Revealed: The cash-for-fake-ID scandal at the heart of the Government

Civil servants have sold the personal details of hundreds of thousands of people to criminal gangs

An internal investigation at the Department for Work and Pensions (DWP) has found that civil servants are colluding with organised criminals to steal personal identities on "an industrial scale".

Ministers have been privately warned that the investigation will show that hundreds of thousands of stolen personal details have been ripped off from official databases, often with inside help. Key personal details such as national insurance numbers can be used to commit benefit fraud, set up false bank accounts and obtain official documents such as passports.

The ID theft from DWP and Revenue and Customs databases is currently the subject of an internal investigation, codenamed Trident, carried out in conjunction with the Government's official data-protection watchdog.

One government figure said: "We have been told that DWP staff have been colluding with organised criminals to commit identity theft on an industrial scale. It is far wider than just tax credits and reaches right across Whitehall."

A minister confirmed that the issue was causing panic in the office of John Hutton, the Secretary of State for Work and Pensions and a key ally of Tony Blair. "It's clear it's pretty serious," she said.

The Information Commissioner, Richard Thomas, told The Independent on Sunday that there are "widespread concerns" that poorly paid staff in tax and benefits offices are "open to temptation".

Ironically, the true scale of identity thefts from the DWP came to light only when its own civil servants were the victims of an audacious attack on the Government's tax credits. The personal details of 13,000 staff were passed to gangsters who used them to steal an estimated £15m in benefits.

Today, however, it can be revealed that the scam is just one of 25 incidents of "significant organised fraud" so far uncovered. The DWP refuses to comment, saying only that there is an "ongoing investigation".

Mr Hutton's nervousness could be explained by the fact that official statistics are now overdue on how much tax credit was paid through error or fraud in 2003-04. Ministers already admit that an initial sum of £430m will have to be revised sharply upwards.

Richard Bacon, the MP who exposed the foreign prisoner débâcle, has now written to the Government's spending watchdog asking him to investigate.

"It is clear that the security of individuals' personal details has been far more severely compromised than has been admitted thus far by ministers. I have written to Sir John Bourn, the Comptroller and Auditor General, asking him to investigate urgently this failure by the Government to protect our IDs from fraudsters."

One senior Whitehall figure said that civil servants were being unwittingly duped into giving away personal identities in most cases. Figures published last week show there were 100,000 offences under the Data Protection Act in the DWP and Revenue and Customs between 2000 and 2004. Neither department will release the figures for Trident, set up in 2004.

Mr Thomas, who this week called on the Government to stiffen penalties for releasing personal information from a fine to a two-year prison sentence, said: "There are widespread concerns that lowly paid staff can be open to temptation," he said. "They [officials] need to say to their staff this [illegal selling of data] is a very serious matter and from time to time they do say this. I've seen newsletters from Customs and DWP reminders to staff that this is a very serious matter. It is a disciplinary matter and you could be exposed to a fine. If they could say in future you could be exposed to a prison sentence that is really going to be a wake-up call."

Union officials say Revenue and Customs investigators believe they know from which DWP office at least some of the information has been stolen but have so far been unable to narrow the search further.

Staff appraisal records, containing names, dates of birth and NI numbers, were removed some time last year, investigators believe. The information was enough for an organised criminal gang to claim millions of pounds in tax credits by making thousands of fraudulent claims for the credits, a means-tested top-up for low- income families.

Charles Law of the Public and Commercial Services Union says it could hardly have been made easier for the fraudsters to use stolen NI numbers to make bogus applications for tax credits online. "People applying online for tax credits were supposed to receive a telephone call to confirm their ID but, of course, there were too few staff to make the calls and they didn't happen."

Mr Law told the IoS that the fraudsters who targeted JobCentre staff almost certainly had inside help. "Staff have access to the ID details of pretty much the whole country and so there is always going to be a risk."

The sheer scale of the potential abuse was underlined by a report by the Institute for Fiscal Studies which found that government departments hand out state support to 2.1 million lone parents - even though the best estimate is that Britain has just 1.9 million single-parent households.

Mike Brewer of the IFS has said that the 200,000 "phantom" lone parents shows just how successful the ID fraudsters have become.

STOLEN LIVES

STEP 1 Fraudsters are passed details of national insurance numbers by civil servants with access to the Revenue and Customs database.

STEP 2 The details are used to receive utility bills bearing the names and details of the IDs stolen from the database, which records every man and woman in the UK.

STEP 3 The criminals can use utility bills to open fake bank accounts, providing themselves with a crucial element for the new identity.

STEP 4 An internet search by the fraudsters helps them to apply for a replacement birth certificate.

STEP 5 The fraudsters apply for replacement passports, which can be sold togangmasters for people smuggling.

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
Joe Cocker performing on the Stravinski hall stage during the Montreux Jazz Festival, in Montreux, Switzerland in 2002
musicHe 'turned my song into an anthem', says former Beatle
News
Clarke Carlisle
sport
Sport
footballStoke City vs Chelsea match report
Arts and Entertainment
theatreThe US stars who've taken to UK panto, from Hasselhoff to Hall
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Life and Style
Approaching sale shopping in a smart way means that you’ll get the most out of your money
life + styleSales shopping tips and tricks from the experts
News
newsIt was due to be auctioned off for charity
News
Coca-Cola has become one of the largest companies in the world to push staff towards switching off their voicemails, in a move intended to streamline operations and boost productivity
peopleCoca-Cola staff urged to switch it off to boost productivity
Environment
Sir David Attenborough
environment... as well as a plant and a spider
Voices
'That's the legal bit done. Now on to the ceremony!'
voicesThe fight for marriage equality isn't over yet, says Siobhan Fenton
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Austen Lloyd: Regulatory / Compliance / Exeter

Excellent Salary: Austen Lloyd: Exeter - An excellent opportunity for a Solici...

Ashdown Group: IT Support Technician - 12 Month Fixed Term - Shrewsbury

£17000 - £20000 per annum: Ashdown Group: IT Helpdesk Support Technician - 12 ...

The Jenrick Group: Maintenance Planner

£28000 - £32000 per annum + pension + holidays: The Jenrick Group: Maintenance...

The Jenrick Group: World Wide PLC Service Engineer

£30000 - £38000 per annum + pesion + holidays: The Jenrick Group: World Wide S...

Day In a Page

Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all
The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there