Databases provide a powerful and essential resource for health and health services research. There are seven reasons why the identification of individuals may be needed: linkage within a database; linkage between databases; ensuring comparisons are meaningful; ensuring completeness of recruitment; investigation of social factors; analysis of trends over time; and assessing the applicability of primary research findings. Examples of recent British research studies for which identifiable data were essential are described to illustrate six research applications: to understand the natural history and development of disease; to identify causes of disease; to evaluate health care interventions; to assess equity of care; to describe trends in health care utilisation; and to ensure the methodological rigour of research. Given the benefits to the public of such research activities, methods need to be found to ensure the continuation of such research while meeting legitimate concerns about individual privacy and confidentiality.