On April 1, 2022, the Department for Work and Pensions (DWP) made a temporary change to the policy of allowing ongoing energy payments to be taken directly from certain benefits - known as the ‘Fuel Direct’ scheme.
The change ensured only claimants could create new arrangements to pay energy bills directly from their benefit, and only they could increase the level of existing payments. However, some suppliers have stated it is no longer commercially viable to offer Fuel Direct.
As a result, the Secretary of State for Work and Pensions has written to the Chief Executive of Ofgem to ask for support in ensuring DWP claimants will continue to be supported during these challenging times and to make sure energy suppliers fulfil their statutory requirements.
In the letter dated May 18, Dr Thérèse Coffey MP said that “without intervention, energy suppliers would have asked DWP to make significant increases to the 100,000 existing arrangements in place in April” and that “claimants may not even have been aware these requests were being made”.
The DWP boss highlighted how the increase in the price cap and the DWP’s own data suggests the average increase could have been more than £110 per month.
Something which she says “could have left some DWP claimants without enough benefit award to meet other essential day-to-day needs”.
Dr Coffey wrote that her Department “recognises that some DWP claimants with existing arrangements may not feel able to increase them given wider cost of living pressures” and that “some claimants with existing arrangements may choose not to increase them and, as a result, accrue more energy debt”.
But she pointed out that these are “budgeting choices that millions of households will be making in the coming months” and said that it was the UK Government’s view that “the risks of not intervening outweighed the consequences of doing so”.
She continued: “Feedback from energy suppliers has generated real concern.
“Some suppliers have stated it is no longer commercially viable to offer Fuel Direct if they cannot control both the application and monetary value of ongoing consumption payments.
“At least two suppliers have suggested they no longer intend to offer Fuel Direct as a payment option to claimants in debt, and in a recent meeting with my officials, asked Energy UK if they would support the lobbying of Ofgem to relax supply licence conditions.
“We have also heard detailed examples of claimants in arrears already being told that ongoing consumption payments are no longer available, and the only option for them was a pre-payment meter.”
Dr Coffey added: “I recognise that energy suppliers were unlikely to be supportive of this change, however the stance taken by some energy suppliers is unacceptable.
“Suppliers have an obligation to support customers in payment difficulty, whether it be DWP claimants or anyone else.”
But she also warned: “Customers should be confident that their energy supplier will support them in any way possible should they have energy arrears or difficulty to pay.
“If suppliers are not doing so, this appears to be a direct contravention of a supplier’s Supply Licence Conditions (278a) that require suppliers to support customers in payment difficulty.”
You can read the full letter on GOV.UK, here.
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