What Is The Fuel Direct Scheme?

How does Fuel Direct work?

For households who are in debt to their energy supplier and are struggling to pay this bill as well as the fees for your ongoing energy usage, you can ask the Department of Work and Pensions (DWP) to send some of your regular benefits payments directly to your energy supplier. The Fuel Direct scheme works by taking a percentage of your benefits and paying them directly to your service providers if you’re in debt to them.

This can be used for:

• Gas, electricity, and water
• Fines and fees for late payments
• Rent and service charges

Will applying for the Fuel Direct Scheme stop debt action?

While your application is being processed, most energy providers pause debt action at this time if it’s begun. However, you may have your application declined, and if this is the case, the debt action is likely to continue.

The best way to stop debt action with energy providers is to get in touch with them and create a repayment plan. They aren’t allowed (legally) to put anything in place that would put you in further debt or that you can’t afford to repay, and repayments can be as low as a few pounds a week. Many UK energy suppliers have dedicated debt management teams to help you with a sympathetic ear, so don’t be afraid to get in touch. A repayment plan is often flexible if your circumstances change, and is much more manageable than dealing with debt recovery action.

Can my energy be cut off?

It’s important to remember that disconnecting your energy is the last resort action for energy suppliers, and they have to prove that it’s the last resort to the UK’s energy regulator Ofgem, otherwise they can get fined and in a lot of trouble.
 

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How to apply to the Fuel Direct scheme?

There are a few ways you can apply to the Fuel Direct scheme:

• Contact the Jobcentre
• Contact your fuel supplier
• Contact the Department of Work and Pensions

Some energy providers such as British Gas say that they can manage your application for you, which can save you doing the paperwork and worrying. British Gas, in particular, say that it’s quicker if they do it for you rather than contacting the DWP, so check with your energy supplier first to see if they can put the application forward on your behalf.

Is Fuel Direct for me?

When thinking about the Fuel Direct scheme, it’s important to think about your current monthly budget, bills and outgoings. Think about whether you can afford to lose 5% of your benefits payments each week or at each interval, and whether this would put too much of a strain on your finances.

While the scheme does make sure that your debt will be cleared at a relatively low weekly payment, you can’t control how much you pay as it’s calculated initially and re-calculated every six months, so you need to make sure that you’re not going to incur debt elsewhere or struggle to put food on the table while you’re clearing your energy debts.

The best thing to do whether you’re struggling to pay or in energy debt is to consider the Fuel Direct scheme as a last resort, and explore all other potential avenues for your energy debt and ongoing energy repayments beforehand.

Am I eligible for the Fuel Direct scheme?

You’re eligible for the Fuel Direct scheme if you or a member of your household is on one of the following five benefits:

1. Income-based Jobseeker’s Allowance (JSA)
2. Income Support
3. Income-related Employment and Support Allowance (ESA)
4. Pension Credit
5. Universal Credit

What happens to the Fuel Direct scheme when my debt is clear?

Once your energy debt is clear via the Fuel Direct scheme, you’ll likely want to cancel this to make sure you’re back in receipt of your full benefits payments. Also, Fuel Direct won’t be available to you if you’re no longer in debt.

At this point, you will go back to your previous way of billing with your energy supplier, or a new route that’s more suitable and ensures you don’t end up in energy debt again. Any other payments that you make to your energy supplier after your debt is clear will go towards your energy use.

What should I do if my Fuel Direct is cancelled?

If your Fuel Direct cancelled – and it can only be cancelled by the DWP – the DWP will let your energy supplier know. This means that instead of repaying debt at the same regularity of your benefits payments, you’ll more than likely need to back to your previous regular billing plan; often monthly or quarterly billing. These bills for your ongoing energy usage will have to be paid in full, but you can also ask your energy supplier to pay off your accrued debt in instalments via a payment plan – but you will need to speak to your energy supplier to ask them to set this up.

How to keep energy costs down?

To keep energy costs low and stay out of debt for the long-term, one of the first things to do is to check your tariff and energy supplier, and compare energy costs. Remember that the quality of your electricity and gas won’t change when you switch supplier, and you may be able to get a better deal which will not only help you clear any outstanding debts quicker, but will also mean that you’re less likely to get into debt again in the future.

As always, we can help you with this here at Switch Plan. Simply give us a quick call, give us some basic information about you and your household, and we’ll compare prices for you and sort the rest. To get started, give us a ring on 0330 818 6223.

If you don’t want to change energy supplier, or you’re on the cheapest tariff available, try some of the following energy-saving tips:

1. Turn off standby appliances such as chargers, TVs, and microwaves etc.
2. Turn down your thermostat by even one or two degrees
3. Remember to turn your lights off when leaving a room
4. Wash clothes at 30 degrees, rather than 40
5. Only boil the kettle for the amount of water you need, rather than filling and boiling a full kettle each time
6. Pick showers over baths, energy-efficient showerheads and washing up bowls to save water, and gas on heating the water.

Would you like to know more information related to fuel direct schemes and government energy grants? Great! Read more of our related articles here:

1. fuel poverty
2. Warm Home Discount
3. Cold Weather Payment
4. Winter Fuel Payment

FAQ

How do Fuel Direct payments work?

DWP can take 5% of your weekly, fortnightly or monthly benefits payments to go towards your energy bills, and these payments go directly to your energy provider. This means you won’t have to manually make these payments each time you receive your benefits, and the payments will be deducted before they go into your bank.

How much can DWP deduct from benefits?

For customers on Universal Credit, DWP are allowed to take 5% from your benefits payments for gas, electricity or water. This deduction can also be split between repaying your current usage as well as paying back what’s owed, so this will reduce your overall amount owed and will mean that once you’re out of debt, you won’t be behind on your current payments, either. So, if you’re paid £100 a week in benefits, £5 (5%) of this would be eligible to go towards your energy debts.

If you’re on the Fuel Direct scheme using pension credit, you’ll have to pay a flat fee of £3.70 a week towards your debts incurred, on top of any current charges for your electricity and/or gas. For example, if you owed £100 in energy debt and also had £5 a week of usage, your weekly payments would be £3.70 towards the £100 debt, and then £5 a week of your current bills, meaning a payment each week of £8.70.

How can I apply for the Fuel Direct Scheme?

When applying to the fuel direct scheme, you have three easy options:

• Asking the Jobcentre
• Contact the Department of Work and Pensions directly
• Speaking to your fuel supplier

Some energy suppliers offer to handle the application and process for you. In some cases, this can be quicker than going down the traditional Jobcentre route. So, we suggest asking your energy provider if they can help in the first instance.