Severe Disability Premium: Transfer to Universal Credit

Statement

My Lords, with the leave of the House, I shall now repeat in the form of a Statement the Answer given by my honourable friend the Minister for Disabled People, Health and Work to an Urgent Question in another place on the transfer of the severe disability premium to universal credit. The Statement is as follows:

“Universal credit is the biggest change of the welfare system since it was created. It is a modern, flexible, personalised benefit reflecting the rapidly changing world of work. When designing universal credit, a choice was made not to replicate every aspect of the disability provision in the legacy system. However, I want to make it very clear that our intention was that no money from this area would be taken out of the system. Universal credit was therefore designed with all the money from the old disability premiums recycled to target support for the most severely disabled.

Disabled people are some of the biggest beneficiaries of universal credit, with around 1 million disabled households having on average around £100 a month more on universal credit than they would have had on the legacy benefits. On Friday, the High Court handed down a judgment in relation to universal credit and the severe disability premium. The severe disability premium—SDP—is an additional premium payable with mean-tested benefits such as ESA. Universal credit is more targeted and support is focused on those who need it most. Transitional protection will be available for people who are moved on to universal credit from other benefits, provided their circumstances stay the same.

We are pleased that the court recognises that it is for Ministers to frame the appropriate transitional arrangements for moving claimants on to universal credit, and we will consider all our options. This Government are committed to delivering a welfare system that supports disabled people”.

My Lords, I thank the Minister for repeating the Answer to the Urgent Question. On their flagship social security policy, the Government have yet again found themselves before the courts, subject to a judgment of illegality, and mired in complexity.

As we have heard, on 7 June last year the Government pledged that severe disability premium claimants would no longer have to transfer to universal credit until managed migration started. Yet for months afterwards, they were still required to do this until the Government finally introduced the statutory instrument that came into force on 16 January. In the interim, because the severe disability premium does not exist in universal credit, in transferring they have lost about £180 per month. The Government plan to pay them only £80 a month in compensation, but if they were to move under managed migration, transitional protection would cover the full amount. Little wonder the High Court said in its damning judgment on Friday that this had no logical foundation. Payments to former SDP claimants are part of the regulations for the managed migration pilot but the Government have still not scheduled those for debate, so no payments at all have been made.

Will the Government ensure that the payments to former SDP claimants who have transferred to universal credit fully reflect the loss that they have suffered? From what the Minister said in her introduction, I am not sure that that is the commitment that the Government are making. Also, what assessment have they made of the hardship that claimants might have suffered as a result of this loss of income and, in particular, of the impact on their children, who have had to take on additional care responsibilities as a result of their family’s loss of income?

My Lords, as I have already said, Ministers are considering the judgment in detail and will make a decision about their response in due course. When designing universal credit, it was important to provide a simpler system, and a conscious choice was made not to replicate every aspect of disability provision in the legacy system, which contains seven different disability payments. These are difficult to deliver and prone to error, and they can be confusing for claimants. Therefore, we are replacing those seven complex and overlapping disability benefits.

Under the legacy benefit system, 500,000 disabled people did not claim what they were entitled to. Therefore, in terms of families losing out, about £2.4 billion of benefits went unclaimed in the legacy system as a whole. We have now moved to a much fairer system. For example, the rate per month under UC for claimants determined as having limited capability for work and work-related activity is more than twice the amount payable through the equivalent support group component of ESA. Under universal credit, it is now £336.20 per month per household, compared with £167.05 per month through the equivalent ESA support group. This means that around 1 million disabled households will gain an average of £100 more per month on universal credit than on legacy benefits.

My Lords, I thank the Minister for repeating the Answer. She said that the Government are considering their options and whether the regulations will have to be rewritten. What about the 10,000 people who are still waiting for the lump-sum payments that they were promised? They will have to wait much longer unless the Government separate the payment regulations from the rest of the managed migration pilot regulations so that the lump-sum payment can be made as soon as possible. Being disabled is very expensive and I expect that people have racked up quite a lot of debt because of this problem. Will the Government undertake a thorough process of evaluation of the effect of universal credit on disabled people?

My Lords, I make it clear that current severe disability premium claimants will receive transitional protection as part of the managed migration process. We now have transitional payments in place for severe disability premium claimants who have moved on to universal credit. As the noble Baroness well knows, we are now spending over £50 billion a year on benefits to support disabled people and those with health conditions, which is over £4 billion more than in 2010. We continue to evaluate the impact of our policies on this system. As the lead Minister for research at the Department for Work and Pensions, I am very clear that we make it our business to evaluate all the policies that we put in place.

My Lords, the Minister said that transitional protection will be available for people moved on to universal credit from other benefits, provided their circumstances stay the same. However, surely natural migration occurs only where circumstances change—sometimes very trivially. As a result, many people are a lot worse off, because they have been transferred on to universal credit, despite the Government’s original claim that nobody would be worse off under universal credit. Will the Government look again at natural migration and pause it to see what can be done to provide transitional protection for this group, who are just being forgotten about?

As the noble Baroness knows, the focus of this Urgent Question is the court case and severe disability payments. We put that block—if I can call it that—in place on 16 January to stop those with a severe disability migrating, and to prevent any more people who are on severe disability premium naturally migrating to universal credit, because we recognise that there is an issue here.

However, to deal with the stock of SDP claimants who have already moved to UC following a change of circumstances, it has been agreed that claimants will be eligible for a transitional SDP payment if they meet the following criteria: that they were eligible for SDP before they claimed UC; that their UC award has not subsequently terminated; that they have not ceased to be entitled to one of the qualifying benefits for the SDP—the middle or higher-rate care component of DLA, the PIP daily living component, the armed forces independence payment or AA; and that no one has become a carer for them. This is focused on that bespoke cohort of individuals the judgment relates to: those who live alone, without a carer.

Perhaps I might come back, because the Statement talks about people being moved on to universal credit generally. The terrible position of those on SDP is the worst tip of an iceberg, but there are a lot of people underneath it who are losing out because they are being naturally migrated to universal credit—often because of the most trivial changes in circumstances, such as moving house.

My Lords, I am sticking to the Urgent Question—which is about the severe disability premium. However, the reality is that we are looking at that judgment and considering with care the way in which we support those who are transferring naturally to universal credit. It is important that we have the legislation in place as soon as possible, so that in future everybody is manage-migrated, as it were, rather than naturally migrating, which, as the noble Baroness has said, some are at the moment.