The Department for Work and Pensions (DWP) has confirmed plans to pay compensation of up to £5,000 to around 57,000 people who were disadvantaged by their transition to Universal Credit.
This payment scheme is aimed at individuals who, after moving from legacy benefits, lost their entitlement to certain disability-related premiums. While the scheme is expected to be completed by August 2025, the compensation addresses a long-standing issue that has affected many vulnerable claimants.
This move follows a series of High Court rulings in 2018 and 2019, which found that the government had failed to adequately protect these claimants’ incomes during the transition to Universal Credit.
Eligibility for compensation
To qualify for compensation, claimants must have been receiving Universal Credit that included a Severe Disability Premium (SDP) element, or have been entitled to such a payment before their transition to Universal Credit.
In addition, they must meet one of the following criteria: they were entitled to an income-based legacy benefit with the Enhanced Disability Premium (EDP), Disability Premium, or Disabled Child Premium.
The compensation covers the period between the claimant’s transition to Universal Credit and the implementation of new income protection regulations in February 2024. Payments will be calculated based on what claimants would have received had the new rules been in place at the time.
The monthly compensation rates vary, depending on the type of premium claimants were entitled to, and can range from £84 to £246 per month, with an additional £177 per child for those receiving the Disabled Child Premium.
Payment groups and timeline
According to Neil Couling, Senior Responsible Owner for Universal Credit, payments will be issued to three distinct groups. The first group, which comprises around 35,000 people, includes those who transitioned to Universal Credit between 2020 and 2024 and are still receiving Universal Credit.
These claimants are expected to receive their payments by August 2025, with over 4,000 already compensated.
The second group, approximately 15,000 claimants who transitioned between 2018 and 2020, will begin receiving payments by the end of March 2025. These cases are more complex due to the transition from manual payments to the Universal Credit system.
A third group of 7,000 claimants, who no longer receive Universal Credit, are also entitled to compensation. Due to the more complex nature of their cases, there is no specific timeline for these payments yet. However, the DWP assures that efforts are ongoing to resolve these cases.
