Calling in from over in the Daily Mirror we’ve that usual conservative complaint that whatever we’ve done in the past should still be done now. No matter changing circumstances, or the unfairness of the original arrangement, or even just this no longer needs to be done. Nope, we used to do it so we should be doing it now and it’s a damn shame, an outrage, that we’re not.
So it is with this complaint of theirs about Support for Mortgage Interest.[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””] New figures reveal three quarters of people who were on Support for Mortgage Interest (SMI) have been left in the lurch since the £87-a-month payment was swapped for a repayable loan. SMI was paid for decades to people on hard times to fund their mortgage interest – saving their homes from repossession. But last April the Tory government changed the benefit to a loan repayable in full, with interest, when claimants die or sell up. [/perfectpullquote] [perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””] Now official figures show 78,000 of 103,000 former claimants (75%) have chosen to stop SMI rather than take on new debt. Just 21,000 (21%) have accepted the loan and 4,000 (4%) are undecided. A further 1,000 could not be contacted. Labour branded the cut a “failure” and Age UK warned it may force people to cut down on heating or eating. [/perfectpullquote]
Complete blither all that complaining, of course it is.
The first point being that given where interest rates are now if we’re going to get rid of a bad bit of the system this is the time to do it for effectively no one’s actually paying any interest on mortgages. And it is and was a bad bit of the system.
The basic idea, that those who have temporary hard times shouldn’t have to lose their mortgaged house is fair enough. So, on unemployment bennies for example, it used to be possible to get your mortgage paid just like you could your rent. Entirely fair really. But there’s an importance to that word “temporary” there which is being deliberately missed here.
So, what does a mortgage do for you? It finances the purchase of an asset for you. An asset which under this old system you owned outright once it was all done. Yup, everyone else gets taxed so that you build up a tax free and considerable asset. Hmm, no, maybe not, eh?
So, what should be done? Well, true, we don’t want people who have some temporary bother to have to give up their house. Quit apart from anything else we’d have to rehouse them anyway. But we also don’t want to be paying their mortgage interest for decades. Nor do we think that we taxpayers shouldn’t get back some of what we’ve paid temporarily. So, the new system is actually pretty good. Those who need it gain the help they require, we’ve got a system in place whereby there’s no potentially unjust enrichment from the process.
Except, of course, look closer. We’ve also built into it a system whereby only those who actually need it claim it. Those who don’t but fancy a bit of extra bunce being put off by that need to repay. Ooooh, and lookee! We find that only 25% of the original recipients did actually need it, for 75% it was just bunce.
So, we’ve a fairer system, which doesn’t lead to unwarranted bunce, which costs the taxpayer less. And people are complaining about this?