The Department for Work and Pensions (DWP) has announced that approximately 57,000 benefit claimants will receive compensation following several significant court rulings. These claimants, many of whom were previously on legacy benefits, lost out on Severe Disability Premiums (SDP) when transitioning to Universal Credit (UC).
Two High Court decisions from 2018 and 2019 found that the DWP failed to ensure that claimants’ incomes were protected during the switch. Although the DWP attempted to challenge these rulings, the Court of Appeal upheld the decisions in 2020.
The compensation scheme aims to correct the income loss many claimants experienced, with payments up to £5,000 depending on the duration and extent of the financial impact.
Who Is Eligible for the DWP Compensation Scheme?
DWP Senior Civil Servant Neil Couling outlined that the compensation targets three specific groups:
1. Claimants Receiving Universal Credit (2020 Onwards):
- Around 35,000 people fall into this category.
- These claimants are eligible for an additional transitional SDP element from 2020 onwards.
- Payments will be processed automatically via the digital system.
2. Claimants Receiving Universal Credit (2018–2020 Period):
- Approximately 15,000 claimants qualify for backdated payments.
- These cases are more complex due to mixed clerical and digital records.
3. Former Universal Credit Recipients (2018 Onwards):
- Around 7,000 individuals who no longer receive UC but are still eligible for compensation.
- Processing these payments will take longer due to record verification needs.
MUST READ: Universal Credit Refund: DWP Offers Historical Refunds – Apply Before May 4, 2025
How Much Compensation Can Claimants Expect?
Compensation amounts vary depending on the claimant’s circumstances and duration of lost benefits.
| Category | Estimated Compensation |
|---|---|
| Long-term income loss (since 2018) | Up to £5,000 |
| Short-term or transitional loss | Between £200 – £3,000 |
| Average monthly income loss | Approximately £180 |
Claimants who lost out on disability-related benefits, particularly the Severe Disability Premium, will likely receive higher payouts.
When Will Compensation Payments Be Made?
The DWP aims to complete most payments by August 2025.
Payment Schedule:
- Group 1 (35,000 claimants): Payments are expected to begin early in the year, with automated processing allowing faster disbursement.
- Group 2 (15,000 claimants): Payments to follow mid-2025 after mixed record verifications.
- Group 3 (7,000 claimants): Expected to receive compensation by August 2025 after thorough record checks.
Claimants should monitor correspondence from the DWP and check their Universal Credit accounts for payment updates.
Why Did the Courts Rule Against the DWP?
The High Court ruled that the transitional protections provided during the Universal Credit rollout were insufficient. Claimants lost vital disability premiums that supported their basic living costs, which the court deemed unlawful.
Key Legal Findings:
- Monthly income reductions of approximately £180 severely impacted claimants’ financial stability.
- The transitional protections failed to cover all essential disability-related support.
- Attempts by the DWP to challenge the decision were rejected by higher courts.
How Has This Affected Claimants Like Philippa?
Philippa, 39, from Chesterfield, is among the thousands affected. Living with fibromyalgia, she lost essential benefits after transitioning to Universal Credit. The loss left her unable to afford basic needs, highlighting the significant financial strain on disabled individuals during the transition period.
Philippa shared, “The compensation has allowed me to access better nutritional options, something I couldn’t afford before. It’s more than just money—it’s a chance to regain dignity and health.”
What Steps Should Eligible Claimants Take Now?
If you believe you are eligible:
- Check Your Universal Credit Account: Updates regarding compensation will be visible in your account.
- Keep Personal Records: Gather any documentation relating to your benefits from 2018 onwards.
- Wait for DWP Contact: The DWP will notify eligible individuals; no new application process is required.
- Monitor Payment Updates: If you haven’t been contacted by July 2025, consider reaching out to the DWP for clarification.
FAQs
Who qualifies for the DWP compensation payments?
Claimants who lost Severe Disability Premiums (SDP) during the transition from legacy benefits to Universal Credit between 2018 and 2020 are eligible.
How much compensation will I receive?
Payments range from £200 to £5,000, depending on how long and how much you lost in benefits.
When will I get my compensation payment?
Most claimants should receive their compensation by August 2025, with priority given to those still receiving Universal Credit.
Do I need to apply for the compensation?
No application is necessary. The DWP is identifying and contacting eligible claimants automatically.
Why did the courts rule against the DWP?
The courts found that the transitional protections during the Universal Credit rollout failed to prevent significant income loss for disabled claimants.
Can former Universal Credit recipients still receive compensation?
Yes, even if you no longer claim Universal Credit, you may still be entitled to backdated payments.
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Aanchal is a passionate writer with a keen interest in storytelling, content creation, and creative expression. She enjoys exploring diverse topics and crafting engaging narratives that captivate readers.
