[2025] UKUT 035 (AAC)

In considering the question of justification for the difference in treatment, it is necessary to set out the relevant policies of the Secretary of State in the light of the decided cases.

One begins with the Universal Credit Policy Briefing Note of 1 September 2011. Paragraph 3 set out the key policy proposals including (with emphasis added)

“(e)

Within Universal Credit individuals will only qualify for either a disability or a carer element, not both. The Government is removing current overlapping provision that allows people to simultaneously claim an addition by virtue of a medical condition and a carer element for themselves to reflect the fact that the additions are paid in respect of not being able to work through either a medical condition or by virtue of caring responsibilities. However, as now, couples could get a disability addition for one member and the carer element for the other partner.

(f)

Whilst many people may benefit from Universal Credit, transitional protection will apply to current claimants so that there will be no cash losers as a direct result of the move to Universal Credit where circumstances remain the same”.

Thus the policy is that transitional protection will apply to current claimants, so that there will be no cash losers as a direct result of the move to UC where circumstances remain the same. It is apparent that there is no suggestion that claimants whose circumstances had changed for the worse (as here) should lose in cash terms.

On the contrary, paragraph 5 included a description of how the protection would work in practice (again with emphasis added)

“(d)

Transitional protection will protect the existing entitlements of people already receiving the various premiums in the current system. In an individual case the need for transitional protection will depend on how the overall benefit entitlement is affected by the move to Universal Credit. The groups who may need some transitional protection as a result of the changes described in this paper include:

• Families who receive the disabled child element of Child Tax Credit (or the disabled child premium in Income Support) for a child but not the severely disabled child element

• People who have been awarded the severe disability premium in the existing out of work benefits

• People with an addition not linked to limited capability for work or work-related activity (eg the disabled worker element in working tax credit)

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(f)

Some of these households may gain from Universal Credit as a whole. For those households who would lose from Universal Credit as a whole, transitional protection will apply where circumstances remain the same”.

The same point as made in paragraph 103 above applies again.

Next comes the Universal Credit Policy Briefing Note: Transitional Protection and Universal Credit of 10 December 2012 which stated that (again with emphasis added)

“2.

Background

The principle of offering Transitional Protection which avoids cash loss at the point of change and which erodes over time is an established one. It is similar to the approach adopted when Income Support was introduced in 1988 and in the current move from Incapacity Benefit/Income Support to Employment and Support Allowance.

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3.

Key Policy Principles

For many claimants, Universal Credit will provide a level of support that is the same as, or higher than, the current system.

To ensure, there will be no cash losers directly as a result of the migration to Universal Credit where circumstances remain the same, the Government will provide cash protection to claimants whose Universal Credit award would be less than under the old system, in the form of an extra amount to make up the difference between the old and the new. The maximum amount will be fixed at the point of change and cash protection will continue to be paid until the value of the award under the new system overtakes the levels of the pre-Universal Credit entitlement. Section 5 outlines what happens to the cash protection as the amount of a Universal Credit award changes.

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5.

How will Transitional Protection change?

Transitional Protection will be eroded by changes in the underlying Universal Credit Award, as outlined below.

Subsequent increases in Universal Credit award: for example, if a claimant qualifies for £20 cash protection and subsequently sees a rise in their underlying Universal Credit award, perhaps through a small fall in income, the birth of a child, or through uprating of the Universal Credit elements, the total award will not increase until the £20 cash protection is used up. This approach ensures that people move eventually to their new rate but without seeing any cash reductions in the amount.

Subsequent decreases in Universal Credit award: if a claimant sees a fall in their Universal Credit award, maybe through an increase in their earnings, the amount of cash protection given at the point of transition will be unaffected, ensuring that work incentives are also protected.

Should a claimant continue to increase their earnings past £0 Universal Credit net entitlement then their Transitional Protection will be removed at the set single taper rate. This ensures that claimants do not experience a ‘cliff-edge’ by losing all their Transitional Protection once they are no longer entitled to Universal Credit. However it ensures that they do not continue to receive support should they no longer need it.

6.

When will Transitional Protection end?

As stated, we believe it is correct to cushion claimants who are affected by a change that the DWP is making when the claimant has had no changes in circumstance. However, it is appropriate to end this protection when circumstances underlying an award are no longer recognisable as those on which the legacy calculation was made. Therefore Transitional Protection will end altogether if a claimant’s circumstances change significantly. The following occurrences are defined as a significant change in circumstance:

• a partner leaving/joining the household;

• a sustained (3 month) earnings drop beneath the level of work that is expected of them according to their claimant commitment;

• the Universal Credit award ending; and/or

• one (or both) members of the household stopping work.

Once Transitional Protection has ended it will not be applied to any future awards”.

The stated policy is therefore to cushion claimants who are affected by a change made by the Secretary of State when the claimant has had no changes in circumstance. It is, however, appropriate to end the protection when circumstances underlying an award are no longer recognisable as those on which the legacy calculation was made. Transitional protection will therefore end altogether if a claimant’s circumstances change significantly. Again, nothing is stated to the effect that transitional protection will end altogether if a claimant’s circumstances change significantly for the worse and I reject the Secretary of State’s argument to that effect nor do I accept that the interaction between the carer’s element of UC and the LCWRA element is envisaged in these documents as a means of altogether extinguishing the transitional protection afforded to MJ.

