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SUPPORT for thousands of low-income homeowners to pay mortgage interest has changed from a benefit payment to a government loan with added interest.
Labour MP and shadow work and pensions secretary Margaret Greenwood said that this “chaotic” change, to be managed by privateer Serco, will put many households at risk of debt.
People eligible for Support for Mortgage Interest (SMI) include those on very low incomes who are claiming a qualifying benefit because they are either unemployed, have a shortfall in their pension or they are ill or disabled. This is after a 39 week qualifying period.
Around 90,000 people receive SMI, according to the latest government figures, of which just under 40 per cent are low income pensioners in receipt of Pension Credit.
Regions with the most people claiming SMI are the North West with 16,000 and Scotland, the south east and London with 12,000 people each.
Five thousand people, as of March 21, had not even received an initial letter from DWP informing them of the change.
Serco, on behalf of the Department of Work and Pensions, had also still not managed to call another 31,000 people – over a third of claimants – to explain the change.
Age UK had warned, during the DWP’s consultation on the plans, that some pensioners might try to cope without the loan by cutting back on essentials like heating.
Under the plans, elderly or disabled people who need to move to specialist residential care would be forced to pay back the loan – with interest – on selling their home, leaving them with less to cover the cost of care.
Ms Greenwood said: “It is worrying that the government seems determined to push ahead with this change despite the risk of it causing real hardship for people on low incomes.”
The government originally estimated just 5 per cent of working age recipients, and 8 per cent of pensioners would not take up the loan.
But, as of March 21, 30 per cent of all claimants – equating to around 27,000 people – had already declined the loan and only 14 per cent, around 13,000, had accepted.
