Ministers’ Severance Pay

(Urgent Question): To ask the Chancellor of the Duchy of Lancaster if he will give a statement on severance pay for Ministers.

The severance pay for Ministers is established in legislation that was passed by Parliament in 1991 and that has been used by successive Administrations over several decades. The Ministerial and other Pensions and Salaries Act 1991 states that where a Minister of eligible age ceases to hold office and is not reappointed to a ministerial office within three weeks, they will be entitled to a severance payment of a quarter of their ministerial annual salary. The context of this legislative provision is the reality that ministerial office can end at very short notice indeed, that reshuffles are a fundamental part of the operation of Government and, by their nature, routinely remove Ministers from office, and that, unlike in other employment contexts, there are no periods of notice, no consultations and no redundancy arrangements. Section 4 of the Act therefore makes provision for severance payments.

This is a statutory entitlement, and it has existed and been implemented for several decades, by Governments of all stripes. Severance payments were made and accepted by outgoing Labour Ministers between the Blair and Brown years, as well as during the Administration in 2007, and by Liberal Democrat Ministers during the coalition. To ensure transparency, severance payments are published in the annual reports and accounts of Government Departments. As an example of the previous operation of this provision, the data published in 2010 indicated that severance payments made to Labour Ministers in that year amounted to £1 million. Finally, let me be clear that although this is a statutory entitlement, Ministers are able to waive such payments. This is not a matter for the Government; it is an entirely discretionary matter for the individuals concerned, and this is an approach that has been taken before.

Thank you very much for granting this urgent question, Mr Speaker. I welcome the fact that there is a Minister to respond. In the middle of a cost of living crisis, and with families struggling to make ends meet and get to the end of each month, the British public will be rightly watching this distracted Government with disgust. They are too busy infighting to provide real solutions, and to add insult to injury, thousands of pounds of people’s hard-earned taxes will be handed out to former Ministers. By my reckoning, £250,000 of severance pay will be given to Ministers who have not been reinstated. Five former Secretaries of State will receive more that £16,000 each, including the former Secretary of State for Education, who was in post for 36 hours and is due to receive close to the annual starting salary for a teaching assistant.

This unprecedented wave of resignations and the avalanche of abdications make this a unique case. The vast majority were not sackings or forced resignations. The departures were caused entirely by a discredited Prime Minister clinging to office and a Conservative party unwilling to deal with it. Now our constituents are forced to foot the bill, paying for this Government’s chaos yet again. So I ask the Minister: what is the exact cost of these resignations to the taxpayer? Have any payments already been made to former Ministers? If so, how much and to whom? Will Ministers receive the severance in a one-off payment to their bank account? How do these payments represent good value for money to the public, and what arrangements are there to ensure that they can be waived, as she identified, and returned to the Treasury? Former Ministers need to look themselves in the mirror and decide if their constituents would wish them to accept this payment, and this whole Government must tell us if they can really defend this use of our money.

As I said earlier, and to answer the hon. Lady’s question, at this point no Ministers who resigned are entitled to receive a severance payment. We have a three-week window.

Does my hon. Friend agree that it is disingenuous of the Opposition to reference my alleged severance pay, as I made it clear almost immediately after resigning that I would not be taking such money?

Indeed, and I thank my right hon. Friend for confirming that she has already talked to the permanent secretary of the Cabinet Office and that she will not be receiving the payment.[Official Report, 20 July 2022, Vol. 718, c. 12MC.]

We now come to the SNP spokesperson, Brendan O’Hara.

Could there be a more fitting end to the tenure of one of the most discredited Prime Ministers in living memory than to have a slew of his former Ministers, motivated in the main by naked self-interest, finally abandoning the ship that everyone else could see was sinking months ago and, in the process, costing the public purse hundreds of thousands of pounds? It is quite astonishing, particularly when, for so many people across the United Kingdom, keeping body and soul together at this time of crisis is a daily challenge that will only get tougher.

I appreciate that the Minister has said that this payment is discretionary and that no one is forced to accept it, so will she join me in asking everyone in receipt of such a payment to refuse it, to return it or to donate it to charity? Will that be made public when it is done? Does she agree that this system, whereby a disgraced Prime Minister—one who is heading out the door, we think—can appoint Ministers knowing they will be entitled to severance pay in a few months’ time, is fundamentally broken and requires an immediate overhaul?

I am afraid I do not agree with the hon. Gentleman. It is quite clear that, within the three-week period, Ministers who have left can decide for themselves whether they should accept the money and make that decision clear to the permanent secretary so that no money leaves the Treasury before having to come back. I hope that is totally clear.

Does my hon. Friend agree that it is outrageous that the Liberal Democrats put out an article last week stating that I, as a Parliamentary Private Secretary, was paid £22,375 for a job we all know is unpaid, and that I received £5,594 in severance pay? Does she also agree that this type of libellous statement, which the Liberal Democrats choose to put out about us, has earned them the nickname of “the Fib Dems”?

That is an astonishing thing for the Liberal Democrats to put out. It is a straight, flat lie that they should know very well should not be put out by any political party. When the hon. Member for North East Fife (Wendy Chamberlain) stands to ask a question, which is a perfectly reasonable thing for her to do, I sincerely hope she apologises and confirms that the Lib Dems will put out a clarification as large as the original piece.

I make it clear that I do not want to cast aspersions on any individual Minister.

This morning I visited the care workers of the St Monica Trust in Bristol. One worker told me that the average wage is between £16,000 and £17,000, and that the trust is asking them to take, in one case, a reduction of £6,000. The House will consider legislation later today that enables agency workers to undercut striking workers, in an atmosphere in which we are talking about levelling up. Does the Minister understand that these payments should not be made where a Minister resigns voluntarily? I understand it if a Prime Minister says, “Your services are dispensed with,” but to make any such severance payment following a voluntary resignation is really wrong.

I recall that, during the Blair and Brown years, the Labour party decided it did not need to change the legislation. The legislation is as it is, there is a three-week period, and I think that is completely fair.

First, I commit to responding directly to the hon. Member for North Devon (Selaine Saxby) and the Minister on what statements were put out.

This seems to be a situation entirely of the Conservatives’ making. We are potentially at risk of making a mockery of our system. Given that the Minister says it has been more than 30 years since this legislation was looked at, does she agree that now is the time to revisit it and that, at the very least, we should look at a minimum term of service before a Minister or Secretary of State is entitled either to waive or to receive a severance payment?

That is a fair question. The answer I would give the hon. Lady is that, obviously, the Liberal Democrat who resigned during the coalition did not think it was worth looking at either.

Does the hon. Lady think the public will consider any resigning Minister who is a Tory leadership candidate to be setting the right example by trousering this cash?

Fortunately, I am going to make absolutely no comment about the fact that we have many, many wonderful candidates to be our next leader who, frankly, will knock the Labour party into a cocked hat when they are elected.