Re: There was never any offline identification tool...
Government Gateway was pretty much a CA.
Early users of the self-assessment system got a certificate signed by the GG CA key, which they used to log in.
Then they went to just a username/password after much faffing about proving your identity.
Now they're throwing both of those away for... well, nothing yet it appears.
There's no reason that the UK government can't be a CA, that signs a further CA cert for all the individual agencies, that then use that to sign individual certificates much the same as people generate an SSL certificate now (no tech needed, really, just save a file somewhere and keep it private). And you can even have the DVLA cross-sign your cert along with the Passport Office or whoever to ensure that you have only the minimum amount of crossover, that they all have their own disparate systems, and that NONE of them know what your actual private key is (signing a certificate request != knowing the private key of the certificate itself, unlike previous comments on this site believed!).
And if you use industry standards, no reason you can't issue everyone who needs it with cross-signed accountant certificates, smart cards with those same certs, and readers for those who want one. This kind of thing has been available for decades and is used to authorise billions of pounds of business as a matter of course, down to tiny businesses, school pensions, etc.
The solution is there. But nobody can really profit from it.
But Teacher's Pensions, for example, charges you a fortune for a per-user certificate signed by them. And it's REQUIRED if you are a school and want to, say, check the List 99 Barred Lists (compulsory legal check on all staff, why it's done through TP is anyone's guess).