Universal Credit warning as payments may be deducted

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Claimants of Universal Credit and other benefits may see their payment reduced if they owe energy payments, including for gas and electricity. The DWP has confirmed energy suppliers can resume putting in requests for Fuel Direct deductions, when an energy debt is taken directly out of a person’s claim, or request to increase an existing deduction.

Temporary changes to Fuel Direct were brought in from April 2022 which meant only claimants could make new requests for ongoing payments or to amend existing arrangements.

The change was introduced owing to high energy prices, so claimants would not have to lose a substantial amount of their benefits in deductions. From the beginning of this month, energy suppliers can resume requesting new or increasing deductions.

The supplier must have the claimant’s consent to put in the request. But if an energy supplier has not been able to get in touch with an individual who has an existing arrangement, they can then contact the DWP.

The DWP will then try to contact the claimant to encourage them to contact the energy supplier.

Other organisations can also contact the DWP to ask for deductions from a person’s benefits to pay for debts.

This could include for court fines, rent or council tax. The office that pays the benefit will only agree to do this if the organisation has tried to contact the individual.

The person will be informed how much will be deducted from their payment by letter or in their Universal Credit journal.

Fuel Direct deductions can come from these benefit payments:

  • Universal Credit
  • Income-based Jobseeker’s Allowance (JSA)
  • Income-related Employment and Support Allowance (ESA)
  • Income Support
  • Pension Credit.

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How much will be deducted from my benefits?

A fixed amount will be deducted from a person’s benefit payments until they have paid off the debt they owe. Money can be deducted to pay up to three debts at once.

For Universal Credit claimants, five percent will be deducted from their claim for each debt they owe. For rent that is owed, between 10 and 20 percent of a person’s claim will be deducted.

For those who receive other benefits, £3.85 a week will be deducted for each debt they have to pay.

A person can opt to pay more than the fixed rate to clear their debts but they will need to arrange this with the organisation which is owed the money.

To increase deductions for an energy debt, a person will need to contact the supplier as they will need the person’s consent to request this from the DWP.

An individual can give their consent on the phone as it does not need to be given in writing.

A person can stop deductions at any time. This can be done by contacting the office that pays the benefit.

If a person owes money but cannot afford the deductions from their benefits, the supplier will be able to advise what help is available for people on low incomes.

They may be able to arrange an alternative way for a person to cover their payments. For example, the British Gas Energy Trust offers grants to help people clear their debts, and there is no need to be a customer to apply.

This support is only available to people who have savings of no more than £1,000, and applicants must have already received advice from a money advice group.

Individuals who apply for a grant must also not have received a grant from the trust within the last two years to get a payment from the group.

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