The Department for Work and Pensions (DWP) has announced that 57,000 benefit claimants who lost financial support when transitioning to Universal Credit (UC) will receive compensation payments of up to £5,000 each.
This decision follows years of legal battles after the High Court ruled that the government unfairly removed the Severe Disability Premium (SDP) and Enhanced Disability Premium (EDP) from many disabled claimants, leaving them financially worse off.
The DWP’s compensation scheme, set to be implemented by August 2025, will help thousands of people who experienced significant financial hardship due to the benefits transition.
What Led to the Compensation?
The issue stems from the UK government’s decision to move people from legacy benefits (such as Income Support and Employment and Support Allowance) to Universal Credit.
For many disabled people, this transition resulted in:
- The loss of Severe Disability Premium (SDP) and Enhanced Disability Premium (EDP).
- A reduction of up to £180 per month in their benefits.
- Increased financial hardship, with some claimants left unable to meet essential living costs.
Following two separate High Court rulings in 2018 and 2019, the government was found to have discriminated against severely disabled claimants by failing to provide an equivalent level of financial support under Universal Credit.
Who Is Eligible for the £5,000 Compensation?
The compensation scheme will cover three main groups of benefit claimants:
1. Current Universal Credit Recipients (Post-2020 Transition)
- Around 35,000 people who moved to UC after 2020 and are entitled to an additional amount of SDP transitional element.
2. Claimants Who Moved to UC Between 2018 and 2020
- Around 15,000 people who lost SDP when switching to UC before the DWP introduced the transitional protection.
- These claimants will receive backdated compensation to make up for lost benefits.
3. Former UC Claimants Who Are No Longer on Benefits
- Around 7,000 people who were affected but are no longer receiving benefits.
- They will still be eligible for compensation based on the amount they lost.
How Much Compensation Will Each Claimant Receive?
The exact amount each claimant will receive will depend on their individual circumstances and how much they lost during the transition.
- The average compensation payment is expected to be around £5,000 per person.
- Some claimants may receive less, while others could receive more if their financial losses were higher.
The DWP has not yet confirmed the exact calculation process, but more details are expected in the coming months.
Legal Action That Led to Compensation
The compensation follows several years of legal battles between claimants and the UK government.
- In 2018 and 2019, the High Court ruled that the removal of SDP and EDP was discriminatory.
- The DWP attempted to overturn the ruling but was unsuccessful in the Court of Appeal in 2020.
- Legal firms like Leigh Day have represented many claimants in securing compensation.
Recently, 275 claimants represented by Leigh Day won compensation payments ranging from £200 to £3,000.
When Will the Compensation Be Paid?
The DWP has stated that payments will begin by August 2025.
- The department is currently working on a system to process compensation payments efficiently.
- Priority will be given to claimants who are still on benefits, as they can be identified more easily.
- Claimants do not need to apply—the DWP will contact eligible individuals directly.
Concerns About Delays and Accessibility
While the announcement is welcome news for thousands of claimants, disability rights groups and legal experts have expressed concerns about delays.
- The August 2025 target date means some claimants will have waited over seven years for justice.
- There are concerns that some people may have moved or changed contact details, making it harder for the DWP to reach them.
- Advocacy groups have urged the government to ensure a smooth and timely payout process.
What Should You Do If You Think You’re Owed Compensation?
- Wait for the DWP to contact you—you should receive a letter or notification if you’re eligible.
- Ensure your contact details are up to date with the DWP and Jobcentre Plus.
- Seek legal advice if you believe you’re eligible but do not receive a notification.
- Monitor government updates to stay informed about the compensation process.
Conclusion
The DWP’s £5,000 compensation scheme marks a significant victory for disabled claimants affected by Universal Credit changes.
While the payouts will provide financial relief, the lengthy legal battle has highlighted ongoing issues with the UK benefits system.
For now, eligible claimants should remain patient, ensure their contact details are updated, and seek advice if needed to ensure they receive the compensation they are owed.
This article has been carefully fact-checked by our editorial team to ensure accuracy and eliminate any misleading information. We are committed to maintaining the highest standards of integrity in our content.
A senior at Yale-NUS College with interests in developmental and labour economics, as well as creative non-fiction and poetry. Currently, I’m studying as an Economics major and an Arts and Humanities minor (focusing on Creative Writing) with heavy involvement in the Singaporean journalism scene and involved in research on economic history and educational policy. I’m working as an author for SKC News, Yale-NUS’ student publication, as a writer for Wingspan, Yale-NUS’ alumni magazine, and as a tutor for the NUS Libraries Writer’s Centre. | Linkedin