In principle, there is nothing really that wrong with a digital ID, as at the moment you have a bunch of UUIDs (mostly) so its not actually that hard to marry you up between departments.
In practice, what they'll do is hire accenture or some other dipshit company, spend _billions_ re-inventing a cross between a passport and oauth2, and it'll fail hard and be horribly insecure.
The better option is to tie everything to your government gateway ID (the thing that lets you renew passports, talk to the HMRC online, and a bunch of other services)