HOUSEHOLDS on Universal Credit could see their payments cut due to a bill change from this month.
Thousands of customers who owe money to their energy supplier could now be affected by a change to the Fuel Direct scheme.
Energy suppliers can once again request to make deductions from a claimants benefits award to pay off any outstanding debts
If you’re in debt with your energy supplier and fail to reach an agreement to repay your arrears directly, claimants or their suppliers can ask for the debt to be paid directly out of their Universal Credit or benefits awards – this is known as Fuel Direct.
But in April 2022, temporary changes were introduced which meant only claimants would be able to make new requests for ongoing Fuel Direct payments or amend existing agreements, and not energy suppliers.
This change was introduced due to high energy prices which would have meant a substantial amount of a claimant’s benefit award could have been channelled to pay energy suppliers instead of hitting their bank account.
But since April 1, energy suppliers have been able to resume requesting new deductions as well as make changes to any existing Fuel Direct payments.
This means that thousands on Universal Credit and benefits could soon receive consent forms from their supplier wishing to create or up their award deductions – reducing the amount of cash sent to claimant’s bank accounts.
However, it’s important that claimants are aware of their rights.
Claimants are fully entitled to contact the Department for Work and Pensions (DWP) at any time to stop any Fuel Direct agreements.
What are Universal Credit and benefits deductions?
Money can be taken directly out of your benefits payments to pay off any debts.
This is sometimes called “third party deductions” or, for gas and electricity payments, Fuel Direct.
Deductions are applicable and can be requested with the following income-based benefits:
- Universal Credit
- income-based jobseeker’s allowance (JSA)
- income-related employment and support allowance (ESA)
- Income support
- Pension credit
How are deductions established?
Claimants as well as organisations you owe money to can ask for deductions to be made from your benefits to pay off the debt.
The office that pays your benefit will only agree to do this if the organisation has tried other ways of getting the money from you, according to the DWP.
If the request for deductions is successful, you’ll be told how much will be deducted by letter or in your Universal Credit journal.
How much money can be deducted from my award?
A fixed amount is deducted from your benefits until you’ve paid off the debt you owe.
Money can be deducted to pay off up to three debts at once.
If you receive Universal Credit, 5% will be deducted from your benefit payment for each debt you owe.
If you receive other benefits, £3.85 a week will be deducted for each debt.
If you want to pay more than the fixed rate towards your debts, you must arrange this with the organisation you owe money to.
Can I stop or amend my Fuel Direct payments?
Claimants can stop deductions for ongoing bills at any time.
They will need to contact the office that pays their benefit to request this.
If you do choose to stop making gas and electricity Fuel Direct payments, contact your energy supplier to arrange a different way to pay to avoid falling into more debt.
And if you want to change the amount you pay, contact your energy supplier directly.
Claimants that owe money but cannot afford more deductions to their benefits, should contact their energy supplier straight away.
Energy suppliers may be able to arrange a different way for you to pay as well as signpost you to apply for specific grants and other cash help.
