The identities of up to 10,000 civil servants have been stolen by criminals to make thousands of fraudulent claims for family tax credit, the government admitted today.
When news of the breach was announced last week, ministers claimed that the number of affected staff was around 1,500.
But Whitehall has now revealed that the breakdown in security at the Treasury's flagship tax credit payment system, and the computerised payroll files of thousands of civil servants employed in jobcentres, was much more extensive.
The news is extremely worrying for existing and former staff at the Department for Work and Pensions (DWP) because it will take some time to establish whether their identity has been stolen or is being used to open bank accounts for fraudulent use.
The DWP has admitted that the theft involves thousands of staff in London, Glasgow, Macclesfield and Pembroke Dock.
Staff at HM Revenue and Customs are also claiming that fraudsters are using the department's inquiry line to ring up and change genuine claimants' address and bank account details to get their benefits diverted, according to The Guardian.
The department closed its website earlier this month, which is used by 500,000 people a year, because of the level of fraud.
David Laws, Liberal Democrat Work and Pensions spokesman, has accused ministers of trying to hush up the scale of the problem, and called for the National Audit Office to launch an investigation.
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