I don't think this is necessarily the most bonkers decision.
The alternative is that we have two separate policies that can never work together - SSE and policies to make it very difficult to implement SSE.
One single person in charge of both can't claim to not understand how they interact.
If i were a service provider, and had the threat of legal action from both women for not providing SSE and from men for questioning their identity, id want this clarity.
Although, the cynic in me is yet to be convinced that thid is the motivation of the government.