Basically, it's a lie and the government should not be in the business of falsifying official documents.
But on top of that:
- It reduces trust
- it perverts stats and analysis
- it reduces protections based upon sex
- People start to think sex really is changeable, or worse, just a piece of paper, when it's not, it's binary and immutable
- All sorts of issues in the NHS with sex based healthcare
The EHRC guidance ties itself in knots trying to deal with the fact we don't reliably record sex, the most basic of information.
A humane society can treat people with courtesy without falsifying reality. Trans people should not be treated differently to others, they should have every right to an existence free from abuse. But these legal fictions are no good for anyone.
You cannot become female at the stroke of a pen.