The proposed withdrawal of mortgage subsidies for people on lower incomes suffering negative equity as a result of the financial crash of ten years ago has been branded ‘despicable’ by SDLP councillor, Shauna Cusack (pictured right).
Colr. Cusack said the scheduled replacement of the ‘Support for Mortgage Interest’ scheme with interest-bearing government loans from April was another direct consequence of the Welfare Reform Act 2015 and would heap further hardship on people who are already struggling.
She said: “It is despicable that, in their time of need, (whether temporary or permanent) the people who strove to secure their own roof when the state couldn’t, and whose personal circumstances may have changed, through no fault of their own, are being punished and put into further debt, in order to save the Government a further 170 million, when they have probably already saved the istitutions billions.”
Her motion, passed unanimously by Derry City and Strabane District Council on Thursday, proposed that the Council “recognises the impact that the changes to the SMI scheme will have on hardworking, low income families in our City and District who will face increased financial hardship due to the upcoming change in the SMI scheme from a benefit to a loan”.
It further recognised that “this change will punish those who own their own home, including those who were actively encouraged by the British Conservative Government to buy their own homes during the crash”.
Councillors declared themselves “concerned that the conditions of this loan will cause people to get into unmanageable debt and is self-defeating in that it could cause people to lose their homes, and in turn possibly become more reliant on the state and on social housing”.
And the Council called on the “Department for Work and Pensions to urgently review this decision, as well as its financial impact and validity before the changes are made in April”.
Speaking in the Guildhall on Thursday, Colr. Cusack said: “On April 5 this year, a benefit which was designed to give struggling home owners on low incomes some financial support with the interest on their mortgage will come to an end.
“SMI benefit will now morph into a loan. When I say low income I’m referring to those on legacy benefits such as Income Support, Job Seeker’s Allowance (JSA), Employment Support Allowance (ESA) and Pension Credit, essentially the disabled, single parents, but mostly (around 50 per cent), pensioners.
“This brainwave is yet another crippling clause in the Welfare Reform Act 2015, and as we have already seen with Personal Independent Payments (PIP) and Universal Credit, it will cause more people here to suffer.
“There are none of the temporary mitigations, some parties keep congratulating themselves on, to delay this blow.
“Basically SMI will become an interest-bearing loan which is secured against the mortgaged property. The interest on the loan will be charged at the rate set by the Office for Budget responsibility. In simple terms, as well as your mortgage loan, which you pay interest on, you will also pay back this Government loan and the interest on it, a double whammy.”
Colr. Cusack said that while some of those who signed large home loan contracts at the height of the boom did acquire assets, many did not, arguing it was unjust for the Government to abandon these people.
“I appreciate that people who have purchased their homes may, in many circumstances, have gained some form of an asset. What the Torys don’t appreciate is that people have worked hard to try and provide some form of security for themselves and their families and have been actively encouraged by the Government and their best friends, the banks, to do so.
“When these citizens need some help and support, the same people who have paid taxes, state contributions and who knows what else are being stripped of what little life legacy they have secured by the same Government who still continue to reward and bail out the banks whose unbelievable recklessness and greed caused the financial and property crash of 2007 leaving immeasurable families in severe financial difficulty.”