For 30 years, Susan’s worked in a benefits office, taking pride in her job. Recently, she and her colleagues noticed a huge wave of bogus claims.

Her bosses’ response? Ignore it. The reason? They’re terrified of Left-wing critics...

SHE IS a devoted grandmother who has spent almost three decades working on the front line of Britain’s benefits system, driven by a desire to help the vulnerable people who depend on state help to make ends meet. But today, the long-serving official – who had been looking forward to a quiet, well-earned retirement – has turned whistleblower, feeling compelled to speak out over a new ‘epidemic’ of fraudulent claims following the introduction of Universal Credit

It is an issue that her bosses are well aware of, says the woman, who we shall call Susan. Yet instead of clamping down on the flagrant, wholesale abuse of taxpayers’ money, benefits chiefs are turning a blind eye to the cheats – because they are running sacred of being targeted by Left-wing critics.

A spate of stories from the BBC, Guardian and Mirror earlier in the year claimed that the new system

was causing hardship and poverty – but many of the reports have subsequently been debunked by The Mail on Sunday.

However, senior managers at the Department for Work and Pensions (DWP) have told staff to approve applications for advanced payments even when the claims are obviously fake, the whistleblower says, for fear of attracting more negative headlines.

The woman, in her 50s, has come forward to this newspaper to expose the wrongdoing after becoming sickened at what she saw. With her voice quivering with barely controlled fury, she told us: ‘In all the years I’ve worked there, the level of fraudulent claims has never been this high, and instead of preventing them, we’re handing out the money and making it so easy.’

In a disturbing account that will shock every taxpayer, she revealed:

One man entered the names of three made-up children as Fish, Chips and Beans – yet still received his advance payment;

Some fraudsters fleece the taxpayer for as much as £1,500 a time in advance payments

Gangs of organised criminals are coercing vulnerable people into making fraudulent claims, then splitting the proceeds;

Senior officials admit that a large fraction of claims are bogus, but say stopping the fraud is not ‘a priority’.

Even though there is a legal protection for whistleblowers, the official fears the backlash from her bosses and has asked that we do not use her real name.

Universal Credit was conceived by former Work and Pensions Secretary Iain Duncan Smith to combine six separate benefits – including Jobseeker’s Allowance and Housing Benefit – into one single, efficient monthly payment.

Despite fierce criticism from the Labour Party, it was introduced last year as a lynchpin of the Government’s welfare reforms, to run in parallel with the existing benefits system. New claimants – or those whose circumstances change – now automatically go on to Universal Credit.

But in March, amid a tide of stories claiming that the new system was causing hardship, the current Work and Pensions Secretary Amber Rudd lifted a cap on claiming benefits for more than two children and allowed claimants to be given advance payments to ease the transition.

Almost as soon as the rules were relaxed, Susan saw a sudden upsurge in bogus claims – many of them blatant. It seemed that the DWP, stung by the avalanche of adverse publicity, had decided to open the taps and let the money flow.

Susan learned just how widespread such fraud was in a mass telephone conference – known in the DWP as a ‘Telekit’. Hundreds of staff listened in as a regional operations director for Universal Credit, Colin Stewart, addressed them about the issue.

‘At each desk in the open plan office there were three or four of us huddled around a phone on speaker,’ recalled Susan.

‘When Mr Stewart mentioned the massive rise in fraud levels, everyone looked at each other – not so much in astonishment, but nodding, as if to say, “I thought as much”.

‘I actually felt a bit pleased, because I thought that, at last, something would be done. But then he said it wasn’t a priority to stop the payments going out ,which left everyone staring at each other open-mouthed.’

Senior officials claimed that, instead of stopping the money going out in the first place – which might cause hardship for genuine claimants – the strategy would be to pursue fraudsters once they had received the money.

However, the DWP has a woeful record in clawing back fake claims and bringing cheats to justice, with just five per cent of fraudsters going to jail in 2012.

Susan said that staff were told in the telephone conference that the fraud problem was worst in the North West and North East of England, but was spreading across the country as people invented fictitious children and inflated housing costs.

Susan said she did not think that was an accurate appraisal, explaining: ‘My theory is that the fraud is actually nationwide but it’s been picked up more quickly in the North because the staff in that area tend to be longer serving, whereas in the South East there’s a huge turnover in DWP staff and not as much experience to draw upon.

