George Osborne warns £25bn more cuts needed

CLAPTON

Graham_Devon wrote: »

Indeed, but as I said before, arguably the interest is a massive part of paying down the mortgage for all of us.

Not going to argue this one any further anyway. If you believe an attachment to the house in order to pay for the help received by the taxpayer is wrong, so be it.

I see it as fair. And for most, it will be a choice of whether to take it as a loan or take another option of their choice (sell up and move to a cheaper home, sell up and use the equity to rent etc).

Essentially we are talking about people here who can't afford their house without taxpayer support, so seems fair to me that if we help them buy it, even if it is just paying the interest on their mortgage, we get a slice of it at a later point.

No ones making them choose this option, and as I say, some may decide they don't want the government taking a slice of equity, so may find another way which doesn't include taxpayer cash.

If were trying to save money, these sorts of "nice" giveaways where it's easy to recoup the money seem like a no brainer. The taxpayer is covered for their outlay and the homeowner gets to stay in their home unless they choose to do something else. Job done in my view.

Not sure why you think they should just get the money for nothing. Maybe you could explain that instead of questioning me?

-we are not helping them 'buy' the property
-in many case the lender allows them to go on a interest only loan so their debt isn't declining at all
-if they do have to pay the capital then they have to forgo something from their JSA that the HB person doesn't have to forgo
-just because some-one owns a property this doesn't make them any better off than some-one renting if they are both on JSA
-there is a cap so the max that will be paid is on a mortgage of 200,000 so a max of 7,260 which is comparable with HB
- they no more get the money for 'nothing' as do HB people; if fact it's pretty certain that most home owners have paid taxes and NI for many years

so lets scrap both mortgage interest support and HB or keep both at modest level.

seems fair to me

Graham_Devon

CLAPTON wrote: »

-we are not helping them 'buy' the property
-in many case the lender allows them to go on a interest only loan so their debt isn't declining at all
-if they do have to pay the capital then they have to forgo something from their JSA that the HB person doesn't have to forgo
-just because some-one owns a property this doesn't make them any better off than some-one renting if they are both on JSA
-there is a cap so the max that will be paid is on a mortgage of 200,000 so a max of 7,260 which is comparable with HB
- they no more get the money for 'nothing' as do HB people; if fact it's pretty certain that most home owners have paid taxes and NI for many years

so lets scrap both mortgage interest support and HB or keep both at modest level.

seems fair to me

You are focusing on the people who are on the 2 year limit, on JSA. No problem here in my view.

You are ignoring all those pensioners on SMI continuously. Problem here in my view.

This conversation has turned pointless though. I simply cannot get my head around why anyone would be so against anyone paying the SMI back on death or on choosing to move.

You keep insisting this is like housing benefit, but it isn't. Housing benefit is given to people because they have no other means of paying.

Those aged over 60 will have a lot of equity built up in their properties, so DO have alternate means of finding alternate accommodation. Either that, or taking SMI as a loan to keep the house if they wish.

You wouldn't give income support to a millionaire just because they are out of work. So why give support to people with possibly tens of thousands, to hundreds of thousands of equity in their homes? The average mortgage is 26k for those over 60 on SMI. Based on the average property price, they are sitting on £139,000.

Anyone with access to £139,000 does NOT get housing benefits.

All that's being said here is sure, pay the SMI, let them keep the home, but treat it as a loan, afterall, unlike those on housing benefits, these people have a CHOICE.

Thankfully, ministers appear to get it...

The Department for Work and Pensions said the government wanted to reform mortgage interest protection so it could continue to provide a “necessary safety net” while still being fair to taxpayers. “In the longer term, we intend to transform SMI from a benefit into a loan,” he said.

Ministers believe that the principle is sound given that homeowners tend to have much greater levels of personal wealth than those who do not own a property.

http://www.ft.com/cms/s/0/05ee3fee-708d-11e3-9ba1-00144feabdc0.html#axzz2pe9K5oJT

Even a left leaning think tanks get it.

The IPPR gets it too.

The institute of Economic Affairs states "It's difficult to see a case for a general unconditional welfare benefit for mortgage interest being given by the government"

Reform get it.

CLAPTON

Graham_Devon wrote: »

You are focusing on the people who are on the 2 year limit, on JSA. No problem here in my view.

You are ignoring all those pensioners on SMI continuously. Problem here in my view.

This conversation has turned pointless though. I simply cannot get my head around why anyone would be so against anyone paying the SMI back on death or on choosing to move.

I must say I don't know the number of pensioners receiving SMI and what amounts they receive.

The reason is that I see a comparability with receiving HB and receiving SMI.

In general the system is biased towards people who make no provision for themselves throughout their lives and taxes those that do.

Graham_Devon

CLAPTON wrote: »

I must say I don't know the number of pensioners receiving SMI and what amounts they receive.

The reason is that I see a comparability with receiving HB and receiving SMI.

In general the system is biased towards people who make no provision for themselves throughout their lives and taxes those that do.

The difference is clear.

The person claiming housing benefit is renting a home they will never make any money from.

They don't have access to money (unless they are committing fraud) to do something different.

