Ministers are to tighten up the national insurance system after it emerged that official policy was to issue NI numbers to applicants even if their immigration documents appeared to be fake.

A memo sent last year to jobcentres ordered staff to issue numbers but report their suspicions to the Immigration and Nationality Directorate. It is not known how many of the 3,300 such cases referred to the IND last year were prosecuted.

An NI number allows a person to work, and is used by employers to deduct tax and NI contributions. It also ensures a worker's movements can be traced, and is used to administer certain benefits.

It is understood that John Hutton, the work and pensions secretary, learned of the problem a fortnight ago and has asked officials to overhaul the regulations.

The issue became public after the Times published the Jobcentre Plus memo, which advised: "Where DWP [Department of Work and Pensions] is satisfied as to the individual's identity, a NI number would be issued in this situation even if we have suspicions around his immigration status."

A DWP spokesman said yesterday: "The national insurance system was set up in 1948. Times have obviously changed since then. Having reviewed this issue, ministers have decided to change the law as soon as possible so that people who have no right to live or work in this country are not given a national insurance number."

David Davis, the shadow home secretary, said: "This is not just a massive administrative failure; it is a massive failure of political will to get a grip on this problem."

Nick Pearce, director of the Institute for Public Policy Research, said: "It doesn't reflect well on the administrative competence of the government, but you can't expect how you issue NI numbers to sort out the problem of illegal working.

"It should be no surprise that there are something like half a million people here illegally and many of them are doing work we don't like doing ourselves. Our economy needs them."

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Tania Branigan Political correspondent
The Guardian

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