Asked by: Ian Mearns (Labour - Gateshead)
Question to the Department for Work and Pensions:
To ask the Secretary of State for Work and Pensions, if he will make an assessment of the potential merits of fixing the interest rate used to determine payments under the Support for Mortgage Interest scheme to a set amount above the Bank of England Base Rate to better reflect the impact on those in receipt of SMI.
Answered by Mims Davies - Shadow Minister (Women)
The interest rate we pay for SMI is based on the Bank of England published average mortgage rate. We do not align payment to the base rate because this would lead to uncertainty for both borrower and lender as well as increasing the administrative burden.
An increase to the rate paid through the SMI scheme was triggered on Wednesday 29th March 2023.This rate increased from 2.09% to 2.65% and will be implemented on 10th May 2023. Any further changes to the standard interest rate will only occur when the Bank of England average mortgage rate differs by 0.5 percentage points or more from the rate in payment.
We currently have no plans to amend the calculation of SMI. We have selected the Bank of England’s published average rate because it is the average interest rate that applies to outstanding mortgages, including fixed and variable mortgages. The Bank of England data is the most reliable as it is based on information that covers over 75% of all banks and building societies’ mortgage business. It is also updated on a regular (monthly) basis.
If we were to base the rate we pay on the Bank of England Base rate, we would pay over and above the average interest rate paid by fixed rate mortgage holders. Conversely, the rate would be too low when the base rate is set at a low level such as the 0.1 base rate between March 2020 and December 2021.
Asked by: Ian Mearns (Labour - Gateshead)
Question to the Department for Work and Pensions:
To ask the Secretary of State for Work and Pensions, what assessment he has made of the impact of the Bank of England Base Rate increases on the Support for Mortgage Interest Scheme (SMI); and whether he plans to uprate the interest rate of 2.09 per cent on which the SMI payments are calculated.
Answered by Mims Davies - Shadow Minister (Women)
The interest rate we pay for SMI is based on the Bank of England published average mortgage rate. We do not align payment to the base rate because this would lead to uncertainty for both borrower and lender as well as increasing the administrative burden.
An increase to the rate paid through the SMI scheme was triggered on Wednesday 29th March 2023.This rate increased from 2.09% to 2.65% and will be implemented on 10th May 2023. Any further changes to the standard interest rate will only occur when the Bank of England average mortgage rate differs by 0.5 percentage points or more from the rate in payment.
We currently have no plans to amend the calculation of SMI. We have selected the Bank of England’s published average rate because it is the average interest rate that applies to outstanding mortgages, including fixed and variable mortgages. The Bank of England data is the most reliable as it is based on information that covers over 75% of all banks and building societies’ mortgage business. It is also updated on a regular (monthly) basis.
If we were to base the rate we pay on the Bank of England Base rate, we would pay over and above the average interest rate paid by fixed rate mortgage holders. Conversely, the rate would be too low when the base rate is set at a low level such as the 0.1 base rate between March 2020 and December 2021.
Asked by: Ian Mearns (Labour - Gateshead)
Question to the Department for Work and Pensions:
To ask the Secretary of State for Work and Pensions, whether her Department plans to extend the period of eligibility for payment of the Bereavement Support Allowance from the existing 21 months period.
Answered by Guy Opperman
There are currently no plans to reform Bereavement Support Payment (BSP). BSP is a contributory benefit intended to help with the immediate costs of bereavement. In common with other contributory benefits, BSP is not means tested. Other sources of financial assistance, including Universal Credit, are available for those who require on-going financial support.
Whilst we have no plans for broader reform, on 15th July we laid a draft proposal for a Remedial Order (The Bereavement Benefits Remedial) Order 2021) that will extend eligibility to Widowed Parent’s Allowance and Bereavement Support Payment to cohabitees with dependent children. Further details can be found on Gov.uk: https://www.gov.uk/government/publications/bereavement-benefits-proposal-for-implementation-of-the-mclaughlin-2018-and-jackson-2020-judgments
Asked by: Ian Mearns (Labour - Gateshead)
Question to the Department for Work and Pensions:
To ask the Secretary of State for Work and Pensions, what assessment she has made of the potential merits of changing the Bereavement Support Allowance eligibility from a fixed period of 21 months to an indefinite and ongoing payment which would be means tested based on annual income.
