The Shadow Cabinet Member for Finance and Deputy Leader of the Liberal Democrat Group, Councillor John McCann, is proposing a motion to the next meeting of Oldham Council (8 November 2017) that condemns the government for withdrawing a financial support scheme for older benefit claimants who are homeowners.

Councillor John McCann explains:  “The current Support for Mortgage Interest or SMI scheme administered by the Department of Work and Pensions is being scrapped on 5 April 2018.  It will be replaced by a repayable loan.”

“Until now, homeowners on a qualifying benefit, such as income support, income-based Job Seekers’ Allowance or Pension Credit, have been able to get some help towards the interest charges levied on a mortgage or home improvement loan, and this help has not had to be paid back.”

“From April, such claimants will be asked to sign up for a loan scheme where they will continue to qualify for support, but this support will be in the form of loan payments that have to be repaid when the home is sold or if ownership is transferred.”

“The Oldham Liberal Democrats do not feel that this is right. Such homeowners may be deterred from signing up for the loan scheme and this may mean that they start to get in arrears with payments and their home could eventually be repossessed. However if they sign up for the scheme they will be building more debt that will eventually be recovered from them when they give up their house.”

Councillor McCann is backed by his colleague, Liberal Democrat Group Leader Councillor Howard Sykes MBE.

Councillor Sykes said: “These changes are being brought in for both new and existing recipients. There is no proposal to offer existing claimants transitional support which is grossly unfair.”

“The Department for Work and Pensions has estimated that of the 140,000 households currently receiving SMI around 50% are of pension age,” stated Councillor Sykes.  “We are keen to champion their cause to fight for the continued existence of the current SMI scheme and the abandonment of a proposal that could make older people homeless.  In our motion, we also call on Council officers to bring forward a report identifying the impact these changes will have.”

The motion reads – Ending of the Support for Mortgage Interest Scheme

 This Council notes that:

• The Government have recently announced that the Support for Mortgage Interest Scheme (or SMI), administered by the Department of Work and Pensions, will come to an end on 5 April 2018.
• Homeowners who are on a qualifying benefit for long enough can currently receive help towards the interest charges on a mortgage or eligible home improvement loan.
• From 6 April 2018, new and existing claimants will instead be offered SMI loans; there will be no transitional protection.
• If a loan is not accepted, SMI will end and claimants will start to accrue mortgage arrears, putting their home at risk.
• If the loan is accepted, homeowners will have to repay the loan, including accrued interest if there is sufficient equity, once the property is sold or ownership is transferred.
• The Department for Work and Pensions has estimated that of the 140,000 households currently receiving SMI around 50% are of pension age.

Council is concerned that:

• Such claimants will end up being in further debt should they choose to participate in the new scheme.
• Other claimants who do not take up the loan may find themselves in mortgage arrears and be evicted.
• There is no transitional protection scheme for existing claimants.
• As claimants fall into more debt, or are faced with homelessness, they will make a greater call on Council services and those provided by partner agencies (such as the Oldham Food Bank) placing these under greater strain.

Council believes that the proposals are grossly unfair as:

• Tenants living in social or private rented housing can receive housing benefit payments that are greater that those made to homeowners through SMI.
• Existing claimants are immediately affected without being offered access to transitional protection.
• Older homeowners with an interest-only mortgage will be hardest hit.

Council resolves to:

• Ask the Chief Executive to write to the Minister responsible outlining our concerns and objections, and to our three local MPs asking them to make representations on this matter.
• Ask the Cabinet Member responsible to ask officers to draw up a briefing paper for Councillors identifying what the impact of these changes will be in Oldham and what actions can be taken by the Council and its partners to mitigate them.

Proposed by Councillor John McCann, Seconded by Councillor Howard Sykes MBE