Benefits to be replaced by loans!

sargeantsalt

2 years ago I predicted that the benefits system would be eventually replaced by a loan system where those who fall on hard times would receive money to live on that they would repay once they are better off.

Well, it has started. SMI benefit is being replaced by a loan system from April 2018 onward.
There will also be interest to pay on top.

My predictions for the future are:

1. More benefits will be replaced, e.g. jobseeker loans, rather than benefits.
2. At some point the claimants 'debts' will be sold on to debt collection companies for a fraction of their value and the claimants will be aggressively pursued for the money.

Debt should never be forced on anyone.

If you care, then write to your MP or start a petition.

TELLIT01

Can you provide a link to the source of this information?

xylophone

Can you provide a link to the source of this information?

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

SMI as a benefit is ending on 5 April 2018, and will be replaced by a loan. If you get SMI as a benefit, you’ll get a letter by February 2018 telling you about the loan and other options available to you.

trigger_fish

sargeantsalt wrote: »

2 years ago I predicted that the benefits system would be eventually replaced by a loan system where those who fall on hard times would receive money to live on that they would repay once they are better off.

Well, it has started. SMI benefit is being replaced by a loan system from April 2018 onward.
There will also be interest to pay on top.

My predictions for the future are:

1. More benefits will be replaced, e.g. jobseeker loans, rather than benefits.
2. At some point the claimants 'debts' will be sold on to debt collection companies for a fraction of their value and the claimants will be aggressively pursued for the money.

Debt should never be forced on anyone.

If you care, then write to your MP or start a petition.

In bold is already being done in view of tax credit overpayment. In many cases it was the incompetence of the DWP that caused the issue in the first place.

IAmWales

The change is being "managed" by Serco. As well as sending out letters, they're calling people and pushing them to agree to the loan. They don't even know what the interest rate will be. If you don't agree, they call again. That's got to be against FCA guidelines.

Note that the amount paid to SMI claimants is almost always less than their LHA rate would be.

Yet another example of the Tories kicking the vulnerable, and paying millions to an outside provider to assist. Nasty, very nasty.

TELLIT01

xylophone wrote: »

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

SMI as a benefit is ending on 5 April 2018, and will be replaced by a loan. If you get SMI as a benefit, you’ll get a letter by February 2018 telling you about the loan and other options available to you.

The most likely end result will be even more people losing their houses and putting more pressure on the rental sector. SMI has been reduced greatly over the past few years anyway so I suppose this step isn't a total surprise.

glentoran99

xylophone wrote: »

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

SMI as a benefit is ending on 5 April 2018, and will be replaced by a loan. If you get SMI as a benefit, you’ll get a letter by February 2018 telling you about the loan and other options available to you.

"However, you’ll need to repay the loan with interest when you sell or transfer ownership of your home."


Just right too!! Get the government to pay your interest then sell your home and pocket the cash, a loophole quite rightly being closed

Darksparkle

trigger_fish wrote: »

In bold is already being done in view of tax credit overpayment. In many cases it was the incompetence of the DWP that caused the issue in the first place.

HMRC didn’t sell debts to DCAs they just used them to pursue them as it was cheaper than employing more of their own staff.

TELLIT01

glentoran99 wrote: »

"However, you’ll need to repay the loan with interest when you sell or transfer ownership of your home."

That doesn't sound unreasonable, dependant on what the interest rate charged is. House prices generally increase over time so the actual cost is not huge. A few years ago the rules for SMI changed and a 9 month wait before it could be claimed was introduced, along with a 2 year maximum claim period. I don't know if that applied to all benefits, but it does limit the loan costs.

FBaby

I don't think it is right to compare SMI becoming a loan and JSA. The two are totally different. In the first instance, claimants were actually gaining from the arrangement in addition to getting support to have a roof over their head. This is totally wrong.

There is no investment gain to be made from being on JSA.

nannytone_2

LHA is paid towards ret.
this rent goes to another person/company.

the claimant doesn't end up with an asset.

why should the families of a person receiving SMI benefit after that persons death?
i agree it should be repaid from the profit gained