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.

Voices
Mosul dam was retaken with the help of the US
voicesRobert Fisk: Barack Obama is following the jihadists’ script
Arts and Entertainment
Loaded weapon: drugs have surprise side effects for Scarlett Johansson in Luc Besson’s ‘Lucy’
filmReview: Lucy, Luc Besson's complex thriller
News
A cleaner prepares the red carpet for the opening night during the 59th International Cannes Film Festival May 17, 2006 in Cannes, France.
newsPowerful vacuum cleaners to be banned under EU regulations
News
people
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
News
A polar bear’s diet is rich in seal blubber and half of its own body weight is composed of fat
i100
News
London is the most expensive city in Europe for cultural activities such as ballet
arts
Travel
Flocking round: Beyoncé, Madame Tussauds' latest waxwork, looking fierce in the park
travelIn a digital age when we have more access than ever to the stars, why are waxworks still pulling in crowds?
Arts and Entertainment
Jeremy Clarkson has rejected criticisms of his language, according to BBC director of television Danny Cohen
tv
Extras
indybest
Arts and Entertainment
Judi Dench appeared at the Hay Festival to perform excerpts from Shakespearean plays
tvJudi Dench and Hugh Bonneville join Benedict Cumberbatch in BBC Shakespeare adaptations
Arts and Entertainment
tv
Sport
Is this how Mario Balotelli will cruise into Liverpool?
football
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
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

Application Support - Enterprise Java, SQL, Oracle, SQL Server

£45000 - £55000 per annum: Harrington Starr: A well-established financial soft...

Service Desk Analyst (Graduate, Helpdesk, Desktop, Surrey)

Negotiable: Harrington Starr: Service Desk Analyst (Graduate, Helpdesk, Deskto...

Service Desk Analyst (Graduate, Helpdesk, Desktop, Surrey)

Negotiable: Harrington Starr: Service Desk Analyst (Graduate, Helpdesk, Deskto...

Junior Quant Analyst - C++, Boost, Data Mining

£25000 - £35000 per annum: Harrington Starr: Junior Quant Analyst - C++, Boost...

Day In a Page

Air strikes? Talk of God? Obama is following the jihadists’ script

Air strikes? Talk of God? Obama is following the jihadists’ script

The President came the nearest he has come yet to rivalling George W Bush’s gormless reaction to 9/11 , says Robert Fisk
Ebola outbreak: Billy Graham’s son declares righteous war on the virus

Billy Graham’s son declares righteous war on Ebola

A Christian charity’s efforts to save missionaries trapped in Africa by the crisis have been justifiably praised. But doubts remain about its evangelical motives
Jeremy Clarkson 'does not see a problem' with his racist language on Top Gear, says BBC

Not even Jeremy Clarkson is bigger than the BBC, says TV boss

Corporation’s head of television confirms ‘Top Gear’ host was warned about racist language
Nick Clegg the movie: Channel 4 to air Coalition drama showing Lib Dem leader's rise

Nick Clegg the movie

Channel 4 to air Coalition drama showing Lib Dem leader's rise
Philip Larkin: Misogynist, racist, miserable? Or caring, playful man who lived for others?

Philip Larkin: What will survive of him?

Larkin's reputation has taken a knocking. But a new book by James Booth argues that the poet was affectionate, witty, entertaining and kind, as hitherto unseen letters, sketches and 'selfies' reveal
Madame Tussauds has shown off its Beyoncé waxwork in Regent's Park - but why is the tourist attraction still pulling in the crowds?

Waxing lyrical

Madame Tussauds has shown off its Beyoncé waxwork in Regent's Park - but why is the tourist attraction still pulling in the crowds?
Texas forensic astronomer finally pinpoints the exact birth of impressionism

Revealed (to the minute)

The precise time when impressionism was born
From slow-roasted to sugar-cured: how to make the most of the British tomato season

Make the most of British tomatoes

The British crop is at its tastiest and most abundant. Sudi Pigott shares her favourite recipes
10 best men's skincare products

Face it: 10 best men's skincare products

Oscar Quine cleanses, tones and moisturises to find skin-savers blokes will be proud to display on the bathroom shelf
Malky Mackay allegations: Malky Mackay, Iain Moody and another grim day for English football

Mackay, Moody and another grim day for English football

The latest shocking claims do nothing to dispel the image that some in the game on these shores exist in a time warp, laments Sam Wallace
La Liga analysis: Will Barcelona's hopes go out of the window?

Will Barcelona's hopes go out of the window?

Pete Jenson starts his preview of the Spanish season, which begins on Saturday, by explaining how Fifa’s transfer ban will affect the Catalans
Middle East crisis: We know all too much about the cruelty of Isis – but all too little about who they are

We know all too much about the cruelty of Isis – but all too little about who they are

Now Obama has seen the next US reporter to be threatened with beheading, will he blink, asks Robert Fisk
Neanderthals lived alongside humans for centuries, latest study shows

Final resting place of our Neanderthal neighbours revealed

Bones dated to 40,000 years ago show species may have died out in Belgium species co-existed
Scottish independence: The new Scots who hold fate of the UK in their hands

The new Scots who hold fate of the UK in their hands

Scotland’s immigrants are as passionate about the future of their adopted nation as anyone else
Britain's ugliest buildings: Which monstrosities should be nominated for the Dead Prize?

Blight club: Britain's ugliest buildings

Following the architect Cameron Sinclair's introduction of the Dead Prize, an award for ugly buildings, John Rentoul reflects on some of the biggest blots on the UK landscape