Universal credit payments effectively ‘wiped out’ by energy bills, warns CAS

Universal credit payments effectively 'wiped out' by energy bills, warns CAS

Prepayment meter customers on Universal Credit could see the value of their payments effectively wiped out by soaring energy costs, new analysis from Citizens Advice Scotland (CAS) has found.

Around 470,000 households in Scotland are prepayment meter customers, paying for their energy in advance. This is normally more expensive than paying by direct debit.

Estimates from the Fuel Bank Foundation suggest monthly payments for prepayment customers could hit £595 per month. This is more than the standard allowance of Universal Credit across a range of claimant types.

For a single person under 25, the standard allowance of Universal Credit is £265.31 per month – less than half of a forecast monthly pay-as-you-go energy bill.

For a couple over 25, the standard allowance is £527.72 – still less than the likely monthly costs.

Prepayment customers are more likely to be living in fuel poverty than direct debit customers and CAS is warning people will ration their energy use this winter due to costs or even self-disconnect, cutting themselves off from their energy supply because they can’t afford to pay.

The charity’s Extra Help Unit, a specialist team of energy caseworkers, has already seen self-disconnection cases increase by almost 600% over the last year.

CABs are seeing this problem even before increases in prices this autumn. Below are two anonymised case studies CABs have seen in recent weeks:

A North of Scotland CAB reports a single male under 25 who has run out of money a week before his UC payment is due. Client has been refused discretionary credit from suppliers and crisis grants from the Scottish Welfare Fund as he has met the limit.

An East of Scotland CAB reports a client with four children who is not able to keep their prepayment meters topped up on their UC income. Client was referred for fuel and food bank vouchers. The client is unable to keep the meters topped up whilst on Universal Credit due to a shortfall in benefits.

Derek Mitchell, CAS chief executive, said: “People will freeze or starve this winter without urgent and radical government action on the cost of living. Costs are set to soar and the safety net isn’t strong enough to support people.

“For those on prepayment meters, their standard payment of Universal Credit could be entirely wiped out by their monthly energy costs. How are people supposed to live like that?

“For claimants under 25, their standard allowance won’t even cover their monthly bills. This isn’t sustainable for people, and makes the decision to cut Universal Credit by £20 per week a year ago seem even more short sighted and counterproductive.”

He added: “We’ve already seen energy rationing and self-disconnection increase and there’s a real risk of this continuing into the winter. Policymakers cant waste time here – this is building up to a tsunami of poverty, debt and destitution.

“If people are struggling with the cost of living, there may be additional benefits or grants they are entitled to. The best thing you can do is seek advice. The CAB network offers free, impartial and confidential advice which is open to everyone regardless of background or circumstance. People can also check our online resources like www.moneymap.scot but it is so crucial that if you are struggling with money you seek that advice.”

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