In a landmark ruling, the UK’s Department for Work and Pensions (DWP) has confirmed that some 57,000 benefit claimants will receive compensation payments. The payments come after court rulings that many people’s pockets have suffered during the conversion from legacy welfare to Universal Credit (UC). Payment amounts could go as high as £5,000 per claimant, and payments are likely to be completed by August 2025.
Background: The Problem with Severe Disability Premiums
The basic issue here revolves around the abolition of the SDP at the stage when a claim holder migrated from legacy benefits onto Universal Credit. The Severe Disability Premium was an essential financial catering for severely disabled people.
In 2018 and 2019, the High Court ruled against the DWP on the grounds that it had failed to protect claimants adequately, resulting in losses of up to £180 per month. The DWP has now been ordered to pay compensation to affected claimants after losing a legal appeal in 2020.
Eligibility Requirements
The main and secondary criteria alongside the principal criteria must be satisfied for being eligible for compensation.
- The primary criterion is that the applicant must be receiving or have received Universal Credit with an SDP element, transitional amount, or would be receiving it if it had not been reduced over time within that specific timeframe.
- The secondary conditions include the applicant having previously received an income-based legacy benefit that constituted one of the following: Enhanced Disability Premium, Disability Premium, or Disabled Child Premium or having received Child Tax Credit specifically made out under Disabled Child Element for the non-severely disabled category.
Amounts of Compensation
Compensation covers the period from when the claimant moved to Universal Credit until February 2024 when new income protection measures were announced. Payments are what claimants would have been entitled to had the measures been introduced earlier.
Monthly rates of compensation will be:
- Enhanced Disability Premium (Single Claimant): £84
- Enhanced Disability Premium (Couple Claim): £120
- Disability Premium (Single Claimant): £172
- Disability Premium (Couple Claim): £246
- Disabled Child Element (per Eligible Child): £177
Payment Schedule
The government department has grouped its beneficiaries into three types based on their individual situation and the period of Universal Credit transfer.
- The first group consists of nearly 35,000 beneficiaries who took advantage of the transitional arrangement sometime in and after 2020. They are still receiving UC and will be paid automatically through the e-system like all other claimants. Over 4,000 payment runs have already been made, and it should have finished by August 2025.
- Group 2: These are about 15,000 people who transferred to UC as a result of the transition process between 2018 and 2020. They still receive the benefits. The class will start getting their payments by the closure of March 2024, and this should roll out to completion in August 2025. The processing is quite complex, however, because SDP payments were actually more manual back then.
- Group 3: Formers UC recipients by around 7,000 will. The DWP will advise on the payment commencement date for this group later because of the complexities in processing these cases.
Steps Ahead Claimants
Eligible claimants will be issued automatically by the DWP if they qualify for such compensation. It becomes imperative that contact details are kept current with DWP. If an individual thinks he or she is entitled but has not been contacted by mid-2025, he or she should call DWP or seek help from support services such as those provided by Citizens’ Advice.
Conclusion
This compensation scheme is by all appearances a big step in righting the financial wrongs associated with the introduction of Universal Credit for disabled people. While really dubious from an operational standpoint, an understanding of the criteria, payment groups, and estimated timelines will arm claimants for the next step and secure the benefit they are owed.