Lawyers are raising alarms over scandalous issues as the Department for Work and Pensions (DWP) disburses a staggering £452 million in compensation to affected benefit claimants.
The payout covers individuals who lost the Severe Disability Premium (SDP) and related enhancements when moving to Universal Credit before transitional protections began.
Affected individuals may receive up to £5,000+ per person, but concerns remain about how these sums were calculated.
Background: Why Compensation Was Needed
- Legacy Benefits Transition: Claimants previously receiving Employment and Support Allowance (ESA) lost the Severe Disability Premium (SDP) when shifted to Universal Credit.
- High Court Rulings: Between 2018 and 2019, two High Court decisions found the DWP failed to protect claimants’ incomes during this transition.
- Compensation Scheme Launch: In response, the DWP launched a scheme earlier in 2025 to compensate those affected.
What Lawyers Are Saying
Law firm Leigh Day, led by Ryan Bradshaw, is demanding full transparency in how the compensation is calculated.
Bradshaw describes some cases as “scandalous,” especially those where claimants were warned that receiving compensation could push them into balance thresholds that would cut their benefits.
He emphasized that there’s no agreed lawful method for calculating payouts and called for clarity on the use of an ‘erosion’ mechanism.
Scale of the Compensation Effort
- Total Cost: £452 million has been set aside for backdated payments.
- Number of Claimants: Roughly 57,000 individuals are affected.
- Per-Person Compensation: Estimated at £5,000+ each, with some settlements already reaching up to £6,000 or more.
- Monthly Shortfall: Many claimants suffered losses up to £180 per month prior to 2019.
- Complex Cases: Around 13,000 complicated cases remain unresolved and are expected to be addressed by September 2025.
Monthly Payment Breakdown
Compensation is structured based on monthly rates tied to the specific benefits lost, calculated for each month from the claimant’s move to Universal Credit up until the introduction of income protection rules in February 2024.
- Enhanced Disability Premium (single): £84
- Enhanced Disability Premium (couple): £120
- Disability Premium (single): £172
- Disability Premium (couple): £246
- Disabled child (per eligible child): £177
Summary Table
| Category | Details / Figures |
|---|---|
| Total Compensation Fund | £452 million |
| Affected Claimants | 57,000 individuals |
| Estimated Payout per Person | £5,000+, up to £6,000 |
| Monthly Loss Pre-2019 | Up to £180 per month |
| Complex Cases Pending | 13,000, to be resolved by September 2025 |
| Monthly Rate – Enhanced SDP (Single) | £84 |
| Monthly Rate – Enhanced SDP (Couple) | £120 |
| Monthly Rate – Disability Premium (Single) | £172 |
| Monthly Rate – Disability Premium (Couple) | £246 |
| Monthly Rate – Disabled Child (each) | £177 |
The DWP’s £452 million compensation scheme addresses a serious injustice inflicted on thousands of vulnerable individuals.
However, the lack of transparent calculations, questionable use of benefit-cutting thresholds, and unresolved complex cases—nearly 13,000—have prompted strong criticism from legal advocates.
For the compensation to be truly fair and credible, the DWP must publish a clear, lawful calculation method and ensure that disabled claimants aren’t penalized for receiving what they’re rightfully owed.
FAQs
Who is eligible for this compensation?
Eligibility includes individuals moved from legacy income-based benefits—like ESA—that included Enhanced Disability Premium, Disability Premium, or Disabled Child Premium before transitioning to Universal Credit where SDP should have applied.
How long will it take to resolve all claims?
Most payouts have been issued, but around 13,000 complex cases remain and are expected to be resolved by September 2025.
Why are lawyers calling for transparency?
Lawyers argue there’s no clear, lawful method for calculating payouts, and some claimants have been unfairly warned that compensation could reduce other benefits—an outcome they say is scandalous and unjust.