George Osborne warns £25bn more cuts needed

kabayiri

HAMISH_MCTAVISH wrote: »

I'm going to shock the board and (partially) agree with Graham here.
...

What have you done with Hamish you evil spirit you !!
I was a sceptic on the possessed, not any more...

Hamish, walk towards the light.

Kennyboy66

Graham_Devon wrote: »

SMI is a completely different beast to that of other welfare payments.

Not to labour the point here, the issue isn't SMI, it's that it's paying off a mortgage in which the beneficiary is soley the homeowner. When the homeowner ceases using SMI for any reason, maybe because the mortgage has now ended, the homeowner will end up with a property worth X amount of which they can do with what they please. I don't find that a particularly good use of taxpayer money considering those benefitting from it are are tiny fraction of the population but benefit greatly from it.

As the majority of SMI claimants are over 60, it stands to reason SMI will be used until the mortgage is fully paid off.

Are you sure about this ?

This report seems to indicate that there are 94k claimants getting pension credit & 136k claimants below the pension credit qualifying age.

In addition, less that 1/4 of the money actually goes to people above the pension credit age (presumably their mortgages are much smaller), who get on average £18 / week.

Scrapping it for pensioners would save £89 million per year (2013/14) and less in future years (according to the link).

As comparisons

Winter fuel allowance £2500 million a year
Free TV licence £ 500 million a year (over 75's)
Free bus passes £1100 million a year (guesstimate)

It seems like the obsession with SMI is a bit to do with green eyed, curtain twitching envy.

I'm not defending it, but the cost of SMI that goes to pensioners would probably be outweighed many times by housing benefit if we forced those people out of their homes & the idea of an attachment order, whilst it has some logic, would probably cost as much to administer as it would raise.

The bigger real issue is the triple lock on pension increases.

This essentially guarantees that state pensions will take ever more out of GDP year on year.

It's the economics of the madhouse.


http://www.parliament.uk/business/publications/research/briefing-papers/SN06618/support-for-mortgage-interest-scheme

Kennyboy66

Graham_Devon wrote: »

In what other circumstance would anyone on here suggest giving benefits to someone who has access to a rough average of 146k would be a decent use of taxpayer cash?

Pensions
Winter Fuel
Free bus passes
Free TV licence
Free prescriptions
Child benefit
JSA
Nursery vouchers
free school meals (the recent extension to all under 7's of whatever)


And a host of other things could be described as 'benefits' and are given out to people who are asset rich.

MFW_ASAP

HAMISH_MCTAVISH wrote: »

I'm going to shock the board and (partially) agree with Graham here.

Long term SMI for pensioners should be converted to loans or charges repayable on sale or inheritance of property.

I also agree with Graham, though I think he thought my 'fact finding' questions were an attempt to undermine his argument. They were just to determine why he was just concentrating on this single benefit when other HB seemed to have the same issues, though much greater costs and yet he didn't seem to see a problem with it (apologies to GD if this is incorrect).

I see from GD's response that he thinks SMI is fine as a temporary measure for people who have a job loss or sickness. I agree and I also think HB is fine in similar circumstances.

I agree that SMI should not be 'open ended'. Hopefully when we have a flat rate pension, we won't need Pensions Credit (if everyone receives the same state pension, then either we are all entitled to pensions credit or none of us are). For those pensioners who still have mortgage debt into retirement, the options are clear - to downsize to a smaller home/cheaper area and pay off the mortgage or to use part of their pension to repay the mortgage. It's should not be an option to receive the same fixed rate pension and then get a 'top up' above everyone else.

I also think that HB should not be open-ended and I think this is where I diverge from GD. He doesn't seem to have a problem with indefinitely subsidizing the rent for people who can't afford to pay their own. Surely they should also 'cut their cloth' and downsize or move to a cheaper area?

N1AK

wotsthat wrote: »

It's based on a standard interest rate (3.63%) rather than the claimants actual payment.

Some will be getting more than the interest and some less but 3.63% is about the average interest rat being paid so it'll balance out although the thought of some people getting more does cause some vexation.

Probably a pragmatic attempt to keep costs down.

https://www.gov.uk/support-for-mortgage-interest/what-youll-get

Thanks, that's a very nice summary and I also agree that it almost certainly is done for simplicities sake.

I think past experience has led to me automatically getting frustrated by what I see as over generous treatment of mortgage or property owners.

I didn't get housing benefit when I was unemployed for 3 months because my partner (not even wife) had savings but if we'd used those savings to buy a house then the government would have happily paid us instead and we would have been entitled to other benefits as well.

Now I'm not saying I needed the benefits, or even think I should have received them. As it happens I don't, but why on earth does someone with a mortgage get treated preferentially? The obvious answer is vote grabbing, because as usual renters are typically younger and thus get stuffed.

N1AK

nickj wrote: »

that is just the level of govt borrowing , i thought the govt debt was well over £1 trillion , if this is the case ,it's gonna take a hellova lot more than the odd £20 billion of cuts here and there

The deficit is the shortfall between income and spending. The debt is the total owed.

£20 billion a year makes a huge difference. Firstly over 10 years that £200 billion of debt paid off (or not borrowed) and second it is the saved interest on that debt.

We don't really have to decrease our debt in nominal terms, simply keeping it the same will mean that it falls in real terms with inflation and GDP growth. Think of it like personal finances. 30 years ago owing someone £1,000 would see like a big deal as most earned around £6k a year but now it doesn't sound nearly so vast.

MFW_ASAP

N1AK wrote: »

Thanks, that's a very nice summary and I also agree that it almost certainly is done for simplicities sake.

I think past experience has led to me automatically getting frustrated by what I see as over generous treatment of mortgage or property owners.

I didn't get housing benefit when I was unemployed for 3 months because my partner (not even wife) had savings but if we'd used those savings to buy a house then the government would have happily paid us instead and we would have been entitled to other benefits as well.

Now I'm not saying I needed the benefits, or even think I should have received them. As it happens I don't, but why on earth does someone with a mortgage get treated preferentially? The obvious answer is vote grabbing, because as usual renters are typically younger and thus get stuffed.

There are other assets and investments that are not included in means testing or not included as 'savings'. If you invested in a classic car (Ferrari), for example, it would not be used as 'savings'. I hold over £200k in a pension pot, which does not count as savings and cannot be used for means-testing.

Perelandra

Why not go the whole hog, and say that all benefits are merely loans?

Upon death, the government gets first dibs on your estate, to the tune of the value of benefits you've taken over your lifetime, on the basis that you didn't "need" those benefits to live.

If there is insufficient in the estate to repay back the benefits-loan, then clearly do did "need" an element of state support during your life?

Thrugelmir

N1AK wrote: »

We don't really have to decrease our debt in nominal terms, simply keeping it the same will mean that it falls in real terms with inflation and GDP growth. Think of it like personal finances. 30 years ago owing someone £1,000 would see like a big deal as most earned around £6k a year but now it doesn't sound nearly so vast.

At some point the wheels fall off though. As it's not possible to have a standard of living than actually is affordable. The world is a changing place. Selling Government debt is already becoming more difficult. So the honeymoon could end very suddenly.

CLAPTON

Thrugelmir wrote: »

At some point the wheels fall off though. As it's not possible to have a standard of living than actually is affordable. The world is a changing place. Selling Government debt is already becoming more difficult. So the honeymoon could end very suddenly.

I would say that if the government offered a saving cert indexed linked with 0.5% interest, they would be inundated with buyers