As the work and pensions secretary says vendors of the Big Issue exploited a loophole allowing immigrants access to UK benefits, the magazine's founder says the Big Issue saves the taxpayer money.

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Following a speech on welfare policy in Berlin, Work and Pensions Secretary Iain Duncan Smith was quoted in the Times newspaper as having referred to the Big Issue magazine while discussing the issue of benefit tourism.

Mr Duncan Smith praised the magazine, saying it was "a brilliant idea by a brilliant individual, who himself was homeless."

However he added: "But actually what is happening progressively, more and more, is people mostly from southern and eastern Europe have actually ended up being Big Issue sellers and they claim, as self-employed, immediately, tax credits."

Mr Duncan Smith was then reported to have said: "So when we talk about benefits, they are not just out-of-work benefits, they are also in-work benefits, that are being claimed."

"Romanians have been claiming those for some time now, regardless of when they came in. We had a reasonable influx of Romanians long before we opened the doors on 1 January. They came in on the self-employment level and that is an issue that needs to be dealt with. So [when] I talk about benefit tourism, in a sense, we are talking about in-work benefit tourism."

New threshold

In March 2014 the Department of Work and Pensions (DWP) brought in a minimum earnings threshold of £153 per week, meaning that any migrant earning less than this can no longer claim in-work benefits.

It is wrong to promote the idea that the Big Issue is doing anything nefarious or harmful in adding to a problem which is not of its making John Bird, Big Issue founder

The government also said the new earnings threshold would "help ensure that benefits only go to those who are genuinely working", and that it was being introduced "as part of the government's long-term plan to cap welfare and reduce immigration."

Of the 3,500 vendors currently registered by the Big Issue, 25 per cent are Romanian or Roma, 66 per cent British and the remainder other nationalities.

But the Big Issue says that the average weekly earnings of its vendors are currently £47.10 - well below the minimum earnings threshold to qualify for in-work benefits.

John Bird, founder of the Big Issue, said in a statement: "the flaws which IDS [Iain Duncan Smith] has highlighted were inherent in a benefit system created by the government and, to that extent, the problem is the government's and not one of the Big Issue's making.

"The Big Issue was set up to lift people into work and reduce the chance of people in need ever to resort to wrong doing. By giving people a hand-up rather than a hand-out it is providing a real and ongoing cost saving for the taxpayer."

Mr Bird said it was for the government to act to change the benefit rules if necessary, "but in the meantime, it is wrong to promote the idea that the Big Issue is doing anything nefarious or harmful in adding to a problem which is not of its making."

Although the DWP did not have any figures about Romanians using the Big Issue as a means to access benefits, it said in a statement "it is an area of legitimate public concern".

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