to very
low cost-per-check.
There is a risk
these costs may
not be accurate and
have increased. We
conducted
sensitivity analysis
to assess how
change in cost
impacts the results.
Net benefits Net benefits Net benefits Net benefits
The net benefits have
been discounted so
are presented in NPV.
The net benefits have
been discounted so are
presented in NPV.
The net benefits
have been
discounted so are
presented in NPV.
The net benefits
have been
discounted so are
presented in NPV.

Impacts on small and micro businesses (SaMBA)

Small and micro businesses are not exempt from this legislation. However, we do
not expect the legislation to significantly impact small-micro relying parties as we
have assumed they will be less likely to adopt digital identity. Regarding service
providers, we do not expect a significant disproportionate impact as these
businesses are already established in the market so we expect their cost to
understand and adapt to the legislation to be minimal.

Additional analysis was conducted in the original 2021 Digital Identity DMA31 to
assess impacts of including small and micro businesses in the analysis. Further
detail can be found there.

Wider Impacts

Distributional Impacts
There are no significant transfers between businesses or sectors.

Equalities Impact Assessment
Although a digital identity market already exists, it is not developed to its full potential
and it presents barriers which may exclude minorities or those with protected
characteristics disproportionately. For example:

• When setting up a digital identity, individuals have highlighted that the process
usually requires a sequencing of tasks which are considered difficult for
people that are, for instance, digitally excluded or neurodiverse32.
• Identity systems tend to be rather rigid and focus on a single way of operating,
which risks excluding people who, for example, wish to manage two bank
accounts at the same bank from one mobile phone.33

The Government’s digital identity framework underpinned by legislation will provide
the option to individuals to choose a secure digital alternative to physical
identification which meets their personal needs. It will promote the growth of the
digital identity market in an inclusive way and give excluded individuals an easier
option for proving their identity or eligibility. For example, those who cannot afford a
passport may instead opt for a digital identity product based on their data or a
‘vouch’.

Inclusion is explicitly mentioned in the UK digital identity and attributes trust
framework. Although signing up to the Trust Framework is not compulsory,
organisations will need to be certified against it to prove that their products or
services meet the UK Government requirements for checking government-held
records of identity-related data.

Public sector equality duty
Section 149 of the Equality Act 2010 imposes a legal duty, known as the Public
Sector Duty (Equality Duty), on all public bodies, to consider the impact on equalities
in all policy and decision making.

31 Digital Identity DMA, 2021, GOV .UK
32 Digital Identity: Ground-up perspectives report summary, Royal Holloway for DCMS, 2020
33 Digital Identity: Ground-up Perspectives Report Summary, Royal Holloway for DCMS, 2020

The Equality Duty requires a public authority, in the exercise of its functions,
to:
• consider the need to eliminate unlawful (direct or indirect) discrimination,
harassment and victimisation and other conduct prohibited by the Equality Act
2010;
• advance equality of opportunity between people who share a protected
characteristic and those who do not share it; and
• foster good relations between people with a protected characteristic and those
who do not share it.

The relevant protected characteristics areage, disability, gender reassignment,
Marriage and Civil Partnership, pregnancy and maternity, race, religion or belief, sex
and sexual orientation.

The digital identity framework provides people with an additional choice of how to
prove things about themselves but does not remove any current methods or
mandate the use of digital means of identification or verification. These measures
have no identifiable adverse or negative impacts in relation to the first limb of the
Equality Duty.

Instead, these measures ought to have a positive impact on promoting equality. As
discussed above, without intervention it is likely that a digital identity market may
develop which negatively impacts those with protected characteristics. The trust
framework aims to tackle this by setting rules for certified private sector
organisations (who are not themselves necessarily bound by the public sector
equality duty).

These initiatives can help advance equality of opportunity between people who share
a protected characteristic and those who do not share it. For example, the fact that a
digital identity can be based on a wider range of attributes could help someone with
a disability prove something about that disability more seamlessly than is currently
possible.

