The transitional SDP amount

The Universal Credit (Managed Migration Pilot and Miscellaneous Amendments) Regulations 2019, No.11521 include rules which provide for the payment of a ‘transitional SDP amount’ to certain UC claimants. These are claimants formerly entitled to the severe disability premium (SDP) in an award of legacy benefit (except housing benefit (HB)) prior to ‘naturally’ migrating to UC. (Those who undergo ‘managed’ migration should instead be entitled to transitional protection to the level of their former legacy benefit.)

These regulations replace the, now withdrawn, draft regulations which were laid before parliament on 14 January 2019.2

A transitional SDP amount is payable where it comes to the attention of the Secretary of State that:

• an award of UC has been made to a claimant who, within the month preceding the first day of entitlement to UC, was entitled to an award of income support (IS), income-based jobseeker’s allowance (JSA) or income-related employment and support allowance (ESA) that included an SDP;
• in a case where the award of IS, income-based JSA or income-related ESA ended during that month, the claimant continued to satisfy the conditions for eligibility for an SDP throughout that month;
• the award of UC has not since terminated (whether by the claimant no longer being entitled to UC or becoming, or ceasing to be, a member of a couple);
• the claimant has not (or, in the case of joint claimants, neither of them has) ceased to be entitled to the disability living allowance (DLA) care component, the personal independence payment (PIP) daily living component, armed forces independence payment or attendance allowance (AA); and
• nobody is in receipt of carer’s allowance or the carer element of UC — for the claimant; or for joint claimants —
  • if an SDP was payable at the higher rate, for both of them; or
  • if an SDP was payable at the lower rate, for the claimant who was the qualifying partner.

A fixed-rate additional amount of UC (‘the transitional SDP amount’) will be payable as a lump sum (disregarded as capital for 12 months or for the remainder of the claim, whichever is longer) in respect of each assessment period that precedes the determination and then an ongoing monthly payment for each subsequent assessment period that begins before the conversion day (a day determined by the Secretary of State having regard to the efficient administration of UC).

The transitional SDP amount is an additional amount, it does not form part of the calculation of the UC maximum amount for the purposes of section 8 of the Welfare Reform Act 2012.

The decision embodying the determination about a transitional SDP amount has the right of mandatory reconsideration and appeal in the normal way.3

Level of the transitional SDP amount

The transitional SDP amounts were increased in the finalised regulations, following a High Court judgment regarding the draft rules.4 However, the increased amounts still do not fully compensate in all cases. In correspondence with NAWRA (the National Association of Welfare Rights Advisers), Neil Couling, the Universal Credit Director General, states that this is because the enhanced disability premium has not been included in the calculation of a claimant’s income before moving to UC.5 As a result, the regulations appear likely to be subject to further legal challenge.6

Guidance7 states that the DWP will send claimants a letter via their UC journal telling them whether they are eligible for an SDP transitional payment or not. The payments will not show up on the UC statement.

Differences to the draft rules

The draft rules only provided for payment of a transitional SDP amount to people who claimed UC prior to 16 January 2019 (the date that the SDP gateway came into force). There is no such date in the finalised version of the regulations so that people who naturally migrate onto UC (even after the abolition of the SDP gateway in 2021) will be able to qualify for a transitional SDP amount regardless of the date of claim.

This also means that some of the uncertainty around who would have qualified for a transitional SDP amount under the earlier version of the regulations has now been cleared up. The explanatory memorandum8 provides the following examples of people who will qualify for an SDP transitional amount:

'a. Those who become entitled to backdated amounts of SDP following Legal Entitlement and Administrative Practices (LEAP) exercises being undertaken by the Department (eg, they are subsequently found to have been entitled to SDP after they moved onto UC and it is backdated to before their UC claim).

b. Those whose PIP applications have taken a long time to be processed. Once processed, SDP eligibility is backdated to the period up to when they claimed UC.

c. Those who have not received SDP in legacy due to maladministration/error (eg, those whom the department did not identify as having entitlement and therefore never had it included in their award).

d. Those who win their appeal or mandatory reconsideration of their legacy award and were therefore entitled to SDP in the period before they moved to UC.

e. Claimants who have inadvertently breached the SDP gateway to claim UC.’

The earlier version of the regulations provided for people who had received SDP in their IS, income-based JSA, income-related ESA or HB calculation to receive a transitional SDP payment.

The current version makes no provision for the payment of a transitional SDP amount to those who had only had SDP included in their HB calculation. This could disadvantage disabled workers and others who had had a reduced HB award due to their income.

With respect to example (e) from the memorandum, there may be an argument that the claim for UC should never have been allowed and that the claimant should be moved back to legacy benefit.9 However, it should be noted that as this is as yet untested, there is a risk to the client in taking this course of action as s/he may be left without subsistence benefit.

Regulation 3 amends the ‘SDP gateway’ (regulation 4A of the Universal Credit (Transitional Provisions) Regulations 2014, No.1230) so that it does not block claims for UC as part of managed migration. Regulation 7 due to come into force on 27 January 2021, provides for the abolition of the SDP gateway.

When do payments come to an end?

Once a determination has been made that a claimant is entitled to a transitional SDP amount, it is not necessary for all of the criteria for a transitional SDP amount to continue to be met throughout the remainder of the UC award. The regulations state that the transitional SDP amount is, following the determination that a claimant meets the criteria for the payment, to be payable ‘for each subsequent assessment period before the conversion day’. Guidance10 states that ‘even if the claimant’s circumstances change at a later date, the transitional SDP amount continues to be included in the UC award.’

The explanatory memorandum states that ‘at a future date, to be determined by the Secretary of State, these payments will be converted into a transitional element. Once these payments have been converted to a transitional element, they will be subject to the rules associated with transitional protection and will erode or end in certain circumstances’.

With respect to any period prior to the date on which the transitional SDP amount is converted into a transitional element, the memorandum states that the transitional payment will end where:

• UC claimants form a couple or separate from their partner; or
• where entitlement to UC ends.

Given that the transitional SDP amount is an additional amount of UC, it seems clear that the payments are additional to an award of UC and therefore a claimant must continue to satisfy the conditions for entitlement to UC as set out in section 3 of the Welfare Reform Act 2012. If the basic and financial conditions for UC are not met, then the UC award will end and the transitional SDP amount will also end.

However, it is arguable whether or not entitlement to UC actually ends in the event of a UC claimant changing relationship status. While the secondary legislation assumes this to be the case11 there is no explicit provision for this in the primary legislation (in contrast to, for example, section 3 of the Tax Credits Act 2002). This may be clarified in future caselaw.

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.