Sharon Cyrus
The Department for Work and Pensions (DWP) has issued a significant update for thousands of disability benefit recipients still awaiting compensation payments in 2025.
These payments relate to historic underpayments for those transitioned from legacy benefits such as Employment and Support Allowance (ESA) to Universal Credit, before proper financial safeguards were in place.
Background: Transition from Legacy Benefits to Universal Credit
Between 2011 and 2019, thousands of disabled individuals were moved from legacy benefits to Universal Credit.
However, due to the absence of transitional protections, many lost out on the Severe Disability Premium (SDP) they previously received. This led to a significant drop in monthly income for many, with little support to make up the shortfall.
High Court Rulings and DWP Response
Following two High Court rulings in 2018 and 2019, the government was found to have breached its duty to protect claimants’ income during the benefit transition.
In 2020, the DWP tried to overturn the ruling but failed. Legal action revealed that some individuals lost approximately £180 per month, with law firm Leigh Day estimating compensation could exceed £5,000 per person.
As a result, the DWP set aside £452 million to cover compensation payments. Most of the 57,000 affected claimants have now been paid. However, the DWP has acknowledged around 13,000 complex cases remain, which are still under review.
Complex Cases and Completion Timeline
In its annual report, the DWP admitted difficulty in identifying and correcting underpayments, especially where claimants no longer have an active ESA claim. Data restrictions have further complicated the process.
Despite this, the department has committed to finalising all outstanding cases by September 2025. Affected individuals will be contacted directly by DWP agents, but the department also encourages those who believe they may be eligible to submit a claim.
Compensation Assessment Process
Each claim will be evaluated individually, with decisions based on the supporting evidence provided.
The repayment scheme is designed to reimburse claimants for the financial losses they would not have faced had proper income protections been applied during their transition to Universal Credit.
Who Qualifies for Compensation?
To qualify, the individual must currently receive, or should have received, Universal Credit with a transitional SDP. In addition, they must have met one of the following conditions immediately before switching:
- Received an income-based benefit with the Enhanced Disability Premium
- Received an income-based benefit with the Disability Premium
- Received an income-based benefit with the Disabled Child Premium, or Child Tax Credit with the Disabled Child Element (not severely disabled)
Breakdown of Monthly Compensation Rates
Eligible claimants will receive backdated payments covering each month from the time of their Universal Credit transition until the new income protection rules came into effect in February 2024. The monthly rates are as follows:
| Payment Type | Monthly Rate |
|---|---|
| Enhanced Disability Premium (Single) | £84 |
| Enhanced Disability Premium (Couple) | £120 |
| Disability Premium (Single) | £172 |
| Disability Premium (Couple) | £246 |
| Disabled Child Element (Per Eligible Child) | £177 |
DWP’s Commitment to Preventing Future Errors
A DWP spokesperson reaffirmed the department’s commitment to rectifying the issue:
“We are fully committed to identifying claimants that are owed arrears and providing the financial support to which they are entitled as quickly as possible, with the majority of these cases having already been resolved.”
They also added that new measures are in place to avoid similar issues from occurring in the future.
The DWP is continuing its efforts to deliver justice and financial redress to those disabled individuals who unfairly lost income during their move to Universal Credit. With most payments already issued, the focus is now on resolving the remaining complex cases.
Eligible individuals are encouraged to proactively check their status and submit a claim if they believe they are owed compensation. This scheme reflects the DWP’s recognition of its past shortcomings and its commitment to correcting them.
FAQs
How do I know if I’m eligible for the DWP compensation payment?
You may be eligible if you were moved from legacy benefits to Universal Credit before February 2024 and lost the Severe Disability Premium during that transition. Meeting one of the specified conditions is necessary.
When will the remaining compensation payments be made?
The DWP aims to resolve the remaining 13,000 complex cases by September 2025. Eligible individuals may be contacted, or they can submit a claim themselves.
How much compensation could I receive?
Compensation is based on your specific situation but could exceed £5,000. Monthly back payments range from £84 to £246, plus £177 per eligible child.