While I largely agree, this isn't a question of having broken the law or not.
The registration is _literally something issued by the DVLA_, so of course government agencies have access to it. The problem in this specific case is where the registration information is not enough to indicate the likely driver.
Behind the scenes, there's a lot of procedure in place to ensure that arbitrary government agencies don't have arbitrary access to arbitrary things that "the government" knows. The DVLA has a legitimate basis for collecting information about vehicle registration, and there are often legitimate reasons to pass this information on to law enforcement; but that doesn't generalise to arbitrary information about the occupants of a vehicle. Collecting arbitrary information just in case the police need it is one, seemingly-benign route to a police state.
