Many low-income families better off on dole - Shortall

MANY LOW-income families are now better off on the dole because of the Government’s failure to reform the mortgage interest supplement scheme, the Labour Party claimed yesterday.

Róisín Shortall, Labour’s social and family affairs spokeswoman, said the supplement was far too restrictive and ruled out many low-income families.

She said reform of the supplement was mooted as part of the national recovery talks with social partners last week. However, since the talks broke down, the reform of the supplement has not been raised.

“In the details of the bank recapitalisation announced on Wednesday evening, troubled mortgage holders will be entitled to a little more leniency from their lender for a period of up to 12 months,” she said. “However, this does nothing to prevent vast amounts of mortgage debt building up in the meantime.”

Ms Shortall said an extra 146,000 people had signed on the Live Register in the past year, but only 8,500 people were in receipt of mortgage interest supplement.

“Many people don’t qualify because the rules haven’t been materially altered for over a decade,” she said.

“If someone becomes unemployed and his or her spouse works in excess of 30 hours per week, they are not entitled to the supplement, regardless of how low their income is.”

She highlighted one case that had been brought to her attention in recent days. A husband had became unemployed and found he was entitled to less than €40 per week in unemployment assistance payments. His wife worked full-time earning €2,250 gross per month. The couple had a monthly mortgage of €1,100.

“This couple can’t qualify for mortgage interest supplement because one of them works over 30 hours, yet their income after tax and mortgage repayments is several hundred euro less than if they were both claiming jobseeker payments,” Ms Shortall said.

“As a couple, they would be better off on the dole.”

She said it was “ incredible” that the Government was borrowing money to recapitalise banks, but had made no effort to reform what had become a very significant poverty trap for low income families.

“Seven billion euro support for the banks was announced this week, but there was not a cent extra to help struggling families with mortgage difficulties,” Ms Shortall said. “You simply can’t leave people destitute, homeless or trapped on welfare, but that is exactly where we are heading if this supplement is not reformed soon.”