My Lords, this order is a necessary measure to address the historical misapplication of the Ministerial and other Salaries Act 1975, which sets ministerial and other officeholders’ pay. The other officeholders are the Leaders of the Opposition in both Houses, the Speakers in both Houses, the Opposition Chief Whips in both Houses and two Opposition Assistant Whips in the House of Commons.
In 1997, a formula was introduced to link pay increases for Ministers and certain officeholders to senior Civil Service pay bands. The formula set out that ministerial salaries should be increased by the average annual change in the midpoint of the senior Civil Service pay bands. During the financial year 2023-24, the Cabinet Office identified that the formula had been misapplied. Since the introduction of the formula in 1997, the salaries of Permanent Secretaries had often been excluded from the calculation, despite the legislation not permitting such an exclusion. This technical misapplication of the law has happened under successive Administrations, over several decades. The formula was originally proposed by the Senior Salaries Review Body, which recommended that Permanent Secretary pay should not be included in the calculation for ministerial pay. The Government believe the policy that has been often applied since 1997, in line with the Senior Salaries Review Body recommendation, is the correct approach and are introducing this Order in Council to ensure the law aligns with long-standing policy.
The order performs two primary functions. First, it resets the statutory salary levels for all Ministers and specified officeholders. Given the misapplication has been applied for several decades, resetting the salaries in law provides legal clarity and a baseline for any future uplifts. These reset figures were calculated based on the average annual change in the midpoint of the senior Civil Service pay bands including the Permanent Secretary pay band for each financial year since the misapplication was identified, in line with the formula set out in the legislation.
Secondly, the order amends the formula to exclude the Permanent Secretary pay band from future calculations. This change simply formalises the policy approach that has been applied in practice, by all Administrations, for over two decades. For the initial year beginning 1 April 2026, the order sets out a transitional measure where the higher of the old or new formula will be applied to ensure that no individual is disadvantaged by the order’s retrospective effect. The impact of this order is minimal; it affects only ministerial office holders and a small number of other office holders in Westminster. Due to incomplete records, it has not been possible to determine the exact financial impact of this misapplication. Analysis shows that no individual has gained or lost a substantial amount.
I want to be clear that for Ministers, this order will result in no change to actual take-home pay. The Prime Minister has maintained the policy of freezing ministerial salaries, and Ministers will continue to waive their statutory entitlement. In fact, ministerial salaries for Members of the House of Commons have not increased since 2008. Ministerial salaries were actually cut in law, via an Order in Council, in 2011. Lords ministerial salaries have not risen since 2008 and were cut in 2011, but in 2019-20, they began to claim their full salary entitlement. They were again frozen in 2020-21 and remain so today. The other officeholders make a personal decision on whether to take the salary they are entitled to in law or to waive part of the salary in line with the ministerial salary freeze. The order therefore does affect the salaries paid to these individuals who choose to take their entitled salaries. The Government have been unable to calculate their annual pay increases while work on this order was ongoing, so we will provide back payments covering annual pay increases owed to current and former officeholders in these roles dating back to 1 April 2023.