The SDP gateway: closure and consequences

Simon Osborne describes the closure of the ‘SDP gateway’ in January, and what that means both for universal credit and legacy benefit entitlement.

Between 16 January 2019 and 26 January 2021 inclusive, certain claimants were prevented by law from making a claim for universal credit (UC). Because of that, they were in effect prevented by law from undergoing transfer, or ‘natural migration’, to UC from current awards of legacy means-tested benefit and tax credit. This applied where the claimant was entitled to a severe disability premium (SDP) in an award of income support (IS), income-related employment and support allowance (ESA), income-based jobseeker’s allowance (JSA) or housing benefit (HB). This rule, located at regulation 4A of the Universal Credit (Transitional Provisions) Regulations 2014, SI No.1230, was known as the ‘SDP gateway’.

The SDP gateway closed on 27 January 2021. From that point, claimants entitled to the SDP are no longer prevented from claiming UC, and coming under the gateway can no longer allow a new claim for legacy benefit or tax credit.

It is important to remember that it is the SDP gateway that has closed. It is not the case either that the SDP itself has been abolished, or that claimants on legacy benefits are automatically migrated to UC from 27 January. Claimants getting the SDP in legacy benefit already can remain entitled to it, those still on legacy benefits can still become entitled to the SDP, and claimants on legacy benefits will still only undergo migration to UC when and if they claim UC.

However, the closure of the gateway has important consequences regarding: (1) natural migration to UC and (2) the inclusion of ‘SDP transitional elements’ in awards of UC.

The gateway was closed by the revocation, from 27 January 2021, of regulation 4A of the Transitional Provisions Regulations. From that date therefore, there is simply no rule providing for the SDP gateway. The revocation of regulation 4A was provided for by regulation 7 of the Universal Credit (Managed Migration Pilot and Miscellaneous Amendments)

Regulations 2019, SI No.1152 (the ‘Managed Migration Regulations’).

The official explanation (set out in the Explanatory Memorandum to the Managed Migration Regulations) is to remove the different treatment of severely disabled claimants under the SDP gateway, compared to those who have undergone or do undergo natural migration, and so instead get a ‘transitional SDP amount’ (see below). That difference in treatment was held to have been unlawful in the decision by the High Court in TP, AR and SXC v Secretary of State for Work and Pensions [2019] EWHC 1116 (Admin) (3 May 2019).1Upheld by the Court of Appeal in R (TP, AR and SXC) v Secretary of State for Work and Pensions [2020] EWCA Civ 37 (29 January 2020).

From 27 January 2021 a claimant is no longer prevented by law from claiming UC on the basis that s/he is entitled to the SDP in an award of legacy benefit. Therefore, in the event that s/he makes a claim for UC, any current entitlement to legacy benefit or tax credit is terminated in the same way that it is for claimants not entitled to the SDP. In short, claimants entitled to the SDP may now undergo natural migration to UC.

Also, entitlement to the SDP no longer prevents the abolition of income-related ESA, or income-based JSA in the event of a new claim for any kind of ESA or JSA.

The abolition of the gateway also means that provisions allowing new claims for legacy benefits and tax credits by claimants prevented from claiming UC by the gateway no longer apply.2For an example (requiring a claim for UC to be prevented by the gateway), see Article 7(2) of the Welfare Reform Act 2012 (Commencement No.23 and Transitional and Transitory Provisions) Order 2015, SI No.634 (C.32). See also the official guidance in ADM Memo 1/21.

So, with very few exceptions, it is now no longer possible to make a new claim for a working-age legacy benefit or tax credit. The most important exceptions are the possibility of a claimant in ‘temporary’ or ‘specified’ accommodation (entitled to an SDP or not) making a new claim for working-age HB – although even s/he is not entitled to make new claims for other legacy benefits or tax credits.3Other exceptions apply regarding working-age HB for certain mixed-age couples, tax credit where another tax credit is already awarded and ‘frontier workers’. Official guidance to local authorities says that the abolition of the gateway means that ‘only people living in temporary or specified accommodation will be allowed to make new claims for working-age HB’, but that existing claimants ‘can remain on HB until they have a change of circumstances which triggers a new claim to UC’.4‘Changes to housing benefit for claimants in receipt of severe disability premium’, Housing Benefit Circular A11/2020, 21 December 2020

UC has no standard disability elements. There is compensation for the loss of the SDP on natural migration to UC, but it is important to understand that this is not intended to provide transitional protection to the full amount of legacy benefit formerly paid.

The compensation is in the form of a transitional payment of an extra amount of UC, called the ‘transitional SDP element’. Strictly speaking, that term only applies to payments where the UC began on or after 27 January 2021. Where the UC began before that date, under very similar rules, although different in requiring that the severely disabled person was actually the claimant of the legacy benefit, they are called ‘transitional SDP amounts’.5The Universal Credit (Transitional Provisions) (Claimants previously entitled to a severe disability premium) Amendment Regulations 2021, SI No.4 inserted a new version of Sch 2 Universal Credit (Transitional Provisions) Regulations 2014, SI No.1230.

The DWP has confirmed that consideration of entitlement to the payment will be automatic: ‘Following the removal of the SDP gateway, when people make a claim to UC, DWP will check to see if they were receiving the SDP in their previous legacy benefit award and, where the claimant would still satisfy the qualifying conditions for SDP, they will automatically be considered for a SDP transitional payment.’6Letter from Neil Couling, Senior Responsible Owner for Universal Credit, DWP, to Disability Benefits Consortium, included in ‘An update on the SDP gateway’, disabilitybenefitsconsortium.com, 16 December 2020

There is no entitlement to the payment where the claimant was entitled only to HB (ie, not to income-related ESA, income-based JSA or IS), even if that included the SDP.7Sch 2 para 3 Universal Credit (Transitional Provisions) Regulations 2014, as amended by SI 2021, No.4 Also, payments of transitional SDP elements do not specifically ensure that the claimant is no worse off on UC in all cases. They are solely intended to compensate for the loss of the SDP, and make no reference to the full amount of legacy benefit formerly received. The payment is a fixed-rate, generic amount, currently set at £120, £285 or £405 a month depending on whether it is a single or joint claim, whether the limited capability for work-related activity element is included.8Sch 2 para 8 Universal Credit (Transitional Provisions) Regulations 2014, as amended by SI 2021, No.4. Official guidance on the payment in ADM Memo 1/21.Particularly in combination with the 2020/21 uplift to the UC standard allowances (not announced as continuing in 2021/22 at the time of writing), in effect this does provide some protection from being worse off on UC. But it remains standard advice to check UC entitlement in advance in individual cases.

The ‘transitional SDP element’ is treated, for certain purposes, ‘as if’ it were part of a UC award and a transitional element of UC.9Sch 2 paras 4 and 6 Universal Credit (Transitional Provisions) Regulations 2014, as amended by SI 2021, No.4 (The ‘transitional element’ itself is different, and will be the mechanism whereby, in yet-to-be-introduced managed migration cases only, the claimant may indeed actually be protected from being worse off at the point of transfer to UC.) The transitional SDP element is treated ‘as if’ it were part of the UC maximum amount, and ‘as if’ it were a transitional element for the purpose of eroding the amount of the payment for increases in UC maximum amounts (excepting the childcare element) and stopping it altogether where the UC award ends.