Police halt five-year inquiry into miners' payout fraud claims

The Serious Fraud Office, which ran the inquiry with South Yorkshire Police, said it could not provide an estimate of the cost but it will run into many hundreds of thousands of pounds at the least.

Bassetlaw MP John Mann, who has campaigned against miners' exploitation by solicitors who have earned multi-million fortunes from the scheme, said he was disappointed but was looking at a potential civil action against the UDM.

The investigation, begun in 2005, focussed on allegations a claims-handling company owned by the UDM, Vendside, had been defrauded of fees which had been diverted to another company called Walker and Co, subsequently renamed Indiclaim. That company was owned by Clare Walker, the chief executive of Vendside.

Ms Walker could not be contacted last night but had previously denied any wrongdoing.

The UDM could also not be contacted.

The compensation scheme, set up for miners who contracted vibration white finger or chest diseases from working underground, has drawn widespread criticism for the huge fees paid to lawyers – some of whom levied charges on top of a guaranteed fee already provided by the Government.

The two highest-profile casualties have been Jim Beresford and Douglas Smith, partners of Doncaster-based Beresfords Solicitors, who were struck off for serious professional misconduct. Beresfords had been paid 130m in legal fees by the government, but partners still charged claimants extra on top.

Last night, Mr Mann said he would be calling for a public inquiry after the election.