Answered by Guy Opperman
There are currently no plans to reform Bereavement Support Payment (BSP). BSP is a contributory benefit intended to help with the immediate costs of bereavement. In common with other contributory benefits, BSP is not means tested. Other sources of financial assistance, including Universal Credit, are available for those who require on-going financial support.
Whilst we have no plans for broader reform, on 15th July we laid a draft proposal for a Remedial Order (The Bereavement Benefits Remedial) Order 2021) that will extend eligibility to Widowed Parent’s Allowance and Bereavement Support Payment to cohabitees with dependent children. Further details can be found on Gov.uk: https://www.gov.uk/government/publications/bereavement-benefits-proposal-for-implementation-of-the-mclaughlin-2018-and-jackson-2020-judgments
Asked by: Ian Mearns (Labour - Gateshead)
Question to the Department for Work and Pensions:
To ask the Secretary of State for Work and Pensions, what assessment she had made of the potential merits of making Bereavement Support Allowance an ongoing payment with similar criteria to Carers Allowance for those bereaved who have been left with children, using an earning threshold allowance for eligibility beyond the existing 21 months.
Answered by Guy Opperman
There are currently no plans to reform Bereavement Support Payment (BSP). BSP is a contributory benefit intended to help with the immediate costs of bereavement. In common with other contributory benefits, BSP is not means tested. Other sources of financial assistance, including Universal Credit, are available for those who require on-going financial support.
Whilst we have no plans for broader reform, on 15th July we laid a draft proposal for a Remedial Order (The Bereavement Benefits Remedial) Order 2021) that will extend eligibility to Widowed Parent’s Allowance and Bereavement Support Payment to cohabitees with dependent children. Further details can be found on Gov.uk: https://www.gov.uk/government/publications/bereavement-benefits-proposal-for-implementation-of-the-mclaughlin-2018-and-jackson-2020-judgments
Asked by: Ian Mearns (Labour - Gateshead)
Question to the Department for Work and Pensions:
To ask the Secretary of State for Work and Pensions, whether her Department plans to increase carers allowance in England in line with inflation and the cost of energy during the winter months.
Answered by Chloe Smith
The weekly rate of Carer’s Allowance is protected by annual uprating in line with the Consumer Price Index (CPI). The rate for April 2022 will be announced in due course as part of the annual Uprating Statement.
Since 2010, the rate of Carer’s Allowance has increased from £53.90 to £67.60 a week, providing an additional £700 a year for carers. Carers also have access to the full range of social security benefits according to their circumstances.
Real terms expenditure on Carer’s Allowance in 2021/22 is forecast to be £3.2bn. Between 2021/22 and 2025/26 real terms expenditure on Carer’s Allowance is forecast to increase by around a quarter (around £0.8 billion). By 2025/26, the Government is forecast to spend just over £4.0bn a year on Carer’s Allowance.
Asked by: Ian Mearns (Labour - Gateshead)
Question to the Department for Work and Pensions:
To ask the Secretary of State for Work and Pensions, for what reason the zero earnings rule linked to universal credit applies to Support for Mortgage Interest loans.
Answered by Guy Opperman
In the legacy system, those in work but on low income received support via the Tax Credit system. There was no help in Tax Credits towards mortgage interest payments and that principle was carried forward into Universal Credit.
Those with earned income will all benefit from the earnings taper and may also benefit from the work allowances. his means that they are in a better position to meet their mortgage commitments than those without earnings.
There are currently no plans to amend the Support for Mortgage Interest qualifying period or the zero earnings rule.
Asked by: Ian Mearns (Labour - Gateshead)
Question to the Department for Work and Pensions:
To ask the Secretary of State for Work and Pensions, if she will make it her policy to reform Support for Mortgage Interest (SMI) for homeowners facing financial difficulties by (a) reducing the time between claiming SMI and receiving the first payment from 39 weeks to 13 weeks and (b) removing the zero earnings rule linked to universal credit that prevents people in any paid work from claiming SMI.
Answered by Guy Opperman
In the legacy system, those in work but on low income received support via the Tax Credit system. There was no help in Tax Credits towards mortgage interest payments and that principle was carried forward into Universal Credit.
Those with earned income will all benefit from the earnings taper and may also benefit from the work allowances. his means that they are in a better position to meet their mortgage commitments than those without earnings.
There are currently no plans to amend the Support for Mortgage Interest qualifying period or the zero earnings rule.