No work, No Money, No Security - What Would Life Be Like If I Lost My Job?

For Jon Robins it's a hypothetical question, but what he learns about that possible future reveals the devastating situation that an increasing number of credit crunch victims and their families are facing.









The small waiting room at Brighton and Hove Citizens Advice bureau, based in Hove town hall, is heaving. The network of bureaux is at the sharp end of the credit crunch and reports a 52 per cent rise in the number of inquiries relating to redundancy in the past six months.

Cash is here to examine the catastrophic impact that job loss can have on a family's financial wellbeing. What happens when a breadwinner suddenly loses his or her job and there are young children to clothe and feed, not to mention the mortgage and bills to pay?

'It isn't just the fact that people lose their job, but that their whole lives can unravel. Everything can fall apart - that's what is so terrible,' says Sheelagh Reid, a 61-year-old adviser who has volunteered at Brighton Citizens Advice for 15 years. The experience can be as upsetting for advisers as it is devastating for clients, she adds. 'I enjoy my work but I wouldn't want to do more than one day a week. It's draining.'

She is considering the financial fate of a fairly typical household that has been abruptly deprived of a £40,000 salary. For the purpose of this exercise, I am playing the part of a breadwinner who's been comfortable in his well-remunerated job for 14 years prior to falling victim to a tanking economy. My (fictional) family has, by today's standards, an unremarkable level of indebtedness: £80,000 to pay on the mortgage and £4,000 outstanding on the credit cards.

Even so, the prognosis is grim. A person 'like the hypothetical you', as Reid puts it, 'is unlikely to have much put by the way of savings. People just don't save any more ... so, sadly, redundancy can destroy marriages and the whole fabric of lives can fall apart.'

It is a view shared by Beccy Boden Wilks from National Debtline, who advises me over the phone before I set off. She reckons the average Briton's savings would only last 52 days if they were to lose their job. According to the Yorkshire building society, average monthly outgoings are £1,445 and the average accessible savings are £2,474. 'Losing a job leaves us incredibly exposed,' she says. 'Few of us would be immune.'

These are questions I asked Citizens Advice:
How much would my employer have to pay if he sacks me after 14 years' faithful service?

Reid wants to know if I have contractual rights exceeding the bare legal requirements. No, I don't.

People are often shocked at how little statutory redundancy pay is, she says. 'You don't get anything until you have been working there for two years and there is a maximum amount you can be paid' - one week for each year's service up to the age of 41 and then one and a half weeks per year, capped at £330 a week.

For the hypothetical me, with my 14 years' service, that adds up to £4,620. If my redundancy pay was meant to be a cushion to soften the blow, then, as Emily Ballantyne, the specialist advice unit manager at Brighton CAB, says it's rather threadbare.
How much will we have to live on?

The answer is £140.38 a week. OK, that's an estimate, but it's likely to be as little as that. According to National Debtline, we would get Jobseeker's Allowance (£94.95 for a couple), £14.08 in tax credits (because I have been working and just lost my job, they are lower than they would have been if I hadn't been working for the past two years), and £31.35 child benefit. 'From that sum you'd have to pay your mortgage, utilities, telephone, car, insurance - everything,' says Boden Wilks. 'The only thing you aren't going to pay out for is council tax' - apparently, I'm entitled to council tax benefit.
How am I going to be able to pay our mortgage?

I'm probably not. It's easy to see that without payment protection insurance (which neither I nor my fictional self have), I'm not going to be able to cover my monthly mortgage payments of £550. 'You need to contact your lender if you have no insurance. Say that you are on Jobseeker's Allowance, you can't afford your mortgage but you're looking for work and hoping to get work,' advises Boden Wilks.

From 5 January, the government will step in to help homeowners with their mortgage interest after 13 weeks of unemployment. The maximum size of mortgage qualifying for help will also rise, from £100,000 to £200,000. But although my £80,000 mortgage is the right size to qualify for help now, because the hypothetical me was made redundant before 5 January, I won't qualify for help for 39 weeks.

So what do the mortgage companies have to say? Lenders can begin court action when homeowners are two months in arrears (though the pre-Budget report wants them to wait three months at least). The sooner I contact my lender, the more options I have, Sarah Robson from the Council of Mortgage Lenders tells me. 'There's no one-size-fits-all approach. The lender will assess the individual situation the borrower is in and try to find a reasonable repayment option.'

