Has anyone heard an explanation of the legal basis for using the UK Passport Office for ID cards?
The UKIPS is in essence set up by Order in Council. Prerogative extends to the whole organisation of government departments. Witness the rapid creation and destruction of the DCA, DCMS, MAFF/DEFRA, and most recently, the unceremonious dismemberment of the Office of the Deputy Prime Minister over a weekend.
Its functions in relation to ID cards may be subject to the Identity Cards Act 2006, but those relating to pasports are still largely under prerogative, and relevant statutes where they exist - though there is some new weirdness in that the Act introduces substantive equivalence for many purposes between passports and identity cards, and passports - viewed as a form of identity card - may therefore be more subject to the law than they were. The law on the things it does is much more in doubt than its own legal status. It was a confused mess before and the Identity Cards Act 2006 (compounded by the swiftly following Immigration, Asylum and Nationality Act 2006) makes matters much worse.
to be a foreign policy issue, agreed, since the theory of passports is that they are about exrending protection of HM government to travellers abroad; but in practice they are controlled by the Home Office, as a citizenship and immigration matter.