A think tank has called for state mortgage support for the unemployed to be extended to include those who have paid enough national insurance contributions.
Currently those out of work can claim £72.40 a week in job seeker’s allowance for six months on the basis of having paid enough NICs. If someone has not paid enough in, or once the sixth months is up, then the benefit is means-tested.
As it stands people on means-tested job seeker’s allowance are eligible for the Government’s Support for Mortgage Interest scheme. Those who qualify get help paying the interest on up to £200,000 of their loans or mortgages, while pensioners qualify on up to £100,000. The money is paid directly to the lender at a standard rate of 3.63 per cent.
In a report, published yesterday, the Institute for Public Policy Research says the amount paid in job seeker’s allowance based on NICs should go up from £72.40 to £100.15 and include access to SMI.
Those on benefits must wait 13 weeks before they can claim SMI. Under the proposal long-term unemployed would receive SMI for an extra 13 weeks.
The IPPR says: “The current average SMI award for those on income-based JSA is £50 a week, and around 30 per cent of those on contribution-based JSA are homeowners with a mortgage.
”Assuming the current 13-week waiting period applies, and that all those who became newly entitled claimed support at the average amount for the full remaining 13 weeks, the extra cost would be just over £150m a year. In practice, many contribution-based JSA claims cease inside the 13-week waiting period.”
The total cost of the plans to increase the amount paid in job seeker’s allowance and providing extra access to the mortgage support scheme would cost £400m.