Unfortunately (given the cost, much higher than most other EU countries) I do not think it is an easy as saying ‘Because I don’t travel, I don’t need a passport’
The only fully legal way to prove ID in Spain is with a passport NIE, residencia or DL do not prove ID and would not be acceptable by notaries, banks or many other legal issues.
Given the new UK government is scrapping the ID cards (which was on a trial scheme pre election) that leaves us Brits with only passports as valid ID.
Yes I fully appreciate (I do it myself) we use DLs for day to day stuff like when using a credit card but that is not the whole picture.
This from UK Gov site
“Withdrawal of Residence cards in Spain
The decision to withdraw the Residents Card is in line with the EU Directive 2004/38/EC on the freedom of movement within the EU. We are aware that this has caused inconvenience to British Citizens living in Spain. We can assure you that we have raised the matter with the relevant authorities both in the UK and Spain however ultimately this is a matter for the Spanish government.
At present the only legitimate form of ID for British Citizens that is recognised by the Spanish Authorities is the British passport. For making payments at shops and stores you may find that a photo driving licence or certified copy of your passport is accepted. However, please bear in mind that there is no obligation to accept either of these forms of ID, and you may be asked to show your passport instead.”
see here
http://ukinspain.fco.gov.uk/en/help-for-british-nationals/living-in-spain/residence-req