12:42, May 12 108 0 theguardian.com

2020-05-12 12:42:04
Benefit claimants unlawfully short-changed, court rules

The government acted unlawfully when it refused to compensate two low-income households left up to £180 a month out of pocket when their legacy benefits were wrongly stopped and they had no choice but to move on to universal credit, the appeal court has ruled.

Although the households were significantly worse off on universal credit – and had successfully challenged the official error that ended their previous benefits – the Department for Work and Pensions (DWP) argued it would be too costly and administratively complex to move them back to the old system.

The ruling holds out the prospect of redress for potentially thousands of claimants who have lost out after moving to universal credit as a result of official error. They could now be able to return to their old benefits or have their universal credit awards topped up to previous levels.

The two households – one a single mother who gave up work to care for her disabled teenage daughter, the other a woman with mobility difficulties – lost about £1,700 and £2,160 a year respectively after they were moved on to universal credit, which they subsequently discovered meant a cut in benefits.

Lord Justice Singh ruled the DWP had breached the claimants’ human rights. Its actions had nothing to do with the individual merits of their cases, he said, and “the only reason in reality why they moved from legacy benefits to universal credit was as a result of errors of law by the state itself”.

Carla Clarke, a solicitor at Child Poverty Action Group, which brought the action, said: “Claimants pushed on to universal credit when the DWP wrongly stops their old benefits should not have to tolerate an income drop that causes them real hardship simply because the DWP considers it is too costly or too complex to rectify its own mistake.”

The DWP – which had successfully defended its position at the original high court hearing in March 2019 – said it was considering whether to appeal against Tuesday’s ruling.

The case highlights what critics say are flaws in the design and rules governing universal credit, which is the UK’s main working-age social security benefit, replacing six legacy benefits.

Under existing rules, anyone who moves on to universal credit – even if wrongly advised to by jobcentre officials – cannot return to their old benefit because of the overriding “lobster pot” principle, which traps people in the new system, even if they are worse off.

It also means they are no longer entitled to transitional protection – an income safeguard that will apply to any individuals on legacy benefits such as tax credits whose payments dip when the DWP formally switches them over to the new benefit from later this year.

Singh said there was no justification for treating the two households differently from other claimants on legacy benefits who will in future receive transitional protection against any drop in income, and that this was a breach of their human rights.

The Disability Benefits Consortium, a group of 100 charities, warned in March that many disabled people claiming working tax credits who lose their jobs over the next few months due to the coronavirus crisis will be worse off, because by having to apply for universal credit they will lose their eligibility for transitional protection.

About 46% of universal credit claimants in the UK will be worse off than they would be under legacy benefits, according to the Resolution Foundation thinktank, in part because universal credit is less generous to some households with disabled children, or severely disabled adults.

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