Research and analysis

Background: Conversion of SMI from a benefit into a loan: claimant communication and loan take up

Updated 13 April 2021

1. Headline findings

Here are the latest main headlines about the conversion of SMI to a loan.

At Wednesday 5 August 2020:

• contact was attempted with 103,000 claimants eligible for an SMI loan of whom 102,000 were successfully contacted

Of the claimants contacted:

• 22,000 (21%) accepted or intended to accept the loan
• 79,000 (77%) declined
• 2,000 (2%) were undecided

These figures do not cover the majority of claimants on Universal Credit who become eligible for SMI, since they are offered SMI as part of their Universal Credit claim.

2. Policy background

Support for Mortgage Interest (SMI) helps protect claimants on qualifying benefits with mortgages from repossession when out of work, retired or sick by contributing towards the interest payments on the claimant’s mortgage. Claimants are usually eligible for SMI if they have a mortgage and get certain benefits. SMI stopped being a benefit and became an interest bearing loan on 6 April 2018.

The Conversion of SMI from a benefit into a loan: claimant communication and loan take up release contains management information on communications with claimants on the changes to SMI and claimants’ decisions on taking up the loan.

3. What you need to know

Since July 2017, the Department for Work and Pensions (DWP) has put arrangements in place to contact claimants with information about changes to SMI in advance of the introduction of the loan scheme.

Claimants are given information about how the SMI loan will work and organisations that can offer further information. This is followed up by a telephone call to explain the changes and answer any questions. A leaflet containing frequently asked questions is issued to support the discussion. Public service provider Serco is contracted by DWP to undertake the discussions with claimants.

An SMI loan has been offered to all claimants who qualified for SMI as a benefit and entitlement to the loan continues to be calculated in the same way as for the benefit. However, these figures published do not cover the majority of claimants on Universal Credit who become eligible for SMI. Claimants that have declined the SMI loan may change their mind and can have SMI payments backdated to 6 April 2018, when the loan scheme was introduced.

Claimants are usually eligible for SMI if they have a mortgage and get one of the following:

• Income Support
• income-based Jobseeker’s Allowance
• income-related Employment and Support Allowance
• Universal Credit (working age claimants must serve a 9-month qualifying period)
• Pension Credit

4. Purpose of the release

The release presents data on communications with claimants on changes to SMI and claimants’ decisions on taking up a loan. It includes:

• the number of claimants DWP has attempted to contact
• the number and proportion of claimants that have accepted, declined or are undecided on taking up an SMI loan

5. About the data

The figures presented in the release are based on DWP management information and data supplied by Serco. Serco has been contracted by DWP to undertake the majority of customer communications in relation to the transition to the SMI loan scheme. Data is reported without detailed verification. These figures do not cover the majority of claimants on Universal Credit who become eligible for SMI, since they are offered SMI as part of their Universal Credit claim.

Since the publication of figures in March 2018, an issue has been corrected on the management information system used to produce the figures. The issue resulted in some claimants being moved to a new loans system ahead of the introduction of the SMI loan scheme on 6 April and meant they were missing from the earlier figures published in March. The figures for March are therefore not comparable with subsequent months.

6. Statement of compliance with the Code of Practice for Statistics

The Code of Practice for Statistics (the Code) is built around 3 main concepts, or pillars:

• trustworthiness – this is about having confidence in the people and organisations that publish statistics
• quality – this is about using data and methods that produce assured statistics
• value – this is about publishing statistics that support society’s needs for information

The following explains how we have applied the pillars of the Code in a proportionate way.

6.1 Trustworthiness

The figures are based on DWP management information and data supplied by Serco. DWP analysts have:

• scrutinised the figures with DWP’s SMI project management information team
• provided challenge to ensure the figures are an accurate representation of data collected on communication undertaken with claimants and SMI loan take up

6.2 Quality

The data presented is derived from DWP’s Support for Mortgage Interest Tracking System (SMITS). SMITS was developed to initiate claimant contact and hold records of claimant discussions to support the engagement of claimants eligible for an SMI loan prior to and following the switch to the SMI loan scheme. SMITS was developed by DWP’s digital team and approved by the Design Authority in July 2017. The SMI project management information team maintains regular contact with Serco to ensure the quality of the information supplied.

6.3 Value

This data provides an overview of contact with claimants on the conversion of SMI into a loan and loan take up. Making this information accessible provides ministers and stakeholders with an overview of claimant awareness of the changes to SMI and claimants taking up a loan, while helping to reduce the administrative burden of answering Parliamentary Questions, Freedom of Information requests and ad hoc queries about changes to SMI.

7. More information about SMI

For more information about SMI, see:

• SMI caseload and expenditure

• House of Commons briefing paper on SMI

8. Contact information

For queries about the content of this document, email graham.walmsley1@dwp.gov.uk.

For press enquiries, contact DWP Press Office on: 0203 267 5144.