The Department for Work and Pensions (DWP) has made changes to its Fuel Direct payment scheme this month.
The Fuel Direct scheme helps benefit claimants pay off their energy debts by taking off a chunk of their benefit payments to repay the money they owed.
The new changes allow UK energy suppliers to request new deductions from claimants and increase the deductions they are already paying.
It comes after the DWP stopped the practice ahead of the Energy Price Cap rise in October, with the freeze to new and increased payments set to last until April 2023.
However, the DWP says that before a new deduction or an increase is made, the energy supplier must have the claimant's consent first.
Energy companies will also need someone's consent before the request can be sent to the DWP.
However, in circumstances where an energy supplier has tried to contact a claimant, who has an existing payment arrangement, multiple times but to no avail, they can then notify DWP.
If you claim benefits and are struggling to pay off an energy debt, then you can have a fixed amount deducted directly from your benefits payments to go towards repaying it.
Fuel Direct can also be known as "Third Party Deductions" as other debts can be paid off using this method.
Other debts or payments can be court fines, rent arrears, or Council Tax.
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
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.
If you receive Universal Credit, 5% will be deducted from your benefit payment for each debt you owe which is more than if you claim another benefit.
For rent arrears, between 10 and 20% will be deducted and if you receive other benefits £3.85 a week will be deducted for each debt
So, for example, if your outstanding balance is £50, and you don't claim Universal Credit, you would pay £3.70 a week towards the debt and if you also use £5 of electricity every week, the total deductions would be £8.70 a week.
If you want to pay more than the fixed rate towards your debts then you can arrange this with the organisation you owe money to.
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.
