Severe Disability Premium: Transfer to Universal Credit

Lord McKenzie of Luton Excerpts

Tuesday 7th May 2019 Lords Chamber

[Lord McKenzie of Luton (Lab)]

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?

[Baroness Buscombe]

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.