Leading Article: A bigger issue than social security fraud

FOR THOSE who have never bought a copy during the three years of its life, the Big Issue is a magazine to help the homeless by giving them freelance work. They receive 35p of a 60p cover price in return for selling it to the public. The magazine has produced some good journalism. It has helped a number of homeless people to find their way back into stable homes and jobs. And it has provided a voice for a previously silent group. These are the achievements not of a charity, but of a growing business that now claims to cover its costs.

This week's big issue is that the magazine's vendors are being investigated for social security fraud. Its managers say they do their best to ensure that those who sell the magazine do not break the law by claiming benefits to which they are no longer entitled when they start working. Vendors sign an undertaking to abide by a code of conduct which clarifies this point. Rightly so: fairness demands that they should not be allowed to ignore a rule that other, equally poor, people are forced to obey. It does appear in this case, however, that the authorities have acted with a zeal out of proportion to the likely scale of the problem.

Sellers of the Big Issue are certainly exposed to scrutiny. They spend long, cold hours outside London Underground and British Rail stations and form an easy target for social security investigators - even though it may be the case that taxpayers' money would be better devoted to tracking down richer fraudsters. Government statistics on income tax evasion, for instance, show that every pound spent on checking company accounts yields pounds 41 in previously unpaid taxes.

Many of those who illicitly work while on benefit do so out of fear that they will lose their entitlement by declaring that they have found a job. When benefits are withdrawn after earnings of only pounds 2 a week, it is no wonder that fraud is rife. Chancellor Norman Lamont's 'job subsidy' scheme - paying benefits over to employers as an incentive to hire people out of work - was one, somewhat half-hearted, attempt to act against the problem of the cripplingly high marginal tax or benefit withdrawal rates faced by unemployed people who are considering going back to work. New ideas on easing the move into the official economy are needed. Perhaps the Big Issue could investigate.