John Hughie
The Department for Work and Pensions (DWP) has announced it will finalize compensation payouts by September 2025 to thousands of claimants impacted by the loss of Severe Disability Premium (SDP) during the transition to Universal Credit.
This compensation is targeted at disabled individuals who saw a significant drop in their income due to the removal of additional benefit premiums.
Who is Affected and Why Compensation is Being Issued
A total of 57,000 claimants were impacted when they migrated from legacy benefits to Universal Credit and lost their entitlement to Severe Disability Premiums. This issue emerged before the introduction of the SDP Gateway, a system later implemented by the DWP to safeguard such entitlements.
In addition to SDP, many also lost access to the Enhanced Disability Premium (EDP), resulting in an income reduction of up to £180 per month.
The problem came under legal scrutiny when two individuals, referred to as TP and AR, filed a case in the High Court, supported by law firm Leigh Day. The court ruled in favor of the claimants, highlighting the government’s failure to safeguard their income.
This ruling led to the implementation of the SDP Gateway, helping ensure future claimants would not be similarly affected.
Current Status of Payments and Financial Impact
While the majority of affected individuals have already received their payments, the DWP is still working through around 13,000 complex cases. These remaining claims are expected to be resolved by September.
The total cost of compensating affected individuals is estimated at £452 million, with individual payments potentially exceeding £5,000 in some cases.
Official DWP Statement on the Compensation Effort
A spokesperson for the Department for Work and Pensions stated:
“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.”
Summary Table: Key Details
| Details | Information |
|---|---|
| Total affected claimants | 57,000 |
| Pending complex cases | 13,000 |
| Type of compensation | Loss of SDP and EDP during transition to UC |
| Maximum individual payout | Over £5,000 |
| Monthly income drop for some | Up to £180 |
| Total cost of compensation | £452 million |
| Deadline for final payments | September 2025 |
The DWP’s compensation initiative addresses a significant error that left thousands of disabled benefit recipients financially disadvantaged.
With over £450 million allocated and the majority of payments already disbursed, the government now aims to clear the remaining 13,000 complex cases by September 2025.
The resolution marks a crucial step toward restoring financial justice for those who unfairly lost their Severe and Enhanced Disability Premiums during the Universal Credit rollout.
FAQs
Who qualifies for the DWP compensation related to disability premiums?
You may qualify if you lost your Severe Disability Premium (SDP) or Enhanced Disability Premium (EDP) during the switch from legacy benefits to Universal Credit before the SDP Gateway was in place.
How much compensation could I receive from the DWP?
Some claimants could receive over £5,000, especially those who experienced long-term loss of both SDP and EDP.
When will the remaining compensation cases be processed?
The DWP has set a deadline of September 2025 to resolve all outstanding complex compensation claims.
