I don't do any work with the UK, and I don't have any idea if they do or not. However, a simple sniffer can capture everything, and it is not unreasonable to assume they could build a Carnivore-like system if they wanted to.
For more information on this topic, visit these other SearchSecurity.com resources:
Executive Security Briefing: The Patriot Act and Carnivore -- reasons for concern?
Best Web Links: Law, Public Policy and Standards
WhatIs Definition: Carnivore
This was first published in August 2002