Oh OP your poor brother I'm not surprised your angry.
With the issues with the Mum not looking after any of the children properly your brother needs to get proof together if he can it will help when he seeks to gain custody of the children.
How old is the oldest DC?If he's old enough he can make a choice over who he wants to live with.I had a friend who was married, her and husband spilt up and got divorced, she wasn't beeing a good parent and her ex took her to court as the oldest child wanted to live with his Dad it came out in the court case that he wasn't actually the childs biological parent(she'd cheated on him)her ex had already worked that out and they're son said he wanted to live with his Dad and the judge allowed it.
So it doesn't always go in favour of the biological parent.
If your brother is going to go for custody then he needs to start getting things in place especially as he's disabled,I'm disabled myself so I know how hard it can be.
He will need to show that he has help in place for himself and for his children he'll also need to show that he has a plan in place (that is the least disruptive for the family as a whole)for anytime that an emergency may arise to do with your brothers health/disabilities,so someone that could pick the children up from school/drop them off at school,someone that could look after them(they usually prefer if it to be within the child's home but that doesn't have to be set in stone)someone that will cook for them,help with homework all the things a parent would do really.
With your brothers step son I'd be speaking to the school,your brother can show them that he does care and that he wants to work with the school to get his oldest back into school.The school will be interested.
Like another poster said your brother must get intouch with the benefits agency what his ex is doing is benefit fraud.
I don't know what disabilities your brother has OP but if he isn't already getting support because of them if he looks online there will more than likely be a few charitys that support people with the same condition/conditions as your brother has they can be a great source of support and practical help.
Also the Citizens Advice can be really helpful as well,they can help your brother find out his rights,what he's entitled to benefits wise and they might be able to help him access some extra support as well.