A story appeared on Slashdot today comparing the UK and US identity database schemes with the Jukinet system that's been quietly running in Japan since 1992. Some of the responses are quite insightful and informative. People describe systems that exist in Bulgaria, Japan, Sweden, Norway and other places, each of which have some things to recommend them.
For me, I think the main lesson is that yes, my personal data is already held in many different databases, both of government agencies such as the tax authorities and of private companies such as my credit card issuer. However, data protection legislation exists explicitly to prevent anyone, government or private, misusing this data by combining disparate databases to build a "profile" of me as an individual and to use that to my advantage or disadvantage. I fundamentally object to paying a huge amount of money so that this government can ride roughshod over those rights of the citizen. It isn't so much a question of privacy, more of protecting the individual against the might of the state.
I quite like the idea of an identity service as something that people can subscribe to if they wish - much like the trust providers used in a Public Key Infrastructure (PKI). There should be a free market in personal authentication, just as there is on the Internet. This would drive down prices and encourage the development of value-added services.