Thousands of the country's poorest families will not see their benefits reduce if energy companies want to take more cash, the Department of Work and Pensions (DWP) has confirmed.
Households who pay for their energy directly out of their benefits won’t have energy increases automatically deducted from their payments for the next year.
The DWP has said that the temporarily freeze means that will not consider automatic requests to increase payments from energy suppliers, even if a bill has gone up. The change means even if your energy bill increases, your benefit payments will remain stable and at the same rate, although you will still have to pay any extra that you're being charged by your energy company.
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This should be done either by paying any extra directly to your energy company, or by asking the DWP to increase your payment from your benefit money.
The idea of freezing automatic increases is that it gives struggling families time to speak to their energy provider to discuss alternative payment options. Only the benefit claimants themselves will be able to increase the amount that comes straight out of their benefit money.
Around 100,000 people who claim Universal Credit, Jobseeker’s Allowance, Employment Support Allowance, Income Support and Pension Credit claimants pay energy costs directly from their benefit. in a scheme called Fuel Direct, or third party deductions.
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 direct, and will now have to make arrangements with their energy supplier to meet the rising costs due to the increased energy price cap.
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David Rutley, Minister for Welfare Delivery, said: “This is another practical change which adds to support through our £1bn Household Support Fund, cut to Fuel Duty and the Energy Bills Rebate which all help people meet their daily costs. Budgeting requirements differ from household to household and this change allows people to maximise their benefit payment to suit their needs while also capitalising on other support available.”
The DWP will also not process new energy supplier requests for ongoing payments where an arrangement is not already in place. But it will consider making deductions for arrears which are lower, fixed amounts that prevent alternative enforcement action being sought.
