Government to provide mortgage help to out of work homeowners

Extended help for homeowners struggling to pay mortgages after losing their jobs was introduced by the Government today in a bid to slow spiralling repossessions.

Thousands more will qualify for help with interest payments after the threshold for qualification was raised and the waiting period slashed by two thirds to 13 days.

Prime Minister Gordon Brown yesterday promised to do everything possible to prevent people losing their homes to the recession - as he conceded the downturn could last two years.

And he will begin a week of efforts to combat rising unemployment today when he addresses business leaders at a meeting of the Regional Economic Council he set up to help co-ordinate action.

The PM's claims yesterday that around 100,000 jobs would be created or protected by bringing forward £10 billion of public projects were welcomed by unions but dismissed as spin by the Tories.

No details were available from Downing Street last night of where the new posts would be created or what proportion of the total were existing jobs that it calculated might otherwise be lost.

The benefit changes, which come into force immediately, mean people with mortgages of up to £200,000 - double the previous cut off - will qualify for Support for Mortgage Interest (SMI).

At present 230,000 households receive cash via SMI, available to those who are already receiving a means tested benefit, getting an average £40 a week.

Work and Pensions Secretary James Purnell said: "We have changed the rules to make sure even more people can get help with their mortgage payments if they lose their job.

"We have brought in changes as quickly as possible so people don't have to wait too long for this support. Every time someone loses their job it is a personal tragedy. Jobcentre Plus is on hand to help people get back to work as quickly as possible.

"But we will do everything we can to give people the real help they need. That is why we will give financial help towards mortgage payments for someone while they are looking for a job."

A second scheme is being finalised to allow householders to defer a proportion of their mortgage interest payments for up to two years, covered by a Government guarantee. which Mr Brown told the Commons last month had the backing of eight of the UK's major lenders.

The Prime Minister, who will spend much of this week touring the country in advance of a Downing Street "jobs summit" next Monday, yesterday urged voters to be patient and give his economic policies time to work - insisting dismal mortgage, retail and jobless statistics did not indicate failure of the £37 billion bank bailout.

"I do not think you can judge the success of recapitalisation by what happened in one month; you have got to judge it as a necessary means by which, by saving the banks - and saving is the right word - we restore the ability to fund businesses and mortgages."

Asked if economists were right to predict the recession could last two years and be longer and deeper than the Government first thought, he said: "I think that does depend on the level of international cooperation.

"If we can persuade the rest of the world to do things together then the effect could be twice as big as each of us doing things individually."

Ministers are working on fresh measures aimed at getting banks lending again, but Mr Brown and Chancellor Alistair Darling both played down reports they could include a second taxpayer-funded recapitalisation.

The Regional Economic Council will bring together senior members of the government, including the PM, Chancellor and Business Secretary Peter Mandelson with business, union and regional representatives to discuss the situation across the country.

Lord Mandelson said: "It is vital that we listen to businesses and support them through these difficult times.

"Everyone across central and local government needs to work together to make sure we take effective action to support workers and businesses."

He urged more businesses to take advantage of a free "health check" of its preparedness to get through the recession - which has so far been taken up by 10,000.

Mr Purnell told BBC Radio 4's Today programme that the 100,000 jobs announced by the Prime Minister were "all new".

Help for homeowners during the recession was part of a "comprehensive raft of measures" being taken by the Government, he said.

"For example, if people have two earners in their household and one of them loses their job, we're working on a scheme with the banks where they would be able to reduce their mortgage payments for two years to get themselves through that difficult period," he said.

Mr Purnell said that during previous recessions, support was cut and people were left to "sink or swim".