Hi Ron,
When I've renewed my licence, I have posted off the forms the day I got them but have NEVER had my new licence returned prior to the old one expiring. The DVLA told me each time that I am able to carry on driving (without the licence) as long as I believe my control to be no worse than last time I renewed my licence!!! I'm not sure how that would work in a court of law.... I think Copepod's recommendations seem good and I think I might take those up next time!
Essentially, if you have documentation from DVLA that they have approved your license then a court would accept that.
Equally a court may accept a few days lapse between your old license expiring and your new one arriving. BUT the law is clear, driving after your license that is in your possession has expired is a criminal offense, you also have no insurance.
DVLA look at the who spectrum of conditions, not just the diabetes, if you have any other diabetes associated health conditions they may decline or limit your license renewal accordingly.
If you were stopped by the police and your license had expired within the past couple of days, I'd suggest a very urgent call to DVLA telling them you've not received your license and where is it. Await their reply there and then. They will be able to tell you if it's issued or if there is an issue. At this stage if it's issued you need only hope the post arrives before the seven days for your producer expires.
If it is approved but not issued, I'd suggest you explain to the police when you deliver the documents requested under your producer to contact DVLA - as such, do not do this while the station isn't fully manned - front desk are very often civilians and can't contact people such as DVLA without authorisation.
In my experience even when everyone knows there is a medical reference coming from DVLA they play a game of total brinkmanship regarding the issue of a new license.
It is up to the driver to ensure their license is renewed, if the DVLA don't get a response from you after their first letter they won't chase you again. If that letter is one of the many that seem to get lost or delayed in the post and you didn't get it, in a court you'd not have a leg to stand on. As the judge would point out to you, you have your driving license, you know the date your license expires why did you let it expire?