Thousands miss out on benefits due to computer glitch
By politics.co.uk staff
The government has inadvertently let slip that it has been underpaying support for mortgage interest (SMI) payments to the unemployed.
Households could have been underpaid by as much as £500 in support each month, due to a computer glitch.
SMI is normally calculated by tracking the Bank of England base rate plus 1.58 per cent. But with the recent dramatic drops there have been concerns the payments would no longer be sufficient.
In November the Department for Work and Pensions (DWP) said the interest rate would be standardised to 6.08 per cent in order to protect families.
However, the DWP disclosed that some people will now be receiving less due to a computer glitch.
Theresa May, shadow secretary for work and pensions, said: “It is completely outrageous that vulnerable households could be falling behind with their mortgages as a result of government incompetence.
“The government claimed it was offering more help to people suffering as a result of the recession, instead it has let down those who need its help the most.
“James Purnell [work and pensions secretary] needs to explain immediately how this happened, how long he has known about this problem, how many people are affected, and when the situation will be put right.”
A DWP spokesman has denied that people have been short-changed and the unemployed will see no loss in ‘real money’ as the payments are made directly to the mortgage lender.
The DWP said they will continue to pay the SMI at the current rate for a further five weeks but will increase the payments to 8.1 per cent after to offset the loss in money.
The DWP has not revealed how many people have been underpaid or by how much but last year there were around 83,300 people on income support receiving support for mortgage interest payments and around 9,100 on job seekers allowance receiving support for mortgage interest.
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