This could mean moving on to an interest-only loan, taking a payment holiday or extending the length of the mortgage. As Ballantyne is quick to point out, an £80,000 interest-only mortgage with a 5 per cent interest rate would still cost me £333 a month. The best scenario is a payment holiday, she adds.

Unfortunately, my notional mortgage company (the Halifax) tells me that it doesn't offer them in the event of redundancy. A spokesman says they might agree 'a reduced payment or a nil payment for a period of time' (apparently not the same as a payment holiday). I have not missed a mortgage payment for 14 years; could I have a nil-payment period? That will depend on my circumstances, he tells me.
What about my £4,000 credit card bill?

Sort out your priority from your non-priority debts, advises Ballantyne - and remember that 'credit cards aren't priority debts. Most people don't understand that. Priority debts are your rent or mortgage, fuel bills and council tax. Non-priorities are unsecured loans - credit cards, store cards, and catalogues.'

Creditors with non-priority debts will scream loudest, ring you up at home and deluge you with red-letter demands, says Boden Wilks. The reason for that is that their money isn't secured against anything you own, so they're worried they won't get it back.

She recommends I start by filling out National Debtline's budget sheet which enables me to calculate my available income after we've paid mortgage, council tax, gas and electricity. If there's any money left for my creditors, we can work out what we can afford to pay and contact creditors making 'pro rata' offers.

I ring up Barclaycard: 'Will you cut me some slack on my £4,000 until I get back on my feet?' Not exactly; but, as the spokesman puts it, they can 'guarantee that we'll be sympathetic'. He goes on to explain they might use a number of options, 'such as accepting reduced repayments for a period of time or looking to agree a repayment plan'.
What about fuel bills?

Payments can be recalculated and direct debits reset on a lower tariff, says Patricia Ockenden of new watchdog Consumer Focus. 'It all depends on your level of consumption, the property and the amount of difficulty you're in. It's always possible for consumers to renegotiate their tariff and look at other ways of paying for their energy.' She warns me to stay clear of prepayment meters, which suppliers might suggest as a means of economising: 'You have to be very cautious. You could end up paying a tariff far greater than you would be if you paid by a different means and moving back to the standard meter can be costly as well.' Ballantyne agrees - she calls them 'debt recovery machines'. Consumer Focus has good advice if you are having problems paying your bills (consumerfocus.org).

I ask EDF what it can do for me. For its 'most in need' customers, it offers a long-term social tariff. This would include someone on Jobseeker's Allowance if they spend more than 10 per cent of their income on their energy bills (more than likely if I'm on benefits). 'Our customers - including those on prepayment meters - can access our social tariff,' a spokesman says. He reckons that EDF's 'Energy Assist' represents an annual saving on an average bill of up to £184.90, assuming a dual-fuel tariff.
How am I going to feed my family?

Boden Wilks says the guideline for housekeeping for two adults and two children is around £500 a month, a figure agreed between the debt advice sector and credit industry: 'You're not going to be spending that much, though,' she warns. 'Your monthly income on Jobseeker's is only £608.31. You're going to shop as cheaply as possible.'
What you need to know

Is the rule 'last in, first out' still used?
Some businesses may still operate on this basis, but they have to be careful. If all the people made redundant are young, the employees could claim against their employer on the grounds of age discrimination.

How quickly can I sign on?
It depends on your particular circumstances and how your final payoff is regarded by your Jobcentre Plus. The best thing is to ring up (0800 0556688) and provide your details immediately. You will then be given an appointment to see an adviser who can determine when, and if, you qualify.

How much money will I get?
The standard Jobseeker's Allowance (JSA) is £47.95 a week for people under the age of 25, and £60.50 a week for over-25s, and lone parents aged 18 or more. You may also qualify for other benefits, so check, either with your local Jobcentre Plus or Citizens Advice. If you are unable to work, you may be able to claim Income Support (the same amount of money) instead. You can claim by calling 0800 0556688 or online at www.jobcentreplus.gov.uk. In Northern Ireland, you claim JSA at a Jobs and Benefits Office or Social Security Office.

