Welfare cuts may trigger homelessness

25 November 2008

Proposed legislation to reduce assistance to people unable to pay their mortgage will not lead to government savings in the long run and will damage our over-indebted society still further, say two independent legal rights organisations.

Under current legislation, a person receiving social welfare assistance may get help with the cost of mortgage interest repayments in the form of a Mortgage Interest Supplement. This scheme was created to support people in danger of homelessness, under very specific conditions.

However, the Social Welfare (Miscellaneous Provisions) Bill 2008 puts forward changes in the law that will give the HSE unfettered power to exclude people from this assistance above certain mortgage amounts and will restrict the length of time a person can claim it.

"While we should acknowledge the costs involved in this scheme, equally there is a need to remember why it was created in the first place. We have to protect people from being put on the streets where there are other options," according to Noeline Blackwell of FLAC. "The medium and long-term costs to society of increased homelessness and repossessions are much greater than those gained from such short-sighted law-making."

The proposed legal changes will exclude from MIS many people who took out a mortgage in the last ten years, when house prices and thus mortgage payments were spiralling upwards. Given the current downturn, FLAC argues that this is not the time to remove this important support.

According to Colin Daly of Northside Community Law Centre, "the current proposals to limit income support to families with mortgages result in greater costs to the taxpayer over the next two years.

"If people lose their homes they will be looking for assistance in the form of Rent Supplement or access to homeless support services. The Minister's proposals are illogical and are an attempt to destroy the basic social welfare safety net that protects people from destitution."

Worryingly, while there has been a huge increase in take-up of the scheme - up 70% in the past year according to Irish Examiner figures today - anecdotal evidence shows that persons who have borrowed from sub-prime lenders in particular have been refused the payment in recent months on the basis that the loan was not affordable in the first place.

FLAC and NCLC have made a joint submission to the Select Committee on Social and Family Affairs who are considering the Social Welfare Bill this Wednesday. The submission recommends changes to the Bill that will protect people's basic rights under the social welfare system and assist in medium to long-term cost saving. The Bill goes before the Select Committee on Social and Family Affairs tomorrow (26 November 2008).