THOUSAND of people who claimed disability benefits may be in line for a £5,000 payout from the Department for Work and Pensions after an error meant they lost out on vital income.
The issue affects those who were moved from their existing benefits onto Universal Credit before January 2019.
A legal challenge has found that some claimants unfairly lost out on Severe Disability Premiums (SDP) and Enhanced Disability Premiums (EDP) during the transition, resulting in a drop in income of up to £180 a month.
Both premiums offered additional financial support on top of the standard allowance for certain means-tested benefits.
This included income support or income-related employment and support allowance (ESA), with the extra funds intended to help cover the increased costs associated with living with a severe disability.
In 2019, the DWP introduced the SDP Gateway to ensure that future claimants transitioning to Universal Credit would not miss out on the additional financial support.
However, an estimated 15,000 people who transferred to Universal Credit before this date are still thought to be entitled to compensation worth up to £5,000.
Solicitors Leigh Day, who brought the original legal challenge, have now secured a settlement for 275 claimants who lost their SDP.
Ryan Bradshaw, human rights lawyer at Leigh Day, said: “I am glad to have settled this claim on behalf of my clients.
“However, there are thousands of others who have been similarly affected who have not been in a position to bring a claim like this.
“They too will have experienced the loss of £180 a month after they were moved from legacy benefits on to universal credit in the years before January 2019.
“They too will have suffered unnecessary stress.
“A suitable scheme, compensating all the people who have endured discrimination at the hands of the DWP, ought to be urgently put in place.
“The mistakes made here should never be repeated.”
The DWP has agreed to an August 2025 deadline to set up a lawful compensation scheme to repay his clients for the loss of income, which he estimates could be worth in excess of £5,000 per person.
The DWP has been contacted for comment.
Will I need to move to Universal Credit?
The DWP is currently moving everyone from old-style “legacy” benefits onto Universal Credit, through a process known as managed migration.
Universal Credit was set up to replace these benefits and the scheme kicked off in November 2022 after a successful pilot in July 2019.
As part of the process, households on legacy benefits, including tax credits, are sent “migration notices” in the post which tell them how to make the move to Universal Credit as it’s not automatic.
Households must apply for Universal Credit within three months of receiving their managed migration letter.
Failing to do this can result in benefits being stopped.
Tax credits, income-based jobseeker’s allowance, income support and housing benefit (for those under the state pension age) will be permanently discontinued in April 2025.
The remaining households, currently claiming income-related employment and support allowance (ESA), will be asked to move to Universal Credit by December 2025.
Can I get help claiming Universal Credit?
As well as benefit calculators, anyone moving from legacy benefit to Universal Credit can find help in a number of ways.
You can visit your local Jobcentre by searching at find-your-nearest-jobcentre.dwp.gov.uk/.
There’s also a free service called Help to Claim from Citizen’s Advice:
- England: 0800 144 8 444
- Scotland: 0800 023 2581
- Wales: 08000 241 220
You can also get help online from advisers by visiting, citizensadvice.org.uk/about-us/contact-us/contact-us/help-to-claim.
Will I be better off on Universal Credit?
ANALYSIS by James Flanders, The Sun’s Chief Consumer Reporter:
Around 1.4million people on legacy benefits will be better off after switching to Universal Credit, according to the government.
A further 300,000 would see no change in payments, while around 900,000 would be worse off under Universal Credit.
Of these, around 600,000 can get top-up payments (transitional protection) if they move under the managed migration process, so they don’t lose out on cash immediately.
The majority of those – around 400,000 – are claiming employment support allowance (ESA).
Around 100,000 are on tax credits, while fewer than 50,000 each on other legacy benefits are expected to be affected.
Those who move voluntarily and are worse off won’t get these top-up payments and could lose cash.
Those who miss the managed migration deadline and later make a claim may not get transitional protection.
The clock starts ticking on the three-month countdown from the date of the first letter, and reminders are sent via post and text message.
There is a one-month grace period after this, during which any claim to Universal Credit is backdated, and transitional protection can still be awarded.
Examples of those who may be entitled to less on Universal Credit include:
- Households getting ESA and the severe disability premium and enhanced disability premium
- Households with the lower disabled child addition on legacy benefits
- Self-employed households who are subject to the Minimum Income Floor after the 12-month grace period has ended
- In-work households that worked a specific number of hours (e.g. lone parent working 16 hours claiming working tax credits
- Households receiving tax credits with savings of more than £6,000 (and up to £16,000)
Either way, if these households don’t switch in the future, they risk missing out on any future benefit increase and seeing payments frozen.
