Ministerial Severance: Reform

Bill Esterson Excerpts

Tuesday 6th February 2024 Commons Chamber

[The Minister without Portfolio (Esther McVey)]

It has been interesting to hear the Labour party—yes, the Labour party—make the case for the terms and conditions of workers to be changed unilaterally, in one day, and without consultation or a proper review. I am sure that Labour’s union paymasters will be fascinated to hear the case made by the right hon. Member for Islington South and Finsbury (Emily Thornberry) today.

I start by making it clear that the motion before the House departs from the fundamental principle that it is the Government of the day—that is the party that won the election, voted in by the public—who are able to determine the business of the House. That is something the House itself has long recognised, in Standing Order No. 14. By setting aside Standing Order No. 14, the motion would enable the Opposition to bring in a Bill and race it through Parliament by proceeding through all its substantive Commons stages in one day. The truth is that if the right hon. Lady is so keen to decide the business of the day in the House, she should not have supported her neighbour, the right hon. Member for Islington North (Jeremy Corbyn), to become the Prime Minister. Given that she did support him, she clearly is not all that keen on being in charge of parliamentary business.

Although it is sometimes necessary for Parliament to legislate at pace—in exceptional circumstances and in response to emergencies—this is not a policy matter that warrants setting aside the procedure of the House. To do so would inhibit proper parliamentary scrutiny. We have just had an Opposition day debate on knife crime, which has gone through the roof in Sadiq Khan’s London. Does it not say everything about the priorities of the Labour party that it proposes emergency legislation in respect of this debate and not that one?

[Bill Esterson (Sefton Central) (Lab)]

Perhaps the third minute of her speech will be when the Minister starts to talk about the topic, which is ministerial severance pay. The “Minister for common sense” had personal experience of this in 2015, 2018 and 2020, and may soon do so again. In the meantime, can she tell us how she decided which of the payments for which she was eligible to accept and which to turn down? Does she think that decisions on what to accept should remain at the discretion of the individual, even in cases where the individual is guilty of gross misconduct?

[Esther McVey]

The hon. Member has raised a point about redundancy payments, and that is fundamentally what we are talking about. Severance pay is a redundancy payment, in that Ministers can be turfed out of office without any notice of termination and without any proper consultation. They have been given what would otherwise be called redundancy payments. I entirely agree that people have accepted those redundancy payments, just as Labour Ministers did when the Prime Minister changed from Blair to Brown, and just as Labour Ministers did when Labour went out of office in 2010.

--- Later in debate ---

[Bill Esterson (Sefton Central) (Lab)]

I think the best that can be said for the previous speaker, the hon. Member for Southend West (Anna Firth), was that she spent six minutes and 50 seconds speaking about anything but the motion and then the last 10 seconds on severance pay. I am sure other than that she is a delightful Member of the House, but on this occasion I am afraid she did not really get there.

In supporting the motion today, I want to highlight a trio of payments that were made during the chaotic period in the autumn of 2022, which capture the essence of why the rules on ministerial severance were brought into disrepute during that period and how reforms can fix the problem. It is impossible to make those points without speaking about individual cases, as my right hon. Friend the Member for Islington South and Finsbury (Emily Thornberry) said from the Front Bench, and I have informed two Members that I will be discussing the payments given to them as examples of what happened.

If we cast our minds back to September 2022, colleagues will remember that in the earlier days of the premiership of the right hon. Member for South West Norfolk (Elizabeth Truss) there was some turmoil in her Whips operation. Mind you, the early days were swiftly followed by the middle days, and the final days were not very far behind—and it is fair to say there was turmoil all the way through. Anyway, in those early days, three assistant Whips were sacked and three more put in their place. The appointments were made three days before the mini-Budget and they lasted just 38 days, until the right hon. Member left Downing Street.

The three assistant Whips spent almost their entire time in office propping up a doomed regime while it continued to do huge damage to the country—damage for which my constituents are still paying the price in the shape of crippling mortgage payments. In those circumstances, we might have thought that those who were appointed by the right hon. Member for South West Norfolk would have walked away from their brief time in office feeling some measure of contrition, perhaps even shame, at the role they had played in that disastrous Administration, and wanting only to apologise to their constituents for what they had done.

Instead, unbelievably, each of the three assistant Whips walked away with three months of severance pay—a £4,479 handout from the taxpayer—after just 38 days’ work. They received two and a half times more in severance pay than they were paid in salary during those 38 days. At the same time, a number of departmental Ministers received £5,593 in severance pay, compared with £2,248 for their salary in five and a bit weeks as Ministers. All that happened at a time when people all round the country were struggling to put food on the table, to fill up their car and to pay their bills in the face of a cost of living crisis that those Ministers’ time in office had just made substantially worse.

Average growth in the UK has been 1.5%, compared with the 2% when Labour was in office between 1997 and 2010. That lower growth has meant £150 billion less in GDP, £40 billion less in tax revenues for public services and infrastructure and £10,000 a year less on average per household for each of those years, across the UK. Those are the figures—the price of failure of 14 years of Conservative government. When the right hon. Member for South West Norfolk crashed the economy through her reckless, unfunded mini-Budget, it just turbocharged the damage done. My constituents, and all our constituents, are still living with the consequences of what the then Chancellor, the right hon. Member for Spelthorne (Kwasi Kwarteng), dismissively referred to as “turbulence”, in the form of higher food prices and mortgage payments.

The premium for economic failure, which was created when the right hon. Members for South West Norfolk and for Spelthorne crashed the economy, is still priced into markets today, and private investment in the UK is still at a record low. The scale of severance payments as reward for being part of that disastrous mismanagement of the economy is nothing short of disgraceful. However, it does serves one purpose at least: it makes the case for reform indisputable. It is a shame that the Minister chose not to engage with the