Thousands of people across the UK may be owed compensation worth thousands of pounds, following a critical update from the Department for Work and Pensions (DWP). The announcement relates to disabled claimants who lost essential financial support after being moved from legacy benefits to Universal Credit between 2013 and January 2019.
Due to a transition error, many individuals lost access to vital disability-related premiums, resulting in sudden drops in income. Following a legal challenge, the DWP has agreed to pay compensation—some individuals may receive over £5,000, depending on how long they were underpaid. The total compensation package is expected to cost £452 million, with all remaining payments to be made by September 2025.
What Went Wrong During the Switch to Universal Credit?
Between 2013 and early 2019, the government began moving people from older benefits like Income-Related Employment and Support Allowance (ESA) to Universal Credit (UC). However, during this migration, a critical oversight occurred: the DWP failed to carry over Severe Disability Premiums (SDP) and Enhanced Disability Premiums (EDP).
These premiums were designed to provide extra monthly support to people with significant health issues or disabilities. The result was a loss of up to £180 per month for some claimants, causing considerable hardship, especially for individuals already facing complex medical and financial challenges.
Legal Battle Leads to DWP Compensation Scheme
The error led to a legal challenge by law firm Leigh Day, which argued that the DWP acted unlawfully by reducing payments without providing transitional protection. The case was heard in the High Court, which found in favour of the claimants.
As a result, the DWP launched a review of affected cases. It estimates that around 57,000 people were impacted, though many have already received payments. Currently, 13,000 cases are still under review, with the government promising to complete all pending payouts by September 2025.
How Much Compensation Could You Receive?
The DWP has confirmed that compensation will cover not just financial losses, but also the emotional impact suffered by claimants. These payments may include:
- Backdated monthly losses, estimated at £180 per month
- Compensation for emotional distress
- Additional amounts for “injury to feelings”, as defined in legal claims
Over time, some individuals could receive over £5,000, depending on how long they were affected and the severity of their financial and emotional hardship.
Official Statement from the DWP
The DWP has publicly acknowledged its mistake. A 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.”
The department also confirmed that system improvements have been made to prevent a similar issue from happening in the future.
Who Was Affected by the Error?
The compensation applies to people who transitioned from older benefits to Universal Credit before January 2019 and lost access to disability premiums.
Affected Legacy Benefits:
- Income-related Employment and Support Allowance (ESA)
- Housing Benefit
- Income-based Jobseeker’s Allowance
- Child Tax Credit
- Working Tax Credit
- Income Support
At the time of their switch, there was no transitional protection scheme in place, which meant the extra disability support was simply lost—causing significant drops in income for many claimants.
What to Expect Next if You’re a Claimant
If you were affected by this issue, you don’t need to apply for compensation. The DWP is proactively reviewing benefit histories to identify who is eligible. Around 44,000 people have already received payments, while the remaining 13,000 cases are expected to be resolved by September 2025.
To ensure you’re not missed:
- Review your benefit history
- Speak to a welfare advisor if you think you may have been underpaid
- Keep an eye on official DWP letters or communications
No new application is required, but support from welfare advisors can be helpful if you believe your case is still unresolved.
Why This Matters for Thousands of Disabled Claimants
This case highlights how technical errors in government systems can have a deep, real-world impact, especially on vulnerable people. The lost disability premiums made a tangible difference in monthly budgets and contributed to increased stress, hardship, and in some cases, debt.
The DWP’s admission and compensation plan are crucial steps in restoring trust in the benefit system, though advocates continue to push for more transparency and long-term reform.
What Claimants Should Do Now
If you think you were affected:
- You do not need to reapply
- DWP will reach out based on your records
- If unsure, speak to Citizens Advice or a benefits expert
- Keep all DWP communications and confirm any benefit changes you remember between 2013 and 2019
FAQs About the DWP Disability Benefit Compensation
Q1: Who is eligible for the compensation?
A: Anyone who was moved from legacy benefits (such as ESA or Income Support) to Universal Credit before January 2019 and lost access to disability premiums may be eligible.
Q2: Do I need to apply to receive the payment?
A: No. The DWP is automatically reviewing cases and will contact those eligible. No formal application is required.
Q3: How much could I receive?
A: Some individuals may receive more than £5,000, depending on how long they were underpaid and the emotional toll the error caused.
Q4: When will all payments be completed?
A: The DWP has confirmed that all 13,000 remaining reviews will be completed by September 2025.
Q5: What if I haven’t heard from the DWP but think I’m eligible?
A: You can contact a welfare advisor or Citizens Advice to help check your status. It’s also helpful to review your benefit changes during the 2013–2019 period.