The Fuel Direct Scheme is a mechanism by which energy bills and in particular, energy debt can be taken from eligible benefits and paid directly to your supplier. The idea around this scheme is to provide a sort of focused bill management whereby the recipient of the eligible benefits can rely on the government to set up a deduction which will include making a fixed, regular monthly payment to start repaying any accrued debt on your energy account.
Eligibility
To be eligible for the Fuel Direct Scheme, you must already be in receipt of one or more of the following benefits:
Universal Credit, income based Jobseeker’s Allowance, income related Employment and Support Allowance, Income Support or Pension Credit.
For further guidance and advice on eligibility criteria it is recommended that you contact your Jobcentre Plus Centre or pension centre.
How to Apply
As well as your National Insurance Number and your energy supplier customer reference number, you will need details of the amount you currently owe on your energy accounts, as well as who your current supplier is. You can then contact your Jobcentre Plus or pension centre who will arrange, on your behalf, for a portion of your benefits to be paid directly to your energy company each month.
How it Works
As mentioned above, a Jobcentre Plus or pension centre representative will arrange a kind of debt management plan with your energy supplier to start reclaiming the balance that you owe. The amount that will be deducted is out of your control as it will be set for you and taken from your benefits before they are paid into your bank or building society account. The structure of payments also differs between Universal Credit and other benefits as laid out below:
Universal Credit – You will be deducted 5% of your Universal Credit which can be used to pay your current bill whilst also reducing the debt that you owe. These payments will be automatically stopped once the debt has been repaid.
Other eligible benefits – For each benefit you receive, £3.70 will be deducted prior to payment into your bank or building society account to cover your debt. This will be on top of another deduction that will be made to cover your current bill each month. If this figure is going to be less than 25% of your total benefits, then it will be taken without any prior agreement from you but you will be informed how much is going to be deducted and further down the line, any changes to these deductions. If the amount is calculated at above 25%, you must expressly agree to the deductions before they can be taken from your benefits and paid to your supplier.
This scheme will not allow you to set up payments with a supplier you no longer use or for more than a combined 3 types of debt.
Advantages and disadvantages
One big advantage of this scheme is that once payments have been established through your Jobcentre Plus or pensions centre, any final demand notices from your supplier will cease. Just the ability to collect the post without having to worry about the stress of another final demand should not be underestimated. With the knowledge that payments are being made and the demands stopping, mental wellbeing can increase which could potentially be enough to help give the breathing space required to organise other aspects of household management. It is easy to become overwhelmed with responsibilities and having energy managed for you could be a big help.
On the negative side, because the payments are made directly from your benefits, before they land in your account, it could put an extra strain on finances. Once applied the payments are non negotiable, so there would be no wiggle room to alter the payments in order to redirect funds to a higher priority at any given time. The payments will remain in place until the account is back in balance, which if you have relatively high arrears and a relatively low amount deducted from your benefits to repay those arrears, could take a significant time frame to complete the process.
Inevitably it comes down to each individual to weigh up what is best for each situation. What works best for one person may not be suitable for another. The Fuel Direct Scheme isn’t the only tool available to keep you out of debt or to stop you from being disadvantaged by fuel poverty. The Winter Fuel Payment and Cold Weather Payments, as well as the Affordable Warmth Obligation could also be useful tools, especially during the winter months and in situations where energy efficiency related home improvements are concerned.
