Universal Credit And The Severe Disability Premium

This Commons Library briefing looks at how Universal Credit will affect benefit claimants who are, or were, getting the Severe Disability Premium. It covers measures which came into force in January 2019 to prevent people getting SDP from moving onto UC until they can receive transitional protection, and proposed “transitional payments” for those who have already moved to UC and lost SDP.

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The Severe Disability Premium (SDP) is an addition payable with means-tested social security benefits. Universal Credit does not include an element equivalent to SDP – or indeed any of the disability premiums currently available. Disabled people may therefore find that their entitlement to UC is significantly lower than their previous “legacy” benefits. Transitional protection will be available to those moving onto UC at the final “managed migration” stage so that they are not worse off in cash terms at the point of transfer, but there is no such protection for those who move onto UC by “natural migration” – i.e. following a change of circumstances.

In June 2018 the High Court ruled in June that the Secretary of State unlawfully discriminated against two men who had to claim Universal Credit when they moved to another area, and as a result experienced a sudden drop in income due to there being no equivalent to SDP (and the Enhanced Disability Premium) within UC. The DWP compensated the two individuals for the losses experienced, but the Court left it to the Government to devise a wider solution to the problem of unlawful discrimination.

On 16 January 2019, regulations came into force preventing people in receipt of benefits including a Severe Disability Premium from moving onto Universal Credit until the final managed migration stage, when they can receive transitional protection. People who have already moved to UC and lost their SDP are to receive additional payments – both backdated and on an ongoing basis – although these may not fully compensate individuals for the amounts lost. Draft regulations providing for these “SDP transitional payments” are currently before Parliament.

This Commons Library briefing gives further background to the abolition of the Severe Disability Premium and covers developments following the High Court judgment.