A DAMNING report into the handling of the foot-and-mouth epidemic reveals today how contractors and farmers profiteered from the crisis amid allegations of fraudulent claims.

Cases of contractors double charging for their services and exaggerating the hours they worked are listed alongside reports that some farmers made false claims to bolster the amount of compensation they would receive.

The report, by the National Audit Office, also highlights how valuers, slaughterers and private vets demanded and received higher fee rates.

It reveals how the Department for the Environment, Food and Rural Affairs (Defra) even had to investigate 20 of its staff for alleged criminal activity.

Three workers at Exeter Disease Control Centre will be prosecuted over claims for hotel expenses and a worker at the Leeds control centre is to be prosecuted for irregularities over false overtime and travel.

The allegations come as vets were last night examining a pig in Leicestershire, which possibly passed through Selby market in North Yorkshire, which was showing signs of either foot-and-mouth or swine disease.

The pig was seen to have blisters on its body at an abattoir in Congerstone.

Vets were investigating each of the 34 farms in Yorkshire where the sick pig could have come from last night.

A spokesman for Defra stressed that since the last confirmed case on September 30 last year, there have been a number of investigations, all of which have sub tested negative.

Today's report reveals how, following allegations of fraudulent claims, Defra brought in forensic accountants to examine the invoices of 107 of the largest contractors, including 86 companies awarded contracts of more than £1m.

In more than 40 per cent of contractors' invoices, officials could not confirm if the work claimed had been carried out.

Fees for temporary vets increased by 50 per cent between February and March.

But Peter Jinman, of the British Veterinary Association, said he was "appalled" by the suggestion that vets had demanded higher fees.

He said: "There was a nationally agreed rate and vets were prepared to give up their time because it was a state of national emergency. Many private vets actually lost money because of it."

Sir John Bourn, head of the audit office, said urgent action needed to be taken to produce contingency plans for the future. He said: "There are lessons to be learned for the whole of Government from the foot-and-mouth crisis."

The report revealed that the cost to the tax payer was more than £3bn.

Rob Simpson, North-East spokesman for the National Farmers' Union, said: "We would support many of the recommendations, in particular the need for better contingency planning."

Richmond MP and former Tory leader William Hague said: "This confirms all our suspicions that there was no real contingency plan."

Defra Secretary of State Margaret Beckett agreed that lessons needed to be learned. She said: "The report describes accurately the unprecedented nature of the outbreak, the very wide spread of the disease before its presence was detected and the department's success in limiting further spread to new areas, once controls were in place."

Meanwhile, Defra has finally pinned down the start of last year's outbreak to Bobby and Ronald Waugh's farm in Northumberland.

Read more about foot-and-mouth here.