‘Me and my colleagues have been there for decades and we know the signs to look for.’

Even more concerning than the individual fraudsters were the reports aired during the telephone conference about gangs of criminals coercing vulnerable people to make bogus claims.

The staff were told that the gangs would approach people in pubs, ascertain they had their own bank account, then persuade them to apply for what they would describe as a ‘free loan’ from the DWP by claiming that they paid a huge amount in rent or had a large number of fictitious children.

Susan said: ‘If the criminals help them with their claim, the crooks then take a percentage of the money that comes in. For example, some people are making claims for housing costs when in fact they live with their parents so they don’t have any rent to pay.’

A number of Susan’s colleagues flagged up their suspicions about claims they believed to be fraudulent and requested an ‘inhibitor’ – a stop on payments. However, they were stunned to have their request turned down by senior officials.

‘We asked why and we were just told, “it’s politics,” ’ said Susan.

‘Basically there had been so many negative stories about people waiting weeks and months for their payments when Universal Credit was first rolled out, that the department has gone completely the other way.

‘Some of those stories were genuine, some exaggerated, but this was absolute madness. Staff have been becoming increasingly frustrated for quite a while, especially when you bear in mind that people are receiving advances which are more than their monthly wage.

‘There is nothing to stop someone making more than one claim, believe it or not, and one particular claimant has had multiple advances in a very short time.

‘The highest I’ve heard of is £1,500 in one go, but if you said you had eight children and very high housing costs, the sky is the limit.

‘We see these claims coming in but when we flag it up to senior management we are told directly to

He said his kids were called Fish, Chips and Beans. He still got his money

do nothing about stopping it “because of the politics” involved.

‘We do report them to the fraud team, but I’ve no idea what action is subsequently taken.

‘We could stop an advance on the basis that we suspected a person had money in savings because the benefit is means-tested. However, staff have been directed not to do that in the last month.’

Susan explained how ridiculously simple it was to make a bogus claim. ‘When you go on the website to make your first claim, it calculates what would be due to you and tells you when you will get your first payment, usually in a month’s time. But it also gives you the option to ask for an advance payment which will come to you in just three working days – and before any of the details you submitted online are verified. You can’t even open a bank account these days without presenting several forms of ID and proof of address, and yet people are having advances of up to £1,500 without any verification.

‘The staff are well aware of it when these claims come through the system.’

The shameless nature of the fraud is, in some cases, entirely transparent, with no attempt at all made to come up with a convincing story.

She said: ‘One man claimed his children were called “Fish”, “Chips” and “Beans”. In other cases the children’s dates of birth were so close together it would be a medical impossibility for them to have the same mother. But the system does not reject such daft claims – the money gets paid into their account nevertheless.

‘It may well be that these people will be the subject of legal or criminal action further down the line if they don’t progress their claim, but maybe people feel there’s a chance they might get away with it.’

The DWP has an abysmal record for clawing back ill-gotten gains and bringing cheats to book that gives little hope that the millions of misspent taxpayers’ money will be recovered, even though staff were told at the teleconference that the number of fraud investigators will rise by 30 per cent. Figures released last year revealed that benefit fraud cost more than £3.8billion – up £200million on the year before – with about 5,000 people convicted.

Susan fears that because Universal Credit operates online with little of the human element, it leaves it more vulnerable to fraud.

She said: ‘Under the old system, before Universal Credit we had something called a short-term benefit advance, which was at the discretion of an adviser to discuss how much the person needed, and then decide on an amount.

‘It would usually be for about £50 or so – not the huge sums which are going out now. The figures are higher because Universal Credit replaces six benefits – including housing, which is the biggest.

‘The trouble is the calculation is virtually instant, but it’s based entirely on the information the claimant is putting in, which only gets verified at a later stage.’

A DWP spokesman said last night: ‘Benefit fraud is a crime that diverts money from those who really need it and we are determined to catch the small minority who cheat the system.

‘We remain vigilant to all forms of fraud and investigate, and prosecute, where appropriate.

‘We are constantly refining our processes to ensure Universal Credit remains both accessible and secure, with those who need support getting it.’

People are getting up to £1,500 with no checks... they think they’ll be able to get away with it