Ministerial and other Salaries Act 1975 (Amendment) Order 2026

Motion to Approve

Moved by

That the draft Order laid before the House on 5 March be approved.

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.

I am grateful to the Minister for the technical explanation of a complex matter, but could she also answer a couple of relevant questions? First, what is the progress on having more Lords Ministers in receipt of salaries, after our recent discussions and legislation on extending the number of paid posts? What progress is there on helping Ministers rather more by clearer definitions of their aims and their targets, with suitable mentoring and support and, if necessary, performance reporting, so that we can all see that these well-justified salaries are indeed well justified and are resulting in better government?

My Lords, I thank the Minister for introducing this order. As she has set out, it is a sensible and largely technical measure that would bring the law on ministerial and officeholder salaries in line with the current practice of excluding Permanent Secretary salaries from the calculation of annual salary increases. It brings the statutory framework in line with the approach that has in practice been followed by successive Governments since 1997. It does not change the underlying policy; rather, it corrects a discrepancy in the legislation relating to the treatment of Permanent Secretary salaries within the relevant calculation. It also addresses the criticism, as the Minister pointed out, from the Secondary Legislation Scrutiny Committee that this issue has not been previously addressed despite the discrepancy being noted by the Cabinet Office in the 2023-24 financial year. On that basis, I do not take issue with the intent of the order.

The principal point on which I would welcome further clarity relates to ministerial pensions. The Government have been clear that ministerial salaries will remain frozen in practice and that take-home pay will therefore be unaffected by this order. However, the order alters the maximum salary that they may receive under the Ministerial and other Salaries Act 1975. It would be helpful, therefore, to understand whether future pension entitlements will be calculated on the basis of that legal maximum salary or on the salary actually received. If it is the former, this measure may have the effect of increasing pension accrual despite the continuation of the pay freeze. I would therefore be grateful if the Minister could set out how pension calculations will operate, and whether any additional cost to the public purse is expected as a result.

More broadly, this measure raises a question regarding the scope of the ministerial pension scheme itself. Unlike with other public service pension schemes, there does not appear to be any provision for forfeiture in cases of serious misconduct. In contrast, we have long accepted in principle across the public sector that pensions may, in defined and exceptional circumstances, be subject to forfeiture where there has been criminal conduct connected to office. Given that disparity, it would be helpful to understand whether the Government have considered bringing forward legislative changes to place ministerial pensions on a more consistent footing with other public service pension schemes in this respect.

Finally, the order resets the underlying salary baseline from April 2026. It would be helpful to understand how that revised baseline is intended to operate in the years ahead, particularly in the context of any future decisions on pay restraint. Despite this being a technical measure, the issues it raises go to questions of consistency, fairness and public confidence, and I look forward to the Minister’s response.

I thank the noble Lord and the noble Baroness. Like magic, I have just received the answer to one of the noble Baroness’s questions. I will address the questions as they came and start with the noble Lord, Lord Redwood.

The Bill we discussed last week is currently awaiting Royal Assent and is not yet an Act, but, on a personal level, I am awfully grateful to your Lordships’ House for passing that legislation. As the Minister for Standards in the Cabinet Office, I was here, as the noble Lord will be aware, when we discussed it. As the Minister for Standards and Conduct across government, the subject of mentoring and support in the area for which I have responsibility and more widely has been the subject of conversations I have had. I look forward to being able to bring forward recommendations when I have been in post slightly longer looking at this in the round. I reassure the noble Lord that this is under active consideration.

In response to the noble Baroness, Lady Finn, pensions have been based on claimed salary, not entitled salary, since 2015. On the issue of forfeiture—a nice segue, if I may congratulate the noble Baroness— I will write to her with the detail but there are currently no active considerations in this space, so we will not be bringing forward an amendment to the Pension Schemes Bill, which I am sure noble Lords will be grateful of at this stage of ping-pong. Having said that, the noble Baroness raises a very important point about wider standards issues and how everything operates in the round. She and I are jointly committed to upholding the highest standards in public life, and I will write to her with all the details on her specific questions.

I thank noble Lords for their consideration of this order. Though technical in nature, the measure is essential for maintaining the integrity of our statutory framework and ensuring that the law accurately reflects decades of established policy. As I have outlined, this order is fundamentally about regularisation; we are addressing a historical discrepancy that has spanned multiple Administrations and several decades. By formalising the exclusion of Permanent Secretaries’ pay from the ministerial salary formula, we are not creating new policy. I thank all noble Lords for the points they raised in today’s debate and I commend the order to the House.

Motion agreed.