Will the money be cut off if I refuse to take a job?
It could be. To claim JSA you must be capable of working, below state pension age, available for work and actively seeking it. If you fail to take up a job offer, or follow up chances of work, you may be penalised. Your JSA could be reduced or stopped for between one and 26 weeks. You can also be penalised because of the circumstances in which you left your last job, for example, if you left voluntarily or were dismissed because of misconduct.

Will I get help with my mortgage?
If you are eligible for JSA or income support, you can claim help with the monthly interest, but not repayment of the loan itself.

When you get help depends on its size (help is only extended to loans up to £100,000) and when you took out your mortgage: if it was before 2 October 1995, you will get nothing for eight weeks, then 50 per cent for the next 18, and the full amount after 26; if you took out your loan on or after that date, you will have to wait for 39 weeks. From 5 January, the waiting period will be reduced to 13 weeks, and the maximum limit raised to £200,000.

Should I use my redundancy payment to reduce or pay off my mortgage?
It depends how much money you get. If you receive a huge amount, then why not pay off at least part of your mortgage? But if you get tens of thousands of pounds or less, you should probably hold onto a large part of the cash to meet bills and in case of an emergency.

I can't afford to pay all my bills - which ones should I concentrate on?
Mortgage or rent, council tax and utilities, and anything affected by a judgement order or bailiff action. If you fail to pay these, you could end up homeless.

I can't manage my debts now I've lost my salary - should I take out one of those plans advertised on TV?
Definitely not. Although they purport to cut your debts, they will charge a large amount to set up the plan. Instead, seek free advice from one of the debt-counselling charities, such as Citizens Advice (www.citizensadvice.org.uk), National Debtline (0808 808 4000), Capitalise (in London - 020 7392 2953) or Consumer Credit Counselling Service (0800 138 1111).

The Travellers Of Dale Farm Face Judgment Day

There is anger and resentment on both sides as the bailiffs prepare to make their move at Europe’s largest gipsy site.

Down a narrow lane and beyond the pile of old tyres and barbed-wire-wrapped scaffolding that marks the entrance to Dale Farm, a knot of men in T-shirts are standing shaking their heads and gesticulating.

Close by, a dozen or so women, hair raked back in ponytails, toddlers at their brightly painted toes, are clustered around a silver Mondeo. All are listening intently to a local radio station that is also blaring out of almost every caravan, car and chalet on each pot-holed track of this ramshackle site, the largest traveller site in Europe, near the village of Crays Hill in Essex.

“I’m very angry,” one woman shouts, face screwed up and emotions unchecked. “Why is that lady on the radio putting out all that c--p about us? I have three children. Where am I going to go?”

The immediate source of provocation is Radio Essex, which is running a phone-in on the 10-year battle between Basildon council and the travellers who have been living here illegally since 2001.

Understandably, the travellers don’t take too kindly to the locals ringing in to say they should “go back to Ireland”, and calling them, “a bunch of people who are trying to avoid paying tax and ignoring the rules of the land’’. But the real tension is caused by the knowledge that, for many of those who have made their homes here, time is running out. Tomorrow, a 28-day notice issued by Basildon council requiring them to vacate the site will expire. Judges at the High Court will hear a plea for a last-minute injunction against eviction. If this fails – it follows a tortuous process involving a tumult of appeals and judicial reviews, pronouncements from Amnesty International and the UN, and a BBC documentary (entitled, inevitably, My Big Fat Gypsy Eviction) – the bailiffs will finally be free to move in to restore this land to green belt.

What will happen when they do?

The answer is keenly anticipated by all those who have ever had an unwanted, and illegal, gipsy or traveller camp on their doorstep, as well as anyone who lives near a temptingly empty field. Travellers have a track record of invading and colonising such spots – often over public holidays when council offices are closed – and of bringing in mechanical diggers and laying concrete bases for their mobile homes in a matter of hours and then exploiting the impossible slowness of bureaucratic procedures to stay.

The facts are these. There has been an authorised traveller site, with permission for 34 pitches, here since the mid-Nineties. Ten years ago, a six-acre plot – Dale Farm – next to this site was bought by two English gipsies who subdivided it into plots and sold them on to other travellers. Today Dale Farm resembles a small derelict estate, with tarmac and gravel tracks, brick walls, railings topped with barbed wire, caravans, chalets and gateposts sporting elaborate finials. Around 240 people live here but Dale Farm does not have, and has never had, planning permission for any of its 51 pitches.

