The Department for Work and Pensions (DWP) has provided a new update for the tens of thousands of benefit claimants due a compensation payment this year.
Around 57,000 people will receive payments, thought to be as large as £5,000, with the department hoping to complete the scheme by August 2025.
The payments will be made to many who were receiving certain disability benefits and moved from ‘legacy benefits’ to universal credit in the years before appropriate transitional protections were introduced. These claimants were found to have lost ‘severe disability premiums’ (SDP) in the move, with the DWP not doing enough to ensure their incomes were protected.
The scheme follows two rulings by the High Court between 2018 and 2019, which found the government failed to ensure the benefit payments of these claimants weren’t reduced when they transitioned. In 2020, the DWP made a failed attempt to challenge these rulings at the Court of Appeal.
It was found that monthly loss of income in both cases amounted to around £180. Law firm Leigh Day – who brought the cases – estimates that compensation could be worth more than £5,000 per person.
In February, DWP’s senior responsible owner for universal credit, Neil Couling, confirmed that most eligible claimants would receive compensation before the end of the year. The department has now released even more detail about the scheme, including precise eligibility and payment rates.
Eligibility
To be eligible for compensation, a claimant must be receiving (or had previously received) Universal Credit that includes an SDP element or transitional amount, or would have done had it not been eroded.
They must then have met one of three more conditions immediately before their move to Universal Credit:
- They were entitled to an income-based legacy benefit that included an Enhanced Disability Premium
- They were entitled to an income-based legacy benefit that included the Disability Premium
- They were entitled to an income-based legacy benefit that included the Disabled Child Premium, or Child Tax Credit that included the Disabled Child Element (non-severely disabled category)
Payment rates
There are five possible payment rates, which will be made for each month between the claimant’s transition to Universal Credit and when new income protection regulations came in force in February 2024. These back payments will be calculated by giving claimants what they would have been entitled to had the new rules been in place when they transitioned.
The monthly rates are:
- Enhanced Disability Premium, single person – £84
- Enhanced Disability Premium, couple claim – £120
- Disability Premium, single person – £172
- Disability Premium, couple claim – £246
- Disabled child – £177 per eligible child
When will I be paid?
When eligible claimants will receive a payment depends on when they moved to Universal Credit, and whether they still do today. Mr Couling outlined three groups of people who can expect a payment at differing times:
- People due an additional amount of transitional SDP element for 2020 onwards, and who continue to receive universal credit
- People due an additional amount for the period between 2018 and 2020, and who continue to receive universal credit
- People due an additional amount relating from 2018 onwards who are no longer receiving universal credit
The first group, he says, comprises around 35,000 people who can expect their payments by August 2025, with over 4,000 already paid. This is because they are the “easiest” to handle, as payments can be made automatically using the digital system.
There are 15,000 in the second group, who can expect their payments to begin by the end of March. The later payments are due to them converting from a manual SDP payment to being paid via the universal credit system, making their cases “slightly more complex.” They should also all be paid by August 2025.
However, no deadline is given for the third group of around 7,000 customers. These are people who received an SDP payment either manually or on-system, but have since seen their universal credit claim close. Due to the “more complex” nature of their cases, “analysis is ongoing to determine the level of work required to enable payments to be made” to them, Mr Couling says.
