Simon Read: Who benefits from a cut that causes hardship?

Helen Wade got a shock on Thursday. The 48-year-old MS sufferer from Norwich got a letter informing her that her benefits were being slashed from next week. Specifically the Government was cutting the amount of money it contributed towards her mortgage payments.

"They just gave me four days' notice that the payment is being cut in half," says the former nurse, who had to give up working when her illness forced her into a wheelchair in 2004. "I have to fight for everything and this just feels like a kick in the teeth."

Helen is just one of 225,000 people affected by the change in Support for Mortgage Interest. The Department for Work and Pensions has cut the rate at which it pays the benefit from 6.08 per cent to just 3.63 per cent.

For Helen, it means the amount of help she gets with her monthly mortgage payment will fall by around £100, cash she simply hasn't got. "I live on the Government's minimum and just about get by," she says. "I can't sell up and move to a cheaper place as I won't get another mortgage. I've been on the local council's urgent list for more than a year, but they can't find a property with wheelchair access."

The future looks a little bleaker for Helen and about 115,000 other people. The DWP says the rate cut will mean about half of those benefiting will be left with less than their mortgage interest costs.

The move may sound like madness, but there is method behind it. The benefit was raised during the recession by the last Labour Government to help struggling families. But the net effect was that many ended up with the handout paying off some of the capital of their mortgage as well as the interest.

It's to stop that that the DWP has acted now, three months ahead of the January 2011 planned cutback in the benefit. The Government talks about fairness and is working on welfare reform to simplify the benefits system. But when such simplification penalises vulnerable struggling folk, you have to question the sense.

Bryan Clover, director of casework at the poverty charity Elizabeth Finn Care, points out: "Homeowners on low incomes, who are already faced with tough financial decisions on a daily basis will face further hardship with the new regulations for Support for Mortgage Interest. Many people will struggle to find the extra money to fund the shortfall in mortgage interest payments, with charities having to pick up the tab.

"The changes to regulations will impact on those people trapped with longer periods of fixed-rate mortgages at high interest levels, who are likely to be building up arrears. This is likely to result in many people losing their homes," Mr Clover warns.

As I've always understood it, the point of benefits was to reduce hardship. The sudden cut in Support for Mortgage Interest looks likely to increase hardship for many folk. And with further cuts ahead promised by the Coalition, things are only going to get worse. I just hope that we aren't all left counting the cost.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

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