Innovation test

Relying partiesWe expect the legislation to behave as a catalyst for innovation for relying parties for
whom digital identity is a core part of their function (e.g. airlines that frequently carry
out passport checks). The legislation will enable the standards required for the
market to develop in a trusted and interoperable way, which aims at making relying
parties more willing to adopt digital identity. This means that, in future, services
which were previously provided in person may be provided remotely, giving relying
parties the opportunity to provide new innovative services. We expect to see the

increase in innovation in the short-term34 and to have a medium to high impact due
to the potential scale of the uptake of digital identity across numerous sectors of the
UK economy.

Service providersWe expect the legislation to foster the growth of the market by enhancing trust and
interoperability, which we expect will drive an increase in demand. We believe that
the greater demand will lower verification costs due to economies of scale driven by
the larger size of the market. In turn, this should contribute to providing identity
providers with the required financial resources to invest in innovation.

These factors should provide new opportunities for businesses already established,
and increase the number of businesses entering the market, which will increase the
level of competition within the market.

We expect that the greater demand and market size, the lower costs and increased
competition will all boost the willingness of identity and attribute providers to innovate
to a medium to high extent. Already established businesses will benefit from a first-
mover advantage, therefore we predict that their innovation will particularly benefit
from the legislation. Although signing up to the trust framework will not be
compulsory for any size or type of organisation, it will be strongly encouraged. If the
framework is too prescriptive it risks constraining the ability of providers to innovate.
Therefore, firms signed up to the framework will need to be aligned with the required
standards which give them less freedom to innovate and develop as they wish.

Moreover, companies on low liquidity might struggle to adhere to the set standards,
potentially driving them out of the market or increasing barriers to enter the market.
Both of these factors may harm innovation of service providers. The framework has
been tested with industry to achieve the right balance between prescription and
freedom to innovate to ensure trust in the market.

Even if at first the trust framework does create some obstacles to innovation, we
expect that overall in the long term the potential benefits to innovation brought by a
larger, interoperable and trusted market outweigh these potential costs.

Potential trade implications by measure

This legislation can support HMG’s objectives to foster the growth of an international
interoperable digital identity market.

34 We consider an impact short-term if it takes place within 2 years from the implementation of the
legislation.

All policy options, other than the “do nothing” option, should indirectly support
international trade of goods and services. However, we expect the preferred option
to provide the most significant support, relative to the other options.

We may expect international interoperability to bring beneficial impacts to
international trade, reducing friction by facilitating remote ID verification checks,
which is very commonly required whilst trading internationally, and helping to
streamline business processes.

The legal framework will support the Government’s wider work internationally to
enable identity verification across borders to be secure and trusted.

A summary of the potential environmental implications of measure
We expect that the legislation, by fostering the uptake of digital identity checks, will
have a positive effect on the environment. This is because less physical journeys will
be required during the identity verification process: individuals may no longer be
required to present the required physical identities.

Furthermore, a greater uptake of digital IDs may lead to less people choosing
traditional IDs over digital alternatives which in turn may lead to a lower quantity of
IDs produced and disposed every year. This could be beneficial to the environment.
However, even though digital identity should benefit the environment, these benefits
are expected to be very small and possibly insignificant. For instance, the total
number of physical journeys related to identity verifications carried out every year,
although substantial, is not large enough to significantly impact the environment.

Monitoring the policy

We will monitor the policy over time. Practical metrics by which to measure this
policy are things like the number of organisations certified, the number of checks
made, the number of people signed up to the trust framework and the growth in
numbers of service providers.

We have already begun collecting data from providers certified against the Beta (0.3)
version of the Trust Framework35 to establish a baseline understanding of their
inclusion practices. We will continue to collect this data annually. We will also
establish similar approaches to monitor and evaluate the effectiveness of the
certification scheme and our wider policy approach.

DSIT will commit to producing an annual report reporting on the Trust Framework
implementation. Additionally, as the Digital Identity measures will be forming a part of
a wider bill, we will be contributing to a PIR in the future.

35 UK digital identity and attributes trust framework beta version (0.3), GOV .UK, 2023