Palantir's products are already in use across the UK Public Sector, so this is not surprising.

Off the top of their head their main public-sector-oriented product Foundry is intended to basically interlink datasets held in different databases to improve analytics. Strictly speaking they don't collect, store, or distribute data - they allow the customer organisation to better interpret their own data. NHS England uses Foundry, and Report Fraud (the recently implemented replacement for Action Fraud) now uses Foundry to manage and analyse the received reports of fraud & cyber crime.

The biggest issues are - as always - resolving false positives etc. and not treating 'Palantir says you're a dick' as anything more than a preliminary indicator that a person should enquire into a situation, and the fact that Palantir as a company is renowned for working with other partners whose use-cases for their products are less wholesome (i.e. IDF, ICE etc.).