Trevor Deaves was sacked as head of the MI insurance group two years ago, shortly after paying pounds 925,000 for Tree Top Farm, set in 60 acres at Haslemere, Surrey. His mortgage is for pounds 832,500.
Mr Deaves, 39, refused yesterday to give details of his relationship with the DSS. However, he defended the right of high earners to receive help because of the tax and national insurance contributions they made when employed.
'It depends whether people believe in the principle of the welfare state and the safety net. If one loses one's job, one is entitled to claim. How much depends on the rules. The biggest claimants are probably, at one point, the biggest contributors. I have been a high earner for a long time. Look how much tax and national insurance I was paying on a pounds 400,000 salary. There are those who say there should be an upper limit. I don't know what that should be, but it is something for the politicians to look at. They have decided there should not be a limit. I am not a wealthy person and I am not fiddling the system.'
Mr Deaves, whose personal worth was once estimated at pounds 15m, was a sponsor of theatre and opera in the 1980s. He is now unemployed. He said he was advised to apply for income support last summer by local DSS officers, who told him he was not the only one to have enjoyed a champagne lifestyle before falling on hard times. He had kept up the mortgage payment for more than two years before making a claim.
He faced an expensive divorce settlement and is now living with his second wife in a house in the grounds of Tree Top Farm, which he is trying to sell.
During the 1980s Mr Deaves owned two other houses in London and 20 cars, including Rolls-Royces, Ferraris and a Maserati. He said he was living on a bank overdraft after signing on for unemployment benefit. The most recent case involving high mortgage payments involved pounds 1,784 a week being paid to Peter Julien, an unemployed interior designer, in Hampstead, north London.
The department said yesterday mortgage interest was paid to 'help people keep a roof over their head when they have fallen on hard times'. It said there was no upper limit on payments.
'There are rules to ensure that people with very large mortgages receive full interest only if they could afford the mortgage when they took it on,' it added. Interest could be paid for up to a year if the recipient was trying to sell the house.