Fraudsters have been caught trying to steal £68million from taxpayers by claiming pensions for people who are dead. Relatives of former public sector workers continued to claim money under local government, NHS, civil service or armed forces pension schemes, even after their loved ones were gone.

The cynical theft was uncovered in a government crackdown on fraud, which exposed total thefts of £480million. Other schemes included getting a council house and then renting it out to somebody else. And more than a third of the money, £186million, involved abusing schemes set up during the Covid-19 pandemic to help people and businesses in need.

This included firms that took out government loans they never intended to pay back, with some owners deliberately going out of business in a bid to avoid ever returning the money.

Cabinet Office minister Josh Simons said: “Working people expect their taxes to go towards schools, hospitals, roads and the services they and their families use. That money going into the hands of fraudsters is a betrayal of their hard work and the system of paying your fair share. It has to stop.

“That’s why this Government has delivered the toughest-ever crackdown on fraud, protecting almost £0.5billion in under 12 months.

“We’re using cutting-edge AI and data tools to stay one step ahead of fraudsters, making sure public funds are protected and used to deliver public services for those who need them most – not line the pockets of scammers and swindlers .”

The Public Sector Fraud authority is to use a new AI tool to spot fraud. Ministers fear that theft at the taxpayer’s expense shot up during the Covid pandemic and remains high.

The majority of the £480million saved is taxpayer money, with a portion from private sector partners, such as insurance and utilities companies.