On 11 February 2021, the House of Lords is due to debate a regret motion tabled by Baroness Sherlock to the Universal Credit (Transitional Provisions) (Claimants previously entitled to a severe disability premium) Amendment Regulations 2021 (SI 2021/4). The motion contends that these measures will “result in claimants in receipt of the severe disability premium in legacy benefits moving on to universal credit without ensuring that all will be fully compensated for the loss of the premium”. The motion also calls on the Government to extend to legacy benefits the same uplift given to universal credit in response to the Covid-19 pandemic, and to “ensure that claimants are advised before moving from legacy benefits to universal credit that they could suffer financially as a consequence”.

What do the regulations do?

Under the system of benefits which existed prior to the creation of universal credit, known as ‘legacy benefits’, qualifying individuals were able to claim a severe disability premium (SDP) payment. This payment could be added to income support; income-based jobseeker’s allowance (JSA); income-related employment and support allowance (ESA); and housing benefit.

Universal credit replaces these benefits. The SDP is not being directly replicated under the new system. Previously, a mechanism known as the severe disability premium gateway prevented those in receipt of a SDP payment from making a new claim to universal credit. (The gateway itself had been introduced following a ruling in the High Court in 2018 in response to a legal challenge brought on behalf of two claimants forced to move onto universal credit, which it was argued had left them worse off.) However, as per provisions enacted as part of earlier regulations introduced in 2019, this gateway was removed on 27 January 2021.

The Universal Credit (Transitional Provisions) (Claimants previously entitled to a severe disability premium) Amendment Regulations 2021, which also came into force on 27 January 2021, will henceforth enable people in receipt of SDP to make new universal credit claims, if their circumstances change or they choose to do so.

Transitional payments

The earlier 2019 regulations also introduced a SDP transitional payment for claimants entitled to SDP as part of their legacy award who had already moved to universal credit before the gateway came into effect on 16 January 2019. Similarly, those who moved after that date but who were subsequently awarded SDP retrospectively were also entitled to a transitional payment. These provisions came into effect from 22 July 2019. The Government contends these measures were intended to “provide transitional support to these claimants in acknowledgement of the decrease in financial award they would have experienced moving to UC prior to the introduction of the SDP gateway”.

The current levels of SDP transitional payments are payable at a flat rate of £120, £285, or £405 per month depending on the claimant’s circumstances. The Government suggests that those amounts reflect the rate of SDP while accounting for other related variables:

The payments broadly reflect the rate of the SDP in legacy benefits whilst taking into account the increased value of the limited capability for work and work related activity (LCWRA) addition that is payable in universal credit, which is set at more than double the equivalent rate in employment and support allowance.

The 2021 regulations provide for the award and treatment of these SDP transitional payments going forward, now that people in receipt of SDP will begin to move onto universal credit in greater numbers. Specifically, the Government states that the removal of the gateway necessitated measures to allow payments to be made at the time of the universal credit claim, rather than as a retrospective award as provided for in the earlier regulations.

The SDP transition payment amounts are unchanged by these regulations. The explanatory memorandum to the regulations sets out how they will be awarded:

From 27 January 2021, a transitional SDP element will be considered for those people who had an SDP in their legacy award of either ESA (income related), JSA (income based) or income support within the previous month of their move to universal credit and where eligible, it will be paid as part of the claimant’s universal credit award as a ‘transitional element’. This transitional element will then be subject to a reduction by the amount of any increase to any other universal credit element, other than the childcare costs element, or by the amount of any new award of a universal credit element other than the childcare cost element. Claimants receiving a transitional element will not see any increase in their overall benefit level following annual uprating due to the erosion rules.

The Government states that the erosion of the SDP-related transitional element will gradually align entitlement to universal credit for those that migrate to it with those of new claimants to universal credit with the same circumstances “in line with a principle based on equality”. The House of Lords Secondary Legislation Scrutiny Committee commented on this issue in designating the regulations as of interest to the House, as explored below.

Eligibility for the transitional SDP element remains broadly the same as is set out for SDP transitional payments in the earlier regulations. However, the 2021 regulations do widen eligibility to the transitional SDP element to both partners following a couple separation where SDP had been included in the legacy benefit award.

It is important to note that the SDP related transitional element is distinct from the transitional element that those transferring to universal credit may be eligible to receive. The regulations have clarified the arrangements between these two payments as follows:

[W]hen a SDP recipient has a change of circumstances, which prompts them to make a new UC claim, they can come into scope for the transitional SDP element. If they have no change of circumstances to prompt a new universal credit claim, they will remain on legacy benefits until the department requests them to move to universal credit as part of the department’s managed migration process. In this situation, the claimant will be considered for the transitional element. These regulations prevent someone awarded the transitional element from receiving a transitional SDP element.

The Government contends this will have limited practical impact, and will largely affect the first payment a claimant receives:

In practice, the only difference between the transitional element and a transitional SDP element is the initial amount paid in the first month of the UC award. The transitional severe disability premium element is set at a rate outlined in these regulations; the transitional element is calculated to reflect the claimant’s previous legacy award in comparison to their initial universal credit award. After this first month, both types of payment are treated in the same way and will reduce, or cease, in exactly the same circumstances [as announced in October 2020].

Scrutiny and reaction

The House of Lords Secondary Legislation Scrutiny Committee examined the regulations in its 42nd report of the current session. Designating the regulations as an instrument of interest to the House, the committee drew particular attention to the erosion rules, stating that “the explanatory memorandum did not make clear that these transitional payments will erode over time and has been revised to include further information at our request”.

In addition, the committee noted the widening eligibility to the transitional SDP element to both ex-partners after a couple receiving SDP separate, and observed that the Department for Work and Pensions had estimated that this eligibility change will benefit a few hundred claimants overall.

Beyond Parliament, the regulations have attracted criticism from organisations such as Disability Rights UK. Noting the changes on the classification of the transitional element, Disability Rights UK contends:

[F]rom October 2020 these transitional payments were no longer ringfenced and separate from other universal credit elements. Under the new rules, they were instead classed as only a “transitional element”. This means that if a claimant’s universal credit entitlement increases—for example if their rent goes up or even if they become 25 years old and so entitled to a higher personal allowance—the amount of the transitional SDP element, worth between £120 and £405 a month, will decrease by the same amount. So, a claimant will [not] receive an increase and the worth of their transitional award for loss of SDP will continue to decrease over time.

Consequently, Ken Butler, Disability Rights UK’s welfare and policy advisor, argued the new regulations “will mean that, after transitional help is eroded after time, [universal credit] for disabled people will be significantly less generous than ESA and the other legacy benefits it has replaced”.

Similarly, on whether claimants should consider switching to universal credit, Disability UK’s interim head of policy and research, Fazilet Hadi, said “we would strongly urge people to seek robust advice before switching. If people choose to switch to universal credit, there is no going back”.

Benefits uplift

In response to the coronavirus pandemic, the Government has increased the standard allowance in universal credit and the basic element in working tax credit by £20 per week for one year, currently due to end in April 2021. Minister of State for the Department of Work and Pensions Justin Tomlinson was recently questioned in the House of Commons on whether those in receipt of the SDP should also receive a similar uplift. In response, the minister pointed out that the removal of the gateway would allow those claiming this payment to see if they would be better off claiming for universal credit. He added, those with disabilities in particular “will have benefited from the annual uprating increases in disability living allowance, personal independence payment and attendance allowance”.

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