I missed this first time round, but caught it via Charlie Stross' blog. Apparently, the Home Office admitted at the end of August that it had had multiple data security breaches. This is the organisation that says that we can trust it with a giant database full of personal ID details.
If employees and contractors are misuing existing data, when how much of a temptation will it be to poke around (or be blackmailed/threatened into taking) data from the new system. Chalk up another reason why it's a Bad Idea.