SDP gateway – a brief update

Return to legacy benefit – guidance

CPAG has obtained DWP guidance1 setting out when the DWP will return a claimant to legacy benefits where s/he had ‘inadvertently’ been awarded UC but should have been prevented from claiming by the ‘SDP gateway’ – ie, under regulation 4A of the Universal Credit (Transitional Provisions) Regulations 2014. The guidance acknowledges that some claimants have ‘inadvertently claimed’ and been awarded UC despite the processes the DWP put in place to prevent them from claiming UC.

By ‘inadvertently claimed’ the guidance is referring to someone who, at the time that s/he claimed UC, should have been blocked from claiming UC by the SDP gateway. The DWP would not accept that someone had inadvertently been awarded UC who, after having claimed UC, had had her/his earlier legacy benefit revised or superseded to include a severe disability premium (SDP) in the calculation.

The document states that the aim of the policy

‘is to identify any claimants who breach the SDP gateway as quickly as possible and before UC is awarded and paid. Where claimants have not been prevented from claiming UC by the SDP gateway when they should have been, the Secretary of State for Work and Pensions can revise the decision to award UC and reinstate any DWP legacy benefits that have been terminated, so as to put claimants back in the position they were in, as regards DWP legacy benefits, before they claimed UC.’

The document goes on to state that the DWP

‘will return claimants to DWP legacy benefits where:

• the error is identified promptly, prior to any award of UC, or
• returning the claimant is in their best interests (which may include financial interests).’

Note that a housing benefit (HB) circular,2 published on 28 February 2020, sets out new information for HB staff on moving people from UC back to HB. It is unclear whether this complements the DWP internal guidance covered in this article or whether this indicates further changes to internal DWP processes. Further updates will be published in future Bulletins.

The claimant’s best interests

So it seems that where an adviser is supporting a claimant who has ‘inadvertently’ breached the SDP gateway and already received an award of UC, the adviser will need to make clear why returning the claimant to legacy benefits is in the claimant’s best interests.

This approach appears to be consistent with caselaw. In R(IS) 15/04, the Tribunal of Commissioners held (at paragraph 39(5)) that a claimant who establishes a ground for revision which requires a change to the original decision is entitled to have that decision revised but that

‘[t]here may be a residual discretion in the Secretary of State not to revise or supersede (eg, if it is clear that a revision or supersession of the original decision favourably to the claimant would not, when his benefit position is looked at overall, benefit him)’.

Entitlement to tax credits

The DWP guidance states that in cases where someone is moved back to legacy benefit it is not possible for HM Revenue and Customs to reinstate tax credit awards by revising the decision terminating the award. It goes on to state:

‘As a result, claimants who breach the SDP gateway and have had tax credits terminated will have to reclaim tax credits after their DWP legacy benefit/s (with SDP) have been reinstated, if they want to take up tax credit entitlement again.

In these cases, Secretary of State for Work and Pensions will consider complaints of any financial loss resulting from loss of tax credits and the suitability of a special payment to compensate for such financial loss.’

If advisers are experiencing problems with this process, then please let CPAG know.

Advising claimants

It is worth noting that the explanatory memorandum to the Universal Credit (Managed Migration Pilot and Miscellaneous Amendments) Regulations 20193 stated that claimants who had inadvertently breached the SDP gateway to claim UC would be included in the transitional payments scheme.4 So should claimants who have inadvertently breached the SDP gateway seek to return to legacy benefit or to secure a transitional SDP amount?

All will depend on the facts, the claimant’s best interests and ultimately will be a matter for the claimant to decide. Some relevant considerations include the following.

• Potentially higher entitlements in the legacy system. Many ‘HB only’ claimants (ie, who had SDP included in their award but who were not receiving any other existing benefit at the time they inadvertently claimed UC) will perhaps benefit from this. Although those HB claimants will not qualify for a transitional SDP amount, they would be able to return to HB and make subsequent claims for other existing benefits which could include SDP.
• Once a UC claimant is awarded a transitional SDP amount, then it will only end when UC claimants form a couple or separate from their partner or where entitlement to UC ends. Even if a claimant with a transitional SDP amount loses her/his qualifying benefit, the amount will continue in payment.
• Potential for gaps in entitlement. If tax credits cannot be reinstated, then the claimant may need to pursue a complaint in order to secure special payments to compensate for any loss for the intervening period. If a claimant was only receiving part of her/his legacy benefit entitlement at the date that s/he claimed UC (eg, was receiving employment and support allowance but not HB), then s/he will need to consider whether s/he will be left without benefit to cover her/his needs for the period – a well-advised claimant will hopefully have made protective claims at the earliest possible date.

Retrospective SDP – revisited

An earlier Bulletin article5 suggested a potential discrimination argument based on claimants being left in a situation analogous to that of Reynolds in TD and Others v Secretary of State for Work and Pensions [2019] EWHC 462 (Admin) (1 March 2019). That article was written before the publication of the draft proposals for making transitional SDP amounts to certain UC claimants.

In most cases, a discrimination argument of the kind suggested will no longer be relevant (due to the availability of transitional SDP amounts). However, there may still be some people who had, at the time that they claimed UC, had an SDP included in their HB calculation but (perhaps due to income) had been receiving less than the maximum possible award – these individuals may be able to consider an argument of this kind.

Please be aware that welfare rights law and guidance change frequently. Older Bulletin articles may be out of date. Use keywords or the search function to find more recent material on this topic.