The travellers claim that, although the land is green belt, it was never a prized beauty spot. “It wasn’t all babbling brooks and big oak trees when we moved here,” says Bridget McCarthy. “It was a broken down scrapyard.” (The council confirms that a corner of the land had been used, without permission, as a scrapyard since the Sixties).

“How long did it take us to clear it?” continues Bridget. “Three weeks,” shouts someone else in the group jostling around me.

It’s certainly true that the camp is tucked away, out of sight of most of its neighbours. Of those who live on Oak Road, which backs on to it, only one has made vocal complaints. Three other families I speak to shrug and say that they don’t notice it’s there, but two others shake their heads and refuse to comment. Their reticence may have something to do with the fact that the one local who has made a very public fuss has received death threats. “If we go, he goes,” some travellers told film-maker Richard Parry.

But that’s not to say the presence of Dale Farm hasn’t made an impact. The local primary, Crays Hill, is now almost exclusively a travellers’ school; 107 of the 110 registered pupils are from the travelling community. They don’t always turn up for class – the Ofsted report cites “significantly below average attendance levels” – and tend to lag behind their peers academically. Local parents have felt pressured into bussing their children out of the area to other schools.

The proximity of Dale Farm has also wiped tens of thousands of pounds off property prices. On a nearby street, where houses are worth £500,000 to £600,000, one resident estimates that the value of his house has dropped by “around £100,000’’.

He says: ''My wife and I would have moved by now otherwise, but we can’t, unless we take a hit and move into somewhere smaller.” Another neighbour said: “The council reclassified all our council tax bands because of it; mine went down from a G to an F.” But property prices and the eyesore on their doorstep isn’t what really antagonises the locals. What most upsets them is a deep sense of injustice.

“It’s people who flout the law of the land when it should apply equally to everyone,” says Terry, who lives nearby with his wife Pam. His words echo those of David Cameron who spoke of, “the sense of unfairness that one law applies to everybody else and, on too many occasions, another law applies to travellers.” Others tell me that they feel that letting those on Dale Farm get away with it, will, “open the floodgates to who knows what’’.

Overturning what has happened here is proving expensive: the council have had to set aside £8 million to clear the site, but there is a strong feeling this is necessary to ensure that the law is upheld both now and in the future.

Basildon council is keen to stress that, “This is a planning row.” That’s not quite how they see things over on Dale Farm. One woman tells me she has been so stressed that she smashed all her windows.

What, of your own home? “Yes, every single one of them,” says Margaret Flynn, a 29-year-old mother of three who lives in an immaculate caravan. She predicts that any clearance will bring a death: “Every time talk of an eviction starts, someone dies.”

Candy Sheridan, a member of the Gipsy Council and a Liberal Democrat councillor in north Norfolk where she now lives, is a more reasoned voice. “This is political,” she insists, “Councillors always say no to us [when we ask for planning permission], it doesn’t matter what it is, or what party they’re from. They always vote against us because they want to be re-elected.”

Candy was born on a site in Bristol and says she has lived “up and down the M4 and all over England’’. Her parents were Irish travellers who came to London in 1958. ''The difference between them and me is that I went to school. And back then they made us do speech therapy, so I have no trace of my Irish accent,” she smiles wryly, and adds that it means she makes more headway on the phone when trying to sort out a planning application or a viewing of some land on someone else’s behalf.

She feels travellers are misunderstood. “It’s not a level playing field for us,” she says. She talks about the strong sense of community that is under threat at Dale Farm. Travellers look after each other, she says. Levels of adult literacy are low, so a few must read and write for the rest. Inter-marriage means the camp is, in every sense, a huge extended family – there are a lot of McCarthys and Sheridans – so children, the elderly and the sick are well cared for. This might explain why there is so much nervousness about being split up and sent to live in “bricks-and-mortar” council flats. Ironically, there are some elements of Mr Cameron’s Big Society to be seen in action here.

The trouble is that there isn’t the same consideration for the rights and wishes of those who aren’t travellers. A wily few of the travelling community have become adept at exploiting legislation that’s intended to protect those who’ve been hard done by, and where they lead the others follow. What will happen next week? There is fighting talk from some travellers who are threatening to fill ditches with petrol.

