The UK Department for Work and Pensions (DWP) has confirmed that 57,000 benefit claimants will receive compensation of up to £5,000 following errors in the transition from legacy benefits to Universal Credit (UC). The payments aim to rectify financial losses suffered by disabled claimants who lost Severe Disability Premiums (SDP) and Enhanced Disability Premiums (EDP) when moving to Universal Credit.
This follows a legal challenge in 2018 and 2019, where the High Court ruled that the government failed to protect vulnerable claimants during the migration process. As a result, the government will now issue financial compensation to those affected.
Why Is the DWP Paying Compensation?
The issue stems from how Universal Credit replaced several legacy benefits, including Income Support, Housing Benefit, and Employment and Support Allowance (ESA).
Prior to the rollout of Universal Credit, disabled claimants receiving SDP and EDP were entitled to additional financial support. However, when they were moved to Universal Credit between 2018 and 2020, many lost access to these premiums, resulting in significant financial hardship.
Following legal action, the High Court ruled that the transition process was unlawful and discriminatory as it failed to provide equivalent financial support to claimants. The court found that the government’s decision left thousands of vulnerable individuals worse off.
Who Is Eligible for Compensation?
According to the DWP, compensation will be awarded to claimants who moved to Universal Credit between 2018 and 2020 and lost SDP or related benefits.
The three key groups identified for payments are:
- Current Universal Credit recipients who transitioned after 2020
- Estimated 35,000 individuals
- Payments expected by August 2025
- Current Universal Credit recipients who transitioned between 2018 and 2020
- Estimated 15,000 individuals
- Payments expected by March 2025
- Former Universal Credit recipients who lost SDP but are no longer on UC
- The most complex group, with an uncertain timeline
The DWP will contact eligible claimants automatically. No application is required. However, if someone believes they are eligible but has not been contacted, they are advised to reach out to DWP directly.
For official information, visit the UK Government website on Universal Credit.
How Much Will Claimants Receive?
The compensation amount will vary based on the length of time an individual lost out on SDP and EDP payments.
- Maximum payout: £5,000
- Minimum payout: Depends on the duration of financial loss
For further details on benefit rates and eligibility, visit the UK Government’s benefits calculator.
How Will the Payments Be Issued?
The DWP has outlined a timeline for distributing payments:
- March 2025: Payments begin for claimants who transitioned between 2018-2020
- August 2025: Payments expected to conclude for most claimants
- Ongoing Assessments: For those no longer on Universal Credit, payments will be made on a case-by-case basis
The government has assured that all eligible individuals will be contacted directly.
For more information, claimants can check the DWP’s official updates.
Legal Background: High Court Rulings
The High Court ruled in favor of claimants in 2018 and 2019, citing discriminatory practices in the Universal Credit transition.
- 2018 ruling: Found that removal of SDP payments disproportionately affected disabled claimants
- 2019 ruling: Concluded that the government failed to provide adequate financial support
These rulings forced the DWP to reassess its policies, leading to this compensation scheme.
What Should Claimants Do Next?
- Wait for DWP contact – If eligible, claimants will be automatically informed
- Verify details – Claimants should check their records to confirm their eligibility
- Contact DWP if necessary – If someone believes they qualify but haven’t been contacted, they should reach out to the DWP helpline
For official updates, visit the Universal Credit transition page.
Conclusion
The DWP’s £5,000 compensation scheme is a long-overdue correction for thousands of disabled claimants who suffered financial losses due to Universal Credit transition errors. This move comes after legal battles and government reassessment of its policies.
While most payments will be made by August 2025, claimants should stay informed and check their eligibility through official government sources.
For the latest updates on benefits and compensation, visit gov.uk.
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