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09 April, 2018

Universal Credit is the government's flagship reform of the benefits system. Universal Credit was introduced to simplify the benefit system but has proved to be unpopular with many. In this article we consider the implications for defendants and insurers who are responsible for re-paying social security benefits paid as a result of an accident, injury or disease.

What is Universal Credit?

Universal credit is a single monthly payment for people in or out of work paid monthly. Universal Credit will replace the following benefits:

  • Child Tax Credit
  • Housing Benefit
  • Income Support
  • income-based Jobseeker's Allowance (JSA)
  • income-related Employment and Support Allowance (ESA)
  • Working Tax Credit

What are the implications for defendants and insurers?

When a claimant brings a successful claim for personal injury and is awarded compensation, the Compensation Recovery Unit seeks to recover certain benefits already paid to the claimant. This is based on the principle that a person should not be compensated twice in respect of the same accident, injury or disease.

There are three benefits that can be recovered against loss of earnings claims: Income Support, Employment and Support Allowance and Jobseeker's Allowance. As listed above, these benefits are included in the Universal Credit system. However, there are also three other payments included in the single monthly payment: Child Tax Credit, Housing Benefit and Working Tax Credit.

It has been reported that going forward the Compensation Recovery Unit will not have the means to break down the Universal Credit Payment therefore when a Certificate of Recoverable Benefits is requested by the compensator the entire single Universal Credit Payment will be listed regardless of whether it contains payments for which the compensator is not responsible.

If this remains the case, then it is inevitable that amounts payable to CRU are going to increase significantly. To avoid this issue, consideration should be given to making Part 36 offers gross of recoverable benefits. Although, in reality claimant solicitors are unlikely to advise acceptance of such offers.

Alternatively, compensators will need to appeal the Certificates of Recoverable Benefit to hopefully access the full records to break down linked and non-linked benefits.

Forbes comment

The rollout of the Universal Credit full service is due to complete in December 2018. The Department of Work and Pensions will then begin moving all remaining existing benefit claimants to the Universal Credit service starting in 2019. It is hoped that going forward the Compensation Recovery Unit will be given the facility to breakdown payments to avoid compensators being forced to pay additional amounts or becoming involved in lengthy appeals and/or satellite litigation.

For more information contact Sarah Wilkinson in our Insurance department via email or phone on 01254 662831. Alternatively send any question through to Forbes Solicitors via our online Contact Form.

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