On Friday evening I took a call from a man who said he was phoning on behalf of Candy Sheridan. He told me the travellers had examined the emergency contingency plans put in place by surrounding counties to deal with any possible fallout from the Dale Farm clearance and that Suffolk seemed to have one of the best deals.

“If everyone at Dale Farm got in their caravans and drove towards Suffolk,” he told me, “I think they would find a field waiting for them.” Suffolk, you have been warned.

David Cameron Took Out Maximum Taxpayer-Funded Mortgage - Then Paid Off Own £75k Loan Four Months Later

David Cameron was dragged personally into the expenses row last night after it was revealed that he paid off a loan on his London home shortly after taking out a £350,000 taxpayer-funded mortgage on his constituency house.

The disclosure followed a powerful call by the Tory leader yesterday for the ‘full force of the law’ to be deployed against MPs who have abused allowances.

Following a Mail on Sunday investigation Mr Cameron could now face searching questions about his own expense claims.
















He took out the £350,000 mortgage – close to the maximum amount that can be claimed for – to buy a large house in Oxfordshire in August 2001, two months after winning his Witney seat in the General Election. By nominating it as his second home, he was able to claim for the mortgage interest payments under the now-infamous Commons’ Additional Costs Allowance (ACA).

Just four months after securing the £350,000 mortgage, Mr Cameron paid off the £75,000 loan on his London home, taken out only six years earlier.

There is no suggestion that he broke any rules. But mortgage experts say that if he had kept the loan on his London home and borrowed £75,000 less on the Oxfordshire property, taxpayers could have been saved more than £22,000 between 2002 and 2007

The revelations came as Gordon Brown was warned that he faces a new threat to his leadership if Labour is beaten by the UK Independence Party in Thursday’s European elections.

And in today’s Mail on Sunday, Liberal Democrat Treasury spokesman Vince Cable calls for ‘immoral’ Chancellor Alistair Darling to resign for ‘being caught with his fingers in the till’ by abusing his expenses.

Last night, Mr Cameron insisted that his mortgage claims had been ‘perfectly reasonable’ and denied that reducing his Oxfordshire loan would have helped the taxpayer.

A statement said: ‘David Cameron paid off his London mortgage with his own money which came from the sale of shares and money built up while working at Carlton TV. He bought a home in his constituency and claimed for mortgage interest payments, which is perfectly reasonable and the intended use of the second-home allowance.

He later paid down a part of this mortgage and claimed for some basic utility bills.

‘He made it very clear several weeks ago that he would not claim for a second home if he became Prime Minister and lived in No10.
































‘We are pleased that Gordon Brown and other members of the Cabinet have now adopted this policy and will no longer be able to claim for their second homes while living in grace-and-favour apartments.’

A later statement said: ‘If he had paid £75,000 toward Oxfordshire it would not have been cheaper for the taxpayer, as that mortgage is far higher than the amount he was able to claim for – particularly in 2001, when the amount you were able to claim for was much lower.’

Ten days ago, at a meeting with his Witney constituents to answer their questions on expenses, Mr Cameron candidly admitted claiming ‘close to the maximum’.

But he failed to mention that he had paid off his London loan shortly after he had secured it.

‘From 2001 to 2007, the only thing I really claimed for in respect of my second home was the interest on a mortgage – not the repayments, but the interest,’ he told the meeting.

‘It was a very large mortgage. It was £350,000 worth of mortgage. It was about £1,700 a month that I was claiming. That was quite close to the maximum you could claim at the time but I did not at that stage claim for anything else.

‘In 2007, I was able to pay down the mortgage a little bit [by £100,000], so it was a £250,000 mortgage, paying about £1,000 in mortgage interest every month, and so I also claimed for what I would call some pretty straightforward household bills – council tax, oil, gas and other utility type bills and insurance on the property.

‘I now claim less than the maximum. I don’t claim all of those utility bills. I claim a percentage of them, because I think that’s right and fair.’

Today’s disclosures may spark fresh criticism among some Conservatives about Mr Cameron’s forceful handling of the expenses row. They believe he is using the scandal as an excuse to clear out traditionalists who stand in the way of his modernising project, while largely protecting members of his inner circle.

Until now, Mr Cameron has made only one concession on his expenses – admitting that he was wrong to claim £680 to have wisteria removed from the chimney of his Oxfordshire home. He has repaid the money.

