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Ministers are rushing through plans to widen income support for local residents facing home repossessions, following concerns from councils. As part of a package of measures designed to tackle the credit crunch, outlined in the Queen's Speech to Parliament last week, the Department for Work and Pensions has expedited plans to increase the number of people eligible for income support for mortgage interest (SMI). SMI is currently linked to other income-related benefits, such as jobseeker's allowance and pension credit, and paid out by local Jobcentre Plus offices. The benefit, distributed to a total of 217,000 people in 2007/08, covers interest on mortgages up to the value of £100,000. But from January, the DWP intends to pay SMI to people with mortgages worth up to £200,000. The qualifying period for the benefit will also be reduced, from 39 weeks to 13. The move follows heavy lobbying from local government bodies concerned that they would face rising welfare bills if repossession rates soared next year. A senior source at the Treasury said the changes could benefit ‘tens of thousands of people'. Treasury officials have also announced a freeze on the rate at which SMI is paid. Despite reductions in the Bank of England base rate to 2%, SMI will continue to be calculated using an interest rate of 6.08%. Local authorities are being urged to encourage eligible local residents to claim the little-known benefit. A spokeswoman for the DWP said: ‘SMI is an integral part of income-related benefits. A customer should claim through… Jobcentre Plus for working-age customers, and the pension service for non-working age customers – or online through the department's Internet sites.' Prime minister, Gordon Brown, also announced a separate scheme to help people with homes at risk of repossession. The Homeowner Mortgage Rescue Scheme will enable households to defer some interest payments for two years, but critics claimed that just 9,000 households would qualify.

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FINANCE

MPs rush aid to stop home repossessions

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