Thousands of the country's poorest families could see their income reduce if energy companies want to take more cash from their benefits, the Department of Work and Pensions (DWP) has confirmed.
Households who pay for their energy by Fuel Direct - where the payment is taken directly out of their benefits before they receive them - may find themselves paying more than they are used to after the DWP lifted a tempory freeze on automatic requests for more money from suppliers. The DWP stopped the practice in March 2022, ahead of the Energy Price Cap rise in October, and announced at the time that the freeze to new and increased payments would last until April 2023.
The moratorium meant that energy suppliers were not permitted to apply for an increased Fuel Direct payment, even if a bill has gone up, meaning that benefit payments remained stable even if energy bills went up, although families still had to pay any extra charged by the energy company.
Read more: Month-by-month guide to when you can expect all of this year's cost of living payments
The change allows UK energy suppliers to start requesting new deductions from claimants and increasing the deductions they are already paying again, however the DWP says that the energy supplier must have the claimant's consent before a new deduction or an increase is made. However, if an energy supplier has tried to contact a claimant who has an existing payment arrangement in place multiple times without success, they can then notify the DWP.
Find out more about Fuel Direct
The Fuel Direct scheme is there to help vulnerable customers who find themselves in debt and have no other way of paying what they owe. Under the scheme, the DWP agrees an amount to be taken from a person's benefits payments every month to cover the debt and ongoing costs, and pays the money directly to the claimant's energy supplier.
Around 100,000 people pay energy costs directly from their benefit. Fuel Direct can also be known as "Third Party Deductions" as other debts can be paid off using this method.
To qualify for Fuel Direct, or Third Party Deductions, you must receive one of the following benefits:
- Income-based Jobseeker’s Allowance
- Income Support
- Income-related Employment and Support Allowance
- Pension Credit
- Universal Credit
To set up payments through the Fuel Direct scheme, you will need to contact your energy supplier as your supplier needs your official consent to do it. Your consent doesn't need to be in writing and can be given over the phone. You can change how much you pay and stop deductions to your benefits at any time by contacting your supplier.
If you get Universal Credit, the deductions will stop once you’ve repaid your debt.
Money can be taken from the benefit payment to pay off up to three debts at once and the amount that is taken off varies depending on the debt. Other debts or payments can be court fines, rent arrears, or Council Tax.
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