The Department of Work and Pensions (DWP) could have to pay 50,000 people on Universal Credit over £150million.
The DWP has been ordered to pay out a huge sum of money to two men after losing a court battle.
The issue surrounds claimants who lost money moving from older, 'legacy benefits' onto the one-size-fits-all Universal Credit scheme.
Two severely disabled men on benefits in this position were discriminated against when they lost money moving onto Universal Credit, the High Court has said.
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The men, known as TP and AR, today won their legal challenge against the Department of Work and Pensions (DWP) over the issue that opens up the possibility of others being able to claim back from the DWP.
The pair were getting £180 extra each a month in benefits before being switched to Universal Credit.
The court said the DWP discriminated against the pair by not giving them the difference when they moved to an area where Universal Credit had been rolled out.
In court, the DWP said paying everyone in the position of TP and AR would affect up to 50,000 people and involve sums of up to £150million over a six-year period to put right.
TP and AR, who were represented by law firm Leigh Day, began their legal campaign after they were moved onto Universal Credit in 2016 and 2017.
Previously they each got Severe Disability Premium (SDP) and Enhanced Disability Premium (EDP).
Leigh Day said the DWP paid the pair £120 a month, compensating for the loss of SDP and not EDP.
Claimant TP said: "The past six years have been immensely stressful as I have struggled to get by on a lower income.
"I just hope that the DWP will put all of this right as soon as possible so that those of us who have been badly affected by this unfair policy can get on with our lives.”
Claimant AR said: “It should never have been the case that disabled people entitled to the severe and enhanced disability premiums were suddenly deprived of the equivalent sum when they found themselves transferred on to Universal Credit.
"The policy has caused me and others serious hardship and I am glad that the court has seen the sense in our argument."
Leigh Day said the case of AR and TP is the fourth time a case of Universal Credit claimants on legacy benefits has gone to court.
DWP has no obligation to pay out money to further claimants unless challenged in court.
Leigh Day partner Tessa Gregory said: “Whilst we are delighted that the court has once again found in our clients’ favour, we do not understand why this matter is still being litigated.
"Following the three previous findings of unlawful discrimination the DWP should have ensured our clients were not losing out on severe and enhanced disability payments following their move from legacy benefits to Universal Credit.
"Our clients hope that this judgment marks the end of the road and that the DWP will stop wasting money on legal fees and get on with protecting the vulnerable.”
DWP has been approached for comment.
Universal Credit began to be rolled out in 2012 and replaced previous benefits like income-based jobseekers' allowance, income-based employment and support allowance (ESA) and housing benefit.
