Friday 6 April 2018 / 12:01 AM Margaret Greenwood / Work and Pensions

Chaotic mortgage support changes put low income households at risk of debt – Margaret Greenwood MP

Chaotic mortgage support changes put low income households at risk of debt – Margaret Greenwood MP

Today, Friday, 6th April, help through the social security system for homeowners on low incomes to pay mortgage interest will change to a government loan. This loan will have to be repaid and the process will be managed by private company, Serco.

Labour has sounded the alarm over the change, warning it risks causing real hardship for homeowners on low incomes.

People eligible for Support for Mortgage Interest include those on very low incomes who are claiming a qualifying benefit because they are unemployed, there is a shortfall in their pension or they are ill or disabled, after a 39 week qualifying period.

The Government originally estimated just 5 per cent of working age recipients, and 8 per cent of pensioners would not take up the loan. However, as of 21st March, 30 per cent of all claimants (27,000 people) had already declined the loan and only 14 per cent (13,000) had accepted.

According to the latest government figures, 90,000 people receive SMI, of which just under 40 per cent of are low income pensioners in receipt of Pension Credit. Age UK has warned that some pensioners might try to cope without the loan by cutting back on essentials like heating.

The government’s own figures reveal the chaos around the changes: as of 21st March 5,000 people had not even received an initial letter from DWP informing them of the change, and SERCO, on the DWP’s behalf, had also still not managed to contact another 31,000 – over a third of claimants – by telephone to explain the change.

Under the Government’s plans, people who are elderly or disabled and need to move to specialist residential care would be forced to pay back the loan on selling their home, leaving them with less to cover the cost.

Margaret Greenwood MP, Labour’s Shadow Work and Pensions Secretary, 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.

“Many of the people who claim SMI are elderly or disabled, and it is extremely concerning that pensioners might try to cope without the loan by cutting back on essentials like heating.

“Even at this late stage the government could and should think again and halt this change.”