Erode to nowhere

The basic rules

Schedule 2 of the Universal Credit (Transitional Provisions) Regulations 2014 (‘the UC (TP) Regs’) provides for a transitional SDP element for claimants who had been entitled to certain legacy benefits (income-based jobseeker’s allowance, income-related employment and support allowance (ESA), or income support) which included a severe disability premium (SDP) before making a claim for UC.1

The rule provides that the element can be eroded, under regulation 55(2) of the UC (TP) Regs, from the second assessment period of the award or, for awards beginning before 27 January 2021, from the second assessment period following the conversion day.2 (Regulations 56 and 57 provide for when the element is to cease and when it may then apply to a subsequent award, but this article does not discuss those rules.)

Erosion for ‘relevant increases’

Regulation 55(2) of the UC (TP) Regs provides for the amount of the element to be reduced by ‘relevant increases’. A ‘relevant increase’ is an increase in the amounts included in the UC maximum amount (including any included for the first time), excluding the childcare costs element. So over time the transitional SDP element will erode, as benefits are uprated annually, as other elements increase (eg, the housing costs element increases due to rent increases) or new elements are included – eg, someone starts to have a child element included. This erosion means that, over time, the UC being paid gradually aligns with the amount of UC a new claimant would be entitled to. The standard allowance amounts used in the calculations are those set out in regulation 36 of the Universal Credit Regulations 2013 – ie, discounting the former uplift to the standard allowance due to coronavirus measures.3

When might erosion occur?

Some common scenarios leading to the erosion of the element can be considered.

The housing costs element

The inclusion of the housing costs element for the first time erodes the transitional SDP element, as do increases to the housing element. However, people receiving UC who move from temporary or specified accommodation (housing benefit, rather than UC, covers these costs) into cheaper or similarly priced mainstream rented accommodation (ie, neither temporary nor specified accommodation: these housing costs are met through UC) will see the transitional SDP element eroded by the full amount of the housing costs element. These people are treated differently to people who move between mainstream rented properties, for whom the element would only be eroded by an amount equivalent to the increase in rent for their new property compared to their previous property. It may be arguable that this amounts to unlawful discrimination (although this has not yet been tested).4

The LCWRA element

The limited capability for work-related activity (LCWRA) element can often only be included in a UC award for the first time after a three-month ‘relevant period’,5 and so is sometimes not in place when the element is awarded. Where that happens, the LCWRA element is a ‘relevant increase’ and so erodes the transitional SDP element. There is still a delay even if the older member of the couple can immediately be treated as having LCWRA due to having reached pension age and being entitled to a disability benefit.6

However, the LCWRA element can be included in the UC award from the first assessment period, in the circumstances set out in regulations 19–27 of the UC (TP) Regs (most commonly, regulations 19 and 21, which cover people making the transition from old-style ESA and ‘credits-only cases’ with limited capability for work (LCW)). If the LCWRA element can be included from the first assessment period, then that will not erode the transitional SDP element (as erosion only results from relevant increases from the second assessment period onwards).

However, an important group of claimants cannot benefit from regulations 19 and 21 – mixed-age couples who claim UC after the legacy benefit claimant turns pension age because the legacy benefit claimant will not, because s/he is now pension age, be entitled to ESA or to national insurance credits on the date of her/his UC claim. Ideally, claimants will avoid this situation by making claims for UC prior to turning pension age but there will be many who do not. If a backdated UC claim would mean the first day of the UC award falls on a day of ESA or credits entitlement, then it may be arguable that the LCWRA element can be included from the first assessment period. Advisers may also wish to consider secondary arguments that the failure to make transitional provisions in respect of these mixed-age couples is discriminatory. CPAG is considering possible arguments about these points, and advisers dealing with cases involving this issue may like to contact the author for advice.

The carer, LCW and LCWRA elements

Someone who meets the conditions for both the LCW element and the carer element only has the carer element included in the calculation of her/his award. Similarly, someone who meets the conditions for both the carer element and the LCWRA element has the LCWRA element included in her/his calculation.7 So how much is the transitional SDP element eroded when the inclusion of one of these elements ending means that another is no longer included?

According to an email correspondence,8 the DWP position is that where a claimant with LCW is subsequently determined to have LCWRA, this will be treated as a relevant increase to an existing health-related element, rather than a new UC element. This means that the transitional SDP element would be reduced by the difference between the LCW rate treated as a new element, as it is not an increase from one health-related element to another, therefore reducing the transitional SDP element by the full amount of the LCWRA. On the DWP’s interpretation of the rules, therefore, a carer who gets LCWRA could lose out by more than £100 per month.

However, it may be arguable that the LCW, LCWRA and carer elements are all paid under section 12(1) of the Welfare Reform Act 2012 and so are all actually different forms of the same element – ie, an element for other particular needs or circumstances. In this argument, moving from the carer element to the LCWRA element would only result in erosion by the difference between the amounts of the two elements. It may also be arguable (but is as yet untested) that the DWP position is irrational or discriminatory, as under that position someone who was never a carer and gets LCWRA gets a net increase in her/his UC despite loss of the transitional SDP element, whereas someone who was a carer and gets LCWRA sees a loss. CPAG is considering possible arguments about these points and advisers dealing with cases involving this issue may like to contact the author for advice.