Digital ID cards: What small businesses need to know – and what they think

The government has announced a new digital ID scheme, which aims to combat illegal working and make it easier to access government services.

Digital IDs will be mandatory for Right to Work checks, which businesses need to carry out when hiring new employees, when the rules come into effect.

What do small business owners think?

The reaction from the small business community has been mixed.

Quibble director Anna Morrish thinks digital IDs won’t have any impact on the number of people working in the UK illegally, adding:

“I’d be less inclined to say ‘no’ if it was voluntary. We haven’t had a choice, which gets people’s backs up.”

Sarah Birkenshaw, managing director of Quest Consulting Services, says the European countries using similar schemes point to its potential to make it easier to access key services.

Marco Strillozzi, technical director at Fluo Technologies, was born in Italy, where ID cards are compulsory, but now runs a business in the UK:

“If implemented with transparency and strong safeguards, it has the potential to transform and streamline government and business interactions massively.

“I appreciate that people fear the ‘big brother state’, but CCTV already surrounds us, so I don't feel that it really makes things any worse on that front.”

What do the new digital ID cards mean for employers?

Small business owners will need to use digital IDs, rather than document and  National Insurance number checks, when vetting new employees.

Sarah, who’s an HR expert, says that the digital ID scheme could simplify onboarding and background checks:

“Part of the scheme is aimed at being the only proof of right to work in the UK that employers will be able to accept and so it certainly simplifies the process for employers.”

She notes employers are already required to check employees’ right to work in the UK (employers can be fined up to £60,000 per illegal employee if they fail to have completed the correct checks).

Why has the government launched digital ID cards?

This initiative builds on the government’s “crackdown on illegal working and its mission to control borders”, according to the official press release.

Prime Minister Keir Starmer said:

“Digital ID is an enormous opportunity for the UK. It will make it tougher to work illegally in this country, making our borders more secure. And it will also offer ordinary citizens countless benefits, like being able to prove your identity to access key services swiftly – rather than hunting around for an old utility bill.”

The government says it will listen to a range of views on how the service will be delivered, as part of a public consultation to be launched later this year.

How will people use the new digital IDs?

The new digital ID will be held on people’s phones, similar to the NHS App or contactless mobile payments.

Information on the holder’s residency status, name, date of birth, nationality and a photo will be stored digitally.

The digital IDs replace the current practice of using a variety of documents such as driving licences, National Insurance numbers and utility bills.

It is not yet clear whether businesses could use the system to check customers’ ID.

There will be no requirement for individuals to carry their ID or be asked to produce it.

How hard will it be to implement the new digital ID scheme?

Marco says that developing and rolling out digital IDs needs to be managed carefully:

“Technically, it is a gigantic initiative. The main challenges will be integrating this into existing services, such as those provided by the various GOV.UK portals. For small businesses, there will also need to be some kind of related verification services that they can rely on.

“The good news is that it has already been implemented in other countries, so there are examples of how the scheme can be designed and gradually rolled out.”

Related content

• Companies House launches new identity verification system for business owners and directors