Now The Mail on Sunday can provide a more detailed account of his property dealings and how they relate to his expenses.

According to Land Registry documents, in 1995 Mr Cameron paid £215,000 for a house in Kensington, West London, which was part-funded with a £75,000 mortgage from Alliance & Leicester.

In August 2001, just a month after the second-home allowance went up by a staggering £5,840 per annum – from £13,628 to £19,468 – and two months after he entered the Commons, he paid £650,000 for the constituency house in Chipping Norton, Oxfordshire, and used the property as security for a £350,000 loan from HSBC.

Mr Cameron’s spokesman said last night that his offer on the house had been accepted three months earlier in May 2001.

Then, in December of that year, the Land Registry removed the Alliance & Leicester charge from its records for the Kensington home after the loan was ‘discharged by electronic means.’

Mr Cameron sold the Kensington property in 2005 for £1,150,000 – a profit of £935,000 – and bought another house nearby. His Oxfordshire home
is estimated to be worth just under £1million, a paper profit of more than £300,000.

His mortgage claim is potentially contentious because, coincidentally or not, experts say that it corresponds approximately to the upper limit of the ACA, which covers the costs of running an MP’s second home. In the financial year 2002-03, the first full year Mr Cameron claimed under the ACA, he received the maximum £19,722.

In 2003-04, he claimed £20,328, just £5 less than the maximum, and in 2004-05 he took the maximum of £20,902.

In total, between 2002 and 2007 he claimed £102,874. If he had paid off £75,000 of the Oxfordshire loan, rather than clearing the mortgage on his London home, the bill would have been about £22,500 lower.

In an interview yesterday, Mr Cameron said: ‘When I was first elected, I was renting rather than owning a home and I couldn’t find my rent bill. The fees office said, “Don’t worry, just claim for food.” I said, “I haven’t had any food,” and I went and found my rent bill.’

In the interview, Mr Cameron maintained his hardline stance by calling for any MPs who have used taxpayers’ money to pay for ‘phantom’ mortgages to be investigated by the police.

He said he was outraged by Sir Peter Viggers, who claimed for a floating duck house, Douglas Hogg, who claimed for his moat to be cleared, and Anthony Steen, who recouped the cost of tree surgery and guarding his shrubs against rabbits.

All three – regarded by modernising Tories as anti-reform ‘bed-blockers’ – have announced that they will stand down at the next Election.

Only one Cameron ally, his adviser Andrew MacKay, has been forced to leave the Commons following revelations that he and his MP wife Julie Kirkbride had claimed more than £250,000 in second-home allowances by ‘double dipping’.

On Friday, Mr Cameron said that Bill Cash, a veteran Eurosceptic regarded as a troublemaker by the party leadership, had ‘serious questions’ to answer about claiming for rent payments to his daughter.

One Tory MP last night attacked Mr Cameron’s alleged ‘double standards’ crackdown on some MPs and soft handling of others. ‘It’s like living through one of Stalin’s purges,’ said the MP.

‘It’s all deeply divisive. Some people are being asked simply to apologise while others are being told they have questions to answer. That’s code for: let’s get all the lunatics in a local constituency to stage a public execution.

‘Although MPs have simply been obeying the rules as they were, Cameron is saying that’s not enough. He seems to want to make burnt offerings of other MPs. Fine, but on that basis, why doesn’t he repay years of mortgage interest claims above £1,250 a month that he’s claimed for?’

In his defence, it could be argued that what Mr Cameron has done with Commons expenses pales into insignificance next to Tony Blair. He used the ACA to help pay for a £296,000 mortgage on a house that he had bought for £30,000 in 1983. He claimed just under a third of the interest back from the taxpayer.

He remortgaged the constituency home in Trimdon, County Durham, in 2003 – shortly before he paid £3.65 million for a London townhouse which became his post-Downing Street home.

Gordon Brown has also been at the centre of controversy after claiming for payments of £6,577 to his brother Andrew over a 26-month period for a cleaner shared by the pair.

Moreover, Mr Cameron has said that if he enters Downing Street, and has use of the official country residence of Chequers, he will give up his second-home allowance completely, a ban that would extend to other Ministers who are entitled to use grace-and-favour apartments.