DWP reveals deadline for thousands of benefit claimants owed compensation after court battle

Independent

21-07-2025

The Department for Work and Pensions (DWP) has provided a new update for tens of thousands of benefit claimants still due a compensation payment this year.
The payments are being made to people with disabilities who were moved from 'legacy benefits' such as Employment and Support Allowance (ESA) to universal credit in the years before transitional protections were introduced.
These claimants were found to have lost the 'Severe Disability Premium' (SDP) in the move, with the DWP not doing enough to ensure their incomes were protected.
Most of the 57,000 people affected by the issue have now received their compensation. However, the department has said it is working to clear approximately 13,000 cases which are more complex.
Explaining the issue in its annual report, the DWP stated: 'Unfortunately, some underpayments may be owed to customers who no longer have an active ESA claim and restrictions in data make it difficult to identify, assess and correct these errors.'
The department said it was working to complete the work on these errors by September.
While agents are proactively contacting those eligible for compensation, anyone who thinks they may have been affected to make a claim.
The department said it will assess claims on a case-by-case basis based on the evidence given.
The repayment scheme follows two rulings by the High Court between 2018 and 2019, which found the government failed to ensure the benefit payments of affected claimants weren't reduced when they transitioned. In 2020, the DWP made a failed attempt to challenge these rulings at the Court of Appeal.
It was found that the monthly loss of income in both cases amounted to around £180. Law firm Leigh Day – who brought the cases – estimates that compensation could be worth more than £5,000 per person.
The DWP has confirmed that the total cost of the repayment exercise is £452m.
A DWP spokesperson said: '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.
"We are clear that errors like this one should not happen and have already taken action to avoid future errors.'
Eligibility
To be eligible for compensation, a claimant must be receiving (or had previously received) Universal Credit that includes a transitional SDP, or would have done, had it not been eroded.
They must then have met one of three more conditions immediately before their move to Universal Credit:
They were entitled to an income-based legacy benefit that included an Enhanced Disability Premium
They were entitled to an income-based legacy benefit that included the Disability Premium
They were entitled to an income-based legacy benefit that included the Disabled Child Premium, or Child Tax Credit which included the Disabled Child Element (non-severely disabled category)
Payment rates
There are five possible payment rates, which will be made for each month between the claimant's transition to Universal Credit and when new income protection regulations came into force in February 2024. These back payments will be calculated by giving claimants what they would have been entitled to had the new rules been in place when they transitioned.
The monthly rates are: