Millions of pounds are being stolen from the taxpayer by fraudsters falsely claiming Universal Credit

Millions of pounds of public money has been stolen by fraudsters who have targeted the UK’s main benefit scheme, Universal Credit.

Bogus claims for huge sums of money in advance loans have been given the green light due to a loophole in the system, with money being awarded to “staggering” applications.

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Criminals have successfully applied for money using ludicrous ploys, such as claiming to be 19 years old with six blind children, and naming Tottenham and England football player Harry Kane as their landlord in their application.

A benefits official told the BBC that in one job centre a third of benefits claims are suspected to be fake. At another branch, £100,000 of fraudulent activity was reported each month. And another official estimated that 10 per cent of the 100,000 government payouts for Universal Credit were potentially bogus - four times the amount for any other benefit.

The government has said that it is committed to tackling fraudulent claims for Universal Credit, which was introduced by the Conservatives in 2010 in an attempt to tackle fraud and error like this and save a billion pounds.

How the scam works

Victims reported being contacted by people in JobCentre Plus badges, dressed smartly, who offered to arrange government grants or payday loans for them. The fraudsters take details of the person’s driving license, bank card and a photograph and then make a Universal Credit claim on their behalf, sometimes without the victim knowing.

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Once the DWP approves the claim, the money is transferred into the victim’s account. However, the victim is usually charged by the fraudster for setting up the loan, and so only gets a fraction of the value of the so-called loan.

The first the victim usually knows of the scam is a letter from the DWP telling them they are now on Universal Credit, and that all other benefits are being stopped. Since the claim is for a loan, the victim ends up owing the full amount back after the fraudster has vanished.

In one case, the victim said she only realised it was fraud (and that she would have to pay back the full amount) when her tax credits stopped and she was told she had been put onto Universal Credit. The unexpected debt pushed her into arrears on rent and council tax.

The extent of the problem

The BBC also gained access to a DWP message board on which officials discussed the problem.

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The messages said that the north west of England was where the scams were most rife, and that people were making up street names and listing names of Simpsons characters, or even just ‘Ha, Ha and Ha’ as their children.

Around 200 to 300 claims each day in the north west are thought to be fictitious. Another official wrote that they believed losses to the taxpayer could amount to £20 million as a direct result of these scams.

The DWP says it has had its first conviction for this kind of fraud.

DWP minister Baroness Buscombe added, "We're encouraging people to listen to their instincts. If someone offers you a low-cost loan from the government, they may be trying to steal your identity.

"Treat your personal information for benefits in the same way you would for your bank. And if you think you've been targeted, we urge you to report it urgently."