New DWP Scheme: Refunds for Recoverable Hardship Payments

Sanctioned Universal Credit claimants may be entitled to refunds of Hardship Payments following announcement of new DWP scheme

The Department for Work and Pensions has been forced to re-run a Scheme for sanctioned Universal Credit claimants following successful judicial review by Osbornes’ client.

DWP Hardship Payment refund scheme announced 4 November 2024

Universal Credit (UC) claimants who were sanctioned and forced to claim and repay Recoverable Hardship Payments should consider whether they are eligible for a refund following the announcement of a new DWP Scheme.

If you repaid Recoverable Hardship Payment debt to the DWP between 2014 – 2021, and tried unsuccessfully to get repayments reduced, you may be eligible for a refund.

Full details of the new Scheme are available here: Ask DWP to review their decision that you must repay a hardship payment – GOV.UK

The deadline to apply is 4 May 2025.

If you need support with applying to the Scheme, try and find a welfare benefits adviser in the first instance (try here).

‘Sanctions’ are reductions to person’s benefit when they do not comply with DWP requirements. Claimants may be eligible for ‘Recoverable Hardship Payments’ to help them make ends meet during the sanction. Like loans, Recoverable Hardship Payments must usually be paid back but can be written off by the DWP in certain circumstances, for example, if they are causing the claimant financial problems.

The new Scheme means some claimants may be able to apply for historic ‘waivers’ of Recoverable Hardship Payment debt already paid off.

We strongly encourage UC claimants that might be eligible to apply. The new Scheme has only been made possible due to our client ‘D’s’ legal case.

About our client – whose case led to the Scheme being re-run

Our client has mild-learning difficulties and other health issues and claimed UC after leaving school. Our client gets support from a family member with managing her benefits claim.

As with most UC claimants, our client had ‘claimant commitments’, such as a requirement to attend job centre appointments. She did not always manage to meet the commitments, which led to her being sanctioned by the DWP multiple times over many years. Some months she would receive hardly any UC and some months she received no UC at all.

During the sanctions, our client was forced to apply for Recoverable Hardship Payments from the DWP (a type of loan). Sometimes hardship payments were granted to our client, sometimes they were not, making life tough.

Our client, with help from a family member, eventually appealed DWP’s sanctions to a Tribunal, leading to most of them being overturned. Our client was awarded back-paid UC, but unfortunately, much of this was quickly swallowed up by debts she owed.

Even after the sanctions had been overturned, our client did not receive a refund of the Recoverable Hardship Payments (loans) she had taken on because of the sanctions. Our client ended up paying the hardship payment loans off. She had asked the DWP to write off the debt following the sanctions being overturned but this request had been ignored.

What led to the first Hardship Payment Refund scheme

Until January 2021, the DWP operated on the basis that, where it had paid claimants Recoverable Hardship Payments to help them meet their needs during a sanction, it was not able to write off or waive those loans. Requests for waivers were simply not considered (as our client found). Following a judicial review challenge in 2021, the DWP accepted that this was wrong, and agreed it could waive Recoverable Hardship Payments.

The DWP ran a Scheme between 21 November 2022 and 19 June 2023 to rectify its past wrong decision making, acknowledging that some people would have had waiver requests wrongly refused. The DWP invited people to apply for waivers of Recoverable Hardship Payments, if they had already paid them off. Our client was clearly eligible to apply to this Scheme.

Our client, with help from her family member, applied to the Scheme in December 2022 but her application was ignored for months.

In June 2023, two working days before the Scheme closed, we sent a legal letter challenging the handling of her application and the design of Scheme. The DWP quickly granted our client’s application and refunded the Recoverable Hardship Payment loan. However, via her solicitors, our client found out that the now-ended Scheme had been a failure: only 3 people had applied, and only 1 person had had their application granted. DWP’s own financial estimates showed that far more people were expected to have received refunds under the Scheme – suggesting many had missed out.

Our client brought a judicial review challenge against the Scheme. The DWP settled the case and agreed to re-run the Scheme. The DWP confirmed that it would learn lessons from the old Scheme, and our client’s experiences of it, and use these to inform the design of the new scheme.

As part of the settlement, the DWP also agreed to pay our client compensation, and her lawyers’ costs.

The client was represented in her judicial review by Emma Vincent Miller at Osbornes and formerly Public Law Project. Counsel were Bijan Hoshi of Garden Court Chambers and Tim Buley KC of Landmark Chambers.

The client wishes to remain anonymous.

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