A bit of searching turned up this from 24 April 2009:
A person's application for Indefinite Leave to Remain (permanent residence) on the basis of 14 years residence cannot be refused because he/she has lived in the UK 'unlawfully' or 'worked unlawfully', according to a recent decision by the Court of Appeal.Any amnesty, whether it be for illegal immigrants, illegal weapons, or tax evasion, represents a triumph of practice over principles. The biggest danger with such schemes is moral hazard, and this seems particularly acute in the case of immigration: belief in a future amnesty can only encourage more illegal immigration. This applies to the existing 14-year rule as well as to the Lib Dem's proposed 10-year rule, though it is clear that the moral hazard will be higher with a shorter waiting period, and with increased publicity for the loophole.
Moreover, even if someone has obtained false identity documents in order to obtain work where the person has no right to work, it should not be held against him/her.
The Home Office recognized that applicants under the rule, if they were to be successful, must be expected to have worked unlawfully for the majority of their time here. The Court said that the reasons for obtaining false identity documents should be carefully considered, i.e., if it is intended to commit financial fraud (which is serious) or merely to obtain work (which is less serious).