The Explanatory Memorandum to the 2019 Regulations stated that

“Purpose of the instrument

2.1

The regulations make provision to:

•

introduce ‘transitional payments’ for those eligible claimants who were in receipt of the Severe Disability Premium (SDP) as part of their award of JSA(IB), ESA(IR) or IS and have already moved to UC following a relevant change in their circumstances. These payments will comprise:

•

an ongoing monthly payment where they are eligible for it;

•

an additional lump-sum payment to cover the period since they moved;

•

the conversion of the monthly payment into a transitional element at a date to be determined by the Secretary of State so that it can be administered and ended in the same way as for those claimants who are receiving transitional protection;

•

abolish, from January 2021, the SDP Gateway that prevents claimants entitled to the SDP from making a claim to UC if they have a relevant change of circumstances. Once the Gateway is removed claimants will move to UC if they have a relevant change of circumstances and may be eligible to be considered for transitional payments.

3.

Matters of special interest to Parliament

Matters of special interest to the Joint Committee on Statutory Instruments

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3.2

The principal changes to the regulations are to add a provision to remove the SDP Gateway and increase the transitional payment amounts to be paid to claimants previously entitled to the SDP.

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7.

Policy background

What is being done and why?

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Transitional Protection – transitional element

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7.26

The regulations also allow for the transitional element to be eroded by an increase in the second or subsequent assessment period if another element included in the UC award increases, or when a new UC element is added to the UC award. An illustrative example of how this would work is below.

7.27

A claimant is in receipt of £1,901.57 UC, which is made up as follows:

Child Element for 2 children £277.08 + £231.67

Standard Allowance £317.82

Housing Element £975.00

Transitional Element £100.00

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Total monthly UC indicative amount £1,901.57

7.28

However, if the claimant reports an increase in rent by £25 to £1,000 in an assessment period after the transitional element has been awarded, the UC award would be adjusted as follows:

Child Element £277.08 + £231.67

Standard Allowance £317.82

Housing Element £1000.00

Transitional Element £75.00

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Total monthly UC indicative amount £1,901.57

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Claimants in receipt of Severe Disability Premium (SDP)

7.40

Regulations have been included to support the transition for those claimants who are entitled to the SDP in JSA(IB), IS, or ESA(IR). Those who were entitled to SDP as part of a Housing benefit (HB) only claim will not be eligible for these SDP transition payments. The legacy system’s complex mix of disability elements has been simplified in UC. UC has two disability elements for adults, and its funding has been targeted differently from the existing benefits, with more money targeted at the most severely disabled.

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7.46

The regulations provide for a one-off check, which:

• ensures that the additional transitional payment is restricted to claimants who are still entitled to UC. This is because claimants who have ceased to be entitled would have had changes of circumstance which means that they cannot be considered as being in an equivalent position to someone still on UC and requiring support;

• excludes cases where, since moving to UC following a relevant change in their circumstances, they have formed a couple or separated from their partner. These would be excluded on the basis that such wider changes would have been likely to affect entitlement to the SDP had the claimant remained on existing benefits, and that protection should not cover such wider lifestyle changes;

• both the above criteria are also criteria by which it is proposed to end Transitional Protection for managed migration cases, thereby providing a continuity of treatment.

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7.49

As with Transitional Protection, the ‘transitional payment’ will end where UC claimants form a couple or separate from their partner or where entitlement to UC ends. 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.

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10.

Consultation outcome

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Severe Disability Premium

10.38

The SSAC report welcomed the decision not to migrate claimants in receipt of the SDP if they had a change of circumstances, the payment to claimants who had already migrated to UC and lost SDP and arrears being paid in respect of this from the start of a claimants UC award. However, it felt that the payment on offer fell short of the level available via SDP within existing benefits. It also commented that:

• payment of the Enhanced Disability Premium was not included in the proposals for transitional payment even though this was not replicated in UC either;

• an element should be added to UC equivalent to the value of SDP and fulfilling a similar function; and

• the claimants in this group will be the least able to comply with the obligation to make a timely claim for UC and, therefore, are most in danger of missing out on Transitional Protection.

10.39

The Government has considered these comments and believe the current proposals offer a fair and balanced response to help provide additional financial support to what is a very specific group of claimants with distinctive needs.

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Loss of Transitional Protection

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10.48

The Department considered these comments, but believes it appropriate to end Transitional Protection when a claimant’s circumstances no longer resemble those on which the original Transitional Protection calculation was made, i.e., it is no longer a like-for-like comparison. Therefore, Transitional Protection will end altogether if a claimant’s circumstances change significantly.

As Ms Smyth submitted, there is no engagement in any of this material with the position which arises here. There is no explanation or justification proffered to a claimant in a position like MJ’s to the effect that “yes, you are worse off when your circumstances change for the worse - and this is the reason why”.

The Explanatory Memorandum to the 2021 Regulations explained that (again with emphasis added)

“...

6.

Legislative Context

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6.2

The 2019 regulations also introduced a SDP transitional payment for claimants entitled to SDP as part of their legacy award who had already moved to UC before the gateway came into effect on 16 January 2019 and for others who moved after that date but who were subsequently awarded SDP retrospectively. These payment provisions came into effect from 22 July 2019. This was intended to provide transitional support to these claimants in acknowledgement of the decrease in financial award they would have experienced moving to UC prior to the introduction of the SDP gateway.

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7.

Policy background

What is being done and why?

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7.4

From 27 January 2021, a transitional SDP element will be considered for those people who had an SDP in their legacy award of either ESA (income related), JSA (income based) or Income Support within the previous month of their move to Universal Credit and where eligible, it will be paid as part of the claimant’s Universal Credit award as a ‘transitional element’. This transitional element will then be subject to a reduction by the amount of any increase to any other Universal Credit element, other than the child care costs element, or by the amount of any new award of a Universal Credit element other than the child care cost element.

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7.7

The erosion of SDP related transitional element will gradually align entitlement to Universal Credit for those that migrate to Universal Credit with those of new claimants to Universal Credit in the same circumstances in line with a principle based on equality”.

Finally, the Explanatory Memorandum to the 2022 Regulations (which effected the amendments to regulation 55) explained that (again with emphasis added)