With the US-Israel war on Iran threatening disastrous consequences for the global economy, the UK is facing its third “once-in-a-generation” crisis in just six years. Each time – Covid-19, the Russia-Ukraine energy shock and now Iran – Britain has faced the same debate about how to support those most in need. And each time, it has been confronted by the same answer: the state doesn’t have the right data and systems to target support to those who need it most. Successive governments have had the means to fix this and have failed to do so. This government’s proposed national digital-ID scheme – reiterated in a consultation published in March – is an opportunity to change that.
The Same Debate, the Same Constraints
As a result of the ongoing war, the energy price cap is already forecast to add around £280 to the average annual household bill in July, with further painful rises expected in the autumn. Although nowhere near the £6,000 bills that haunted the government during the 2022 energy crisis, it arrives on top of bills that have remained much higher than pre-2022 prices and affects a population whose financial cushion has been worn thin by years of elevated costs.
The impact of these rises will vary among households – a £280 increase lands very differently on a household in fuel poverty than on one in the top income decile. The government has rightly indicated it wants to provide targeted rather than universal support, avoiding the costly failures of 2022. The trouble is, it doesn’t yet have an effective way to do it. The options available are familiar and flawed. Extending the Warm Home Discount would reach only half of the estimated 6 million households that face fuel poverty. Linking support to Universal Credit would miss millions of fuel-poor working families who have never claimed benefits. Channelling funds through local councils via the Crisis and Resilience Fund would overwhelm them if millions needed help. And DSIT’s “kickstarter” programme – which aims to link income data and energy accounts more effectively – will not be operational until winter 2027.
The choice, as it has been in every previous crisis, remains this: spend broadly, or target poorly. And with Covid having added more than £300 billion to UK debt and the 2022 energy response a further £78 billion, the Chancellor of the Exchequer has less room to do either than any of her predecessors.
It Didn’t Have to Be This Way
Other countries have shown a better path. Portugal had a social energy tariff for vulnerable households, but uptake was poor – eligibility had to be applied for manually, and many of those who needed it most never claimed it. In 2016, the government fixed this by integrating data flows across energy companies, tax authorities and its social-security system, allowing eligibility to be determined automatically. Uptake went from 150,000 households to 725,000. The key was not the tariff, but the data infrastructure to deliver it to everyone entitled to it. The system remains in operation today, with monthly privacy-preserving updates on eligibility for a social tariff submitted to energy companies.
Britain has failed to do the same. During the 2022 energy crisis, households in the top income decile received an average of £1,350 in direct energy-bill support – money that went to people who, by any reasonable measure, did not need it. Analysis from the Tony Blair Institute for Global Change estimated that the government could have saved at least £10 billion under the 2022 support schemes alone had it been able to taper support at the top end. That single saving would have covered the cost of building a more-targeted system many times over – including, for instance, the digital-identity infrastructure this piece argues for.
What Digital ID Makes Possible
The reason targeted support has failed in the past is straightforward: HM Revenue & Customs (HMRC) holds income data on individuals, not households, and there is no mechanism to link data to energy accounts or benefit records. The government’s digital-identity consultation, published in March, points the way to fixing both problems. First, household income could be established by the government – not individual earnings held by HMRC, but a verified picture of what a household earns. Second, that picture could be cross-linked to energy accounts or benefits status automatically, replicating what Portugal developed in 2016 as permanent infrastructure. The direction of travel points to a federated model, with data staying with relevant institutions: HMRC and the Department for Work & Pensions wouldn’t share a household’s actual income level or benefit status with its energy supplier but would simply confirm whether the household qualifies for support or not, based on information the departments already hold, with full transparency for the citizens on what is shared, with whom and why.
The building blocks for this already exist. GOV.UK One Login provides the authentication layer. The GOV.UK Wallet can store and present verifiable credentials. A basic version targeted specifically at energy support is technically within reach – potentially even for this winter. What stands in the way is not technology but whether existing legal frameworks are used to authorise the sharing of data between the relevant organisations, and the political will to prioritise it.
And the case for reform goes beyond energy. Every means-tested intervention the government makes – whether standing entitlements like free school meals and housing benefit, rapid crisis responses like pandemic income support and cost-of-living payments, or targeted compensation and benefit uplifts for those hit hardest – faces the same underlying problem: income data sits in one place, data to assess need sits somewhere else. Instead of using this data to target and deliver personalised services, the state relies on citizens finding and filling out lengthy forms to submit the same information again and again. A digital-ID system solves this once, for all of them.
The Case for Urgency
Had this work begun in earnest after 2022, the infrastructure would already be operational – and the chancellor wouldn’t need to wait until autumn to announce a plan. But it wasn’t and so, once again, the government will have to make do with what it has. But the next crisis will come. The shocks of the past six years are not once-in-a-generation events – and the next may not be an energy crisis at all. Each crisis will come with the same public expectation that the state will act, and the same targeting problem if it does.
The government’s digital-ID project has had a difficult start. As justifications have swung between concerns about illegal working and technocratic arguments about data infrastructure, public support has narrowed and opposition has hardened. But the British public continues to hold a common-sense view, with more in favour of digital ID than against. And the case that wins public support is simpler than the one the government has been making until recently. TBI’s recent polling, set out in What Does the UK Public Think About Digital ID?, shows what people really want: a secure system with clear limits, better value for money and public services that actually work. This latest energy crisis illustrates all three more powerfully than any government announcement could. A state that can identify households that need help – automatically, without billions going to those who don’t, and without sharing underlying data – delivers on exactly that promise.
Digital ID is more than a piece of identification or a technology project. It is the infrastructure that determines whether, when the next crisis hits, the state can find the people who genuinely need help, or is once again forced to help everyone and hope for the best. The investment needs to start now.