Those on continuous SMI DO make money (in terms of increasing equity) from the home the taxpayer is chipping into. Even if it's just interest, we all have to pay it to buy a home, so the taxpayer is helping them buy the home.

The majority will (just based on the averages) have access to 10's of thousands of pounds in order to pay for alternate accomodation. In some cases, considering the size of the average mortgage for these claimants, the money will be significant. Therefore, they could sell up and rent (just like those on the 2 year limit may have to face). They could sell up and use their equity to buy a cheaper home.

Or, under plans, they could choose to stay put, dip into taxpayer funding BUT, pay the taxpayer back for the ability to stay in their home.

A few stats, though these are from 2010...

- 38% of SMI recipients are over the age of 65.
- 15% of SMI recipients are aged 60-65. (I have seen newer stats stating 62% over 60 as things change, but can't find them now)
- The average outstanding balance for over 65 year olds is £20,000
- The average SMI payment is £27 per week for those over 65.
- 86% of SMI customers are on SMI contiguously without limit. (Unless, for those on IS, their circumstances change). But only 14% are on the 2 year time frame limit.

Therefore, if you take the average mortgage of the >65 group above, deduct the average house price, they would be left with £146,000 after selling.

No housing benefit claimant has access to that kind of money allowing them A) to buy another, smaller place or rent a place off their own back. Unless, as stated, they are committing fraud.

£27 a week doesn't sound like much, sure. But it's sizeable in the grand scheme of things, costing around £0.6bn a year. If were trying to cut £25bn, it seems like a perfectly decent place to start. Doesn't involve chucking anyone out of their homes, just involves giving peopel the option of tapping into their asset worth, or sitting on it, enjoying the house and then paying it back on death.

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?

HAMISH_MCTAVISH

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.

However I also think that there should be a clear relationship between paying National Insurance and receiving some temporary and short term benefits for anyone that needs it in the event of downturns.

I'd like to see perhaps 12 months housing benefit/SMI be payable to anyone that lost their job without means testing it, even if some small increase in NI payments was required to cover it.

What the UK seems to lack is fair unemployment insurance cover for ordinary people, where the insurer won't rip you off and try to deny payout of claims on technicalities.

This is probably one of the rare occasions where the state may be able to do a better job than private companies.

lvader

There is another option to save 40-50bn over 4 years, give Northern Ireland back to the Irish.

nickj_2

antrobus wrote: »

Actually, I think the current deficit is still around the £100 bn mark. Granted, that's a lot better than the £150 bn Gideon was lumbered with back in 2010, but it shows you that there is still some way to go before we're entirely out of the woods.

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

chewmylegoff

Graham_Devon wrote: »

I don't want to drag this thread into an SMI discussion.

However there is a huge difference.

One helps the person BUY their home.

The other helps the person rent a home, from which they will never be able to profit.

I see nothing wrong with an attachment order should the homeowner require SMI to service their mortgage payments. Up to the homeowner at that point whether they are happy with the loan type arrangement. Many have 10's of thousands of pounds in equity and could sell up and move to a smaller place. Up to them how they play it, but at least it's a loan rather than a giveaway.

Whilst I understand what you are getting at the flip side is that whilst SMI could be characterised as helping to buy an asset for a person on benefits, housing benefit could similarly be characterised as helping to buy an asset - but instead of the claimant getting it, the beneficiary is the claimant's landlord.

I don't see how this is a better result for the taxpayer. I suppose at least any profit the landlord makes is taxed (in theory of course...).

grizzly1911

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

Of the £100bn £50bn is interest at historically low rates.

To make any headway on the debt would require something substantially above £100bn in savings/income.

Hence the reason I was bemused that Ozzy was apparently saying the borrowing had been reduced by £3000 per person.

Interestingly Cleggy is distancing himself (same original link)

he said he strongly opposed welfare cuts on a scale set out by Mr Osborne and said his party would set out its own plans in due course to do it in a "fairer way".

Expecting "all future sacrifices [to come] from the working poor who are dependent on welfare" was "unrealistic and unfair", he said.

The plans, he added, showed the Conservatives wanted to "remorselessly pare back the state for ideological reasons" and make "cuts for cuts sake".

Graham_Devon

chewmylegoff wrote: »

Whilst I understand what you are getting at the flip side is that whilst SMI could be characterised as helping to buy an asset for a person on benefits, housing benefit could similarly be characterised as helping to buy an asset - but instead of the claimant getting it, the beneficiary is the claimant's landlord.

I don't see how this is a better result for the taxpayer. I suppose at least any profit the landlord makes is taxed (in theory of course...).

True.

I guess you could extend that even further and suggest income support, tax credits, jobseekers goes towards helping people to feed and cloth themselves, the beneficiary being Tescos and Matalan (2 random selections!).

I guess with housing benefit, it's paying for a service and one which can't really be bought any other way, bar radical government changes and a mass building programme.

With SMI it appears there are other solutions. Easy ones at that. Ones which come down to a simple choice the beneficiary of SMI is free to make. Take a loan based on an equity share, or move.

To be honest, it's a fairly "nice" choice to have to make considering the position of so many others in the country and the brutal fact that, put simply, these people can't afford their homes. Especially when you look at the proposals to cut housing benefits to all under 25's. Their choices will be all but nil in many cases.