Step 1) Buy everybody (at least those on benefits) a new phone every time it stops working.
Yep. We failed there.
This is a case of things just being taken from thought-experiment to headline news of impending doom.
You know what? At some point, we'll all have ID cards, and those ID cards are already small enough to contain a complete GSM modem set. With an e-sim we don't even need anything else. Enough research and they could be charged inductively as you walk around the city or so low power they gather energy from wifi signals and whatnot passively. Done. Everyone is now carrying a fully-traceable Star Trek combadge-like thing that you could legislate the necessity of it.
But you have a long way to go before then, because we couldn't even convince people to use ID cards and scrapped the whole concept at great expense. Couple with a handful of data breaches and people just won't use them or they'll be rendered unfit for such a purpose anyway.
I have no doubt that ID cards, driving licences, passports and car number plates will eventually turn into trackers/computers. It's the only logical natural progression. But let's not run before we can walk.
Literally, the point at which people will get such things is the point at which they find it more useful than worrying anyway. Go back to the 80's and tell them we all have always-listening devices that can send our conversation to any phone / person on the planet at any time, which can take photos of us, that we tap our most intimate messages into to send to others, and which we all voluntarily buy for ourselves and carry on our person / put on the nightstand. They'd be horrified. But it happened because they turn out to be more useful to the average person, than the average person feels they have to worry about their security and privacy. Sad, but true.
This stuff is inevitable. When we get there, we will want controls. We discover what kind of controls we will need and possible implications by performing such thought-experiments. In the same way that "AI will overrun the planet", we will all end up carrying tracking devices. It doesn't mean "only if you vote Labour at the next election". It will happen. It's just a case of deciding what they will mean and how we should do that.
Personally, an ID card whose possession proves my identity that, when activated by - say - a biometric or challenge-response of some kind that only the user can activate, confirms the location of such a card to an authority, and receives a notification to the card that your location was requested - proves several very useful things. Your identity. Your presence. That no-one has tried to use your identity on the other side of the world to request credit without your knowledge. That the person signing up for benefits is you and you don't have ten other ID's on you. That the person signing up for benefits isn't using a cloned card or their mate's card. That the person requesting access to their bank is you even though you're on holiday in France. That anyone can verify who you are with a two-factor system with your consent (e.g. "Are you over 18?").
It would seem to have ENORMOUS advantages, personally. And needs that kind of two-way communication, connectivity, sensors, etc. And we're really not that far away from it given electronic passports and driver's licences and things like 2FA apps for banking and email accounts. You could make it happen today if you wanted.
Therefore it's probably something that will happen, and probably something we should think about now.