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What is the Fuel Direct Scheme?

The Fuel Direct Scheme is a financial programme designed to help people who receive certain benefits to manage their energy costs effectively. Referred to as ‘Third Party Deductions’, the scheme allows a fixed amount to be automatically deducted from your benefits to cover your energy bills.

This method ensures that you maintain regular payments to your energy supplier, which prevents you from going into debt and helps you stay on top of your utility expenses.

Opting into the Fuel Direct Scheme can be a good move if you’re struggling to keep up with your energy costs. By using this scheme, you’re not only making sure you don’t go into debt but also gaining peace of mind.

The deductions are calculated to cover both your ongoing energy use and any previous debt you owe to the supplier. Additional support can be provided to tailor the payments according to your needs, ensuring that the arrangement supports your financial situation.

Key Points

  • The Fuel Direct Scheme assists with managing energy bills by deducting from certain benefits.
  • Deductions cover current energy usage and any accumulating debts to suppliers.
  • The scheme is crafted to offer financial ease and prevent utility service disruption.

To be eligible to use the Fuel Direct Scheme, you must be receiving one of the following income-related benefits:

  • Income Support
  • Pension Credit
  • Universal Credit
  • Income-Based Jobseeker’s Allowance (JSA)
  • Income-Related Employment and Support Allowance (ESA)

Your eligibility also depends on whether you have outstanding fuel debts and are receiving one of the above benefits. To apply, your consent is required, and it must be obtained before debts can be repaid through your benefits.

The application process involves contacting the Department for Work and Pensions, which is responsible for administering the scheme. You can also reach out to your energy supplier, who will then work alongside the Department to set up the payments.

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 and who your current supplier is.

Once you’re part of the scheme, a fixed amount is deducted from your benefit payment to cover your current fuel usage and to pay off any arrears. This amount is determined based on your average fuel consumption and the level of debt, ensuring affordability alongside essential living costs.

When enrolled in the Fuel Direct Scheme, your energy supplier directly receives payments for utilities like gas and electricity, as well as other essentials. This ensures that your essential bills are managed efficiently.

Direct payments to your energy supplier

Your energy supplier will automatically receive payment towards your energy bills from your benefits. This payment plan helps to address your debts in a manageable way.

Specifically, if you are on a prepayment meter for your gas or electricity, the Fuel Direct Scheme could adjust how you top up, with a portion of your benefit going directly to your energy account.

Covering other expenses

The scheme can cover service charges, including water bills, in addition to energy expenses. As with energy costs, a calculated amount of your benefit payment is used to pay the supplier, reducing your arrears over time and making sure that your important services remain uninterrupted.

Essential living expenses like rent may also be included, and it is designed to ensure you keep up with these crucial payments without the stress of manual management.

A man looking at an energy bill. These bills could be paid directly if he signed up for the fuel direct scheme

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.

The ability to collect the post without worrying 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 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.

If you are struggling with fuel debt, getting some support and advice can be a key step in helping with this. Various programmes and financial assistance options are available to help you, including benefits and grants tailored to your needs during the colder months.

Debt advice and assistance

Organisations like Citizens Advice provide free, confidential advice that can help you understand potential solutions tailored to your unique circumstances. They should be your first port of call.

Other options for support that might be available to you include:

  • Benefits and Income Support: Check if you’re entitled to benefits, such as Pension Credit or Income Support, which may increase your disposable income.
  • Winter Fuel Payments: If you were born on or before 5 October 1954, you could receive between £100 and £300 tax-free to help pay your heating bills.
  • Warm Home Discount: You might be eligible for a one-off discount on your electricity bill if you are on a low income or receive certain means-tested benefits.
  • Cold Weather Payments: During exceptionally cold weather, you may receive payments to help cover additional heating costs.
  • Breathing Space: Also known as the Debt Respite Scheme, it gives you legal protections from creditors for 60 days, with most interest and penalty charges frozen, allowing you a period to get advice and sort out your debts.

If you’re looking to manage your fuel expenses more effectively, the Fuel Direct Scheme may offer a solution. This section answers common queries about the programme, its application process, eligibility, and related government initiatives.

How can I apply for the Fuel Direct Scheme?

You can apply for the Fuel Direct Scheme by contacting your energy supplier or Jobcentre Plus. They will guide you through the application process and help facilitate the setup with the Department for Work and Pensions (DWP).

Who is eligible to set up Fuel Direct from their benefits?

Eligibility for the Fuel Direct Scheme is generally limited to individuals who receive certain income-related benefits, such as Income Support, Income-based Jobseeker’s Allowance, or Pension Credit. Contact Jobcentre Plus to assess your specific eligibility.

What is the process for halting Fuel Direct payments?

To halt Fuel Direct payments, you must reach out to your energy supplier and the DWP. They will discuss the steps required to stop the deductions, which may include settling any outstanding fuel debt you have.

How does being on Universal Credit affect eligibility for Fuel Direct?

Fuel Direct for those on Universal Credit has specific conditions, such as a cap on debt payments and a limit on the proportion of your total benefit that can go towards ongoing energy bills. Ensure you understand these before applying.

What steps can be taken to lower deductions made from Universal Credit for fuel costs?

To lower deductions from your Universal Credit, you can request a review of your payment plan or negotiate with your energy supplier.

It may be possible to reduce your deductions by demonstrating financial hardship or updating your budgeting plan.

Rob
Rob

Hi, I'm Rob and I run Energy-Review.co.uk. I initially started this project 5 years ago when I was looking to switch energy suppliers and found there wasn't a website that provided simple, data backed reviews on all the suppliers available. Since then, I spent have a lot of time (too much some may say!) looking at all publicly available data about each supplier and writing reviews using this information. These reviews are updated as regularly as possible and any data is backed up by a source where necessary. I have also started writing guides on various energy related topics which hopefully you will find useful. If you find any issues, please use our contact form to let us know.

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