And the rest of us pay a fiver.
Of course, the rest of us isn't the government. But this still sounds a tad clueless. There's a reason you have .gov.uk, which could be that "single domain" with everything goverment stuck under that. Why you wouldn't want to use that feature of the DNS is probably... incompetence and/or ignorance. The latter is the same thing for those deciding on what to do with the government internet presence.
I can see that not having lots of bureaucrats looking out the window any more than they already do because the internet befuddled them, but going at it from the presentation inwards looks a bit bass ackwards to me. Or an excuse to shell out more; someone's going to have a little party with all that money.
No matter how I look at it, it sounds like half-arsed failsauce waiting to go downhill in a hurry. Too bad good intentions alone don't get you there, not even halfway. Carry on government.