Socialist Worker

Limits to mortgage help: a ticking timebomb

Labour’s proposals to impose a time limit on mortgage help will hit the poorest hardest and set a dangerous precedent, writes Carola Becker

Issue No. 2146

The government has found yet another way of putting pressure on the long-term unemployed, in addition to the Welfare Reform Bill currently going through parliament.

Under new social security regulations, job seekers will have help towards their mortgage interest payments cut after two years.

This has the potential to set a new and extremely damaging precedent.

Usually, such regulations have to be referred first to the Social Security Advisory Committee (SSAC) for consultation and comment, before they can go to parliament and become law.

There is a possibility that changes contained in these new regulations will never face proper scrutiny.

Under the “urgency” provisions in the Social Security Administration Act 1992 ministers can bypass democratic measures if they appear “inexpedient”.

The regulations can then become law before the SSAC gets to comment on them, and without ever being aired in parliament.

This convenient provision has enabled the government to give with one hand and take with the other, leaving most people none the wiser.

The are some beneficial aspects to the new regulations.

These include bringing down the time before claimants can access help towards their mortgage payments to 13 weeks, and increasing the capital limit – the maximum value of the home on which payments will be made – from £100,000 to £200,000.

But the provision cutting off help after two years is a nasty and well hidden attack.

There is a real danger that time-limiting the length of mortgage benefits could make it easier for governments to introduce limits on other welfare benefits too.

After Bill Clinton’s reforms in the 1990s, some US states have a “lifetime limit” of two years on welfare payments. This has had devastating results.

According to research by the University of California, the cut-off mainly affects women with young children. Many of them are suddenly left without money to buy food.

And that research was conducted in 2007, following a period of economic growth.

Britain’s Welfare Reform Bill is based, to a great extent, on the US model.

This way of cutting the number of people on benefits – in some cases by as much as 90 percent – is now popular with governments on both sides of the Atlantic.

Many of the “reforms” proposed in the government’s Green Paper “No-one Written Off: Reforming Welfare To Reward Responsibility”, mimic the US model.

The underlying ideology is that unemployment is the individual’s fault and should be punished – hence the work for your benefits schemes, which are called workfare in the US.

It is deeply ironic that an economic crisis, which makes long-term unemployment a virtual certainty for many, has provided the government with the justification it needed to bring in further welfare cuts under the “urgency” provisions.

Notwithstanding the global economic crisis, ministers insist that finding a job is our personal responsibility.

In an explanatory note to the SSAC, the government states, “The two-year time limit for JSA [Job Seekers Allowance] claims is an essential measure to ensure customers are clear about what is expected of them by way of meeting their responsibilities to find work.”

This statement presumes that there are jobs “out there” for those who look hard enough for them.

However, only last month the International Monetary Fund forecast that the British economy will keep shrinking well into next year, and at a much faster rate than other nations.

It is generally accepted by economists that employment figures are the last thing to recover after a recession.

The number of homes repossessed in Britain rose by 54 percent to 4,000 last year, according to the Council of Mortgage Lenders (CML).

The CML says that the limit on mortgage interest payments will do nothing to alleviate this problem.

In a second explanatory note, the government admits that the CML welcomed the reduction in the waiting period and increased capital limit, but had “concerns over the two-year time limit”.

But this has not persuaded ministers to drop this provision.

As in the US, the two-year limit is likely to hit women with young children the hardest. One of the “welfare reforms” already introduced through secondary legislation means that unemployed single parents with children as young as 12 – seven from next year – now have to go onto job seekers allowance.

This will make them vulnerable to all the “conditionality” threats attached to that benefit.

So, while our ministers have been able to claim generous “expenses” for the maintenance of their second homes, many jobseekers now have to live under the threat of having their only home repossessed.

Carola Becker is a campaigner on welfare issues

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Tue 7 Apr 2009, 19:04 BST
Issue No. 2146
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