The Personal Injury Blog

Universal Credit and the Compensation Recovery Unit

I have blogged in the past about how an injured person’s benefit payments need to be repaid from certain parts of their personal injury compensation.

What is only just being understood is how the Government’s overhaul of the benefits system, resulting in the introduction of Universal Credit (‘UC’), is potentially going to make a significant increase in the level of repayments.

This is going to have wide-reaching implications for both injured people and compensators (usually insurance companies or large organisations like the NHS).

The Government is gradually phasing UC in across the United Kingdom. It describes it as a social security payment that is designed to simplify the benefits system and to incentivise paid work. It is replacing and combining six benefits for working-age people who have a low household income: income-based Employment and Support Allowance, income-based Jobseeker’s Allowance, Income Support, Child Tax Credit, Working Tax Credit and Housing Benefit.

It is fair to say that UC has attracted a mixed response from benefit claimants and the media alike. What is only recently becoming clear, whether by design or oversight by the Department for Work and Pensions (DWP) is that UC is only capable of being offset against claims for loss of earnings.

Before UC, only Income Support, Employment and Support Allowance and Jobseeker’s Allowance were recoverable and could be offset from loss of earnings claims. Now, under the UC regime, there are three other benefits integrated into the one UC payment. These are Housing Benefit, Working Tax Credit and Child Tax Credit.

When a claim is notified to compensators, the law requires the compensator to register the claim with the DWP’s Compensation Recovery Unit (‘CRU’). The CRU section then checks whether the injured person has claimed benefits as a result of their injury and sends a certificate (known as a Certificate of Recoverable Benefits, or ‘CRB’) both to the compensator and the injured person (or their Lawyers) showing the benefits they received, broken down into each component benefit.

If an injured person makes a successful compensation claim for personal injury, compensators are required to repay the benefits claimed as a result of the accident or injury. The principle of repayment is so that injured people are not compensated twice, once through the benefits system, and once through personal injury compensation.

Since UC is a single payment, the CRU officially says that it cannot break it down into its constituent parts.

Before UC, the six benefits it replaced (detailed above) were listed separately on the CRB. It was relatively straightforward for compensators to see which benefits had to be repaid as having been claimed as result of the injury or accident. Under the new rules, UC is listed on the CRB as just one payment.

This is causing major problems as any UC claimed after an accident or injury must be repaid by compensators in full. This can cause unfairness for injured people as they may end up with more of their compensation being repaid (and therefore not paid to them) than people who are not yet on UC, and whose benefits are separate and more easily broken down into their constituent parts.

Another unforeseen (or perhaps not unforeseen) consequence is that UC covers whole households, whereas previously benefits were applied to individuals. Therefore, UC paid to benefit an entire family will wipe out a significant chunk of the injured person’s compensation. Repayments do not take into account that the UC applies to more than just the injured person, but every person in their household who claims UC, which seems manifestly unfair.

The CRU appears unrepentant. I have had discussions and correspondence with the CRU who says it is not possible to break down the UC figure, and so UC is repayable in its entirety.

It is not clear whether the differences between the ‘old’ system (to which most benefit claimants still belong) and the new UC system is known to Government, but the effects are dramatic and are increasing. According to Government statistics, there are 2.3 million people on UC as at 11 July 2019.

Without fresh guidance, or a revised approach from the CRU, injured people and compensators will both be starting to see CRB’s showing much higher sums than under the ‘old’ system.

It is very important that compensators state in any offers of settlement whether their offers are gross of net of CRU repayment, and injured people and their lawyers also need to be aware of this and advise appropriately.

Injured people should be very careful when compensators make gross offers due to the large amount of compensation that will be repayable to the CRU.

Previously, it was possible to appeal against whether a specific benefit was related to an accident or injury. UC is classed as one payment, and the CRU refuses (at the moment) to break it down. Injured people (and their Lawyers) need to appreciate that the likelihood of a successful appeal to the CRU is much lower.

Ultimately, the upshot of UC is that much higher than usual repayments are going to be made to CRU, affecting compensators and injured people alike.

Our experts can guide injured people through the maze of CRU. If you have a question, or want us to handle your personal injury claim, please do not hesitate to contact our team of experienced lawyers on 0114 218 4000 or email info@tayloremmet.co.uk

John Green

John Green is an associate in our personal injury department. John grew up in Sheffield and had no hesitation returning here after studying law in Nottingham. He joined Taylor&Emmet in 2011 having trained and qualified with another local firm. John enjoys playing football and cricket in his spare time. For more information on this topic email john.green@tayloremmet.co.uk or call him on 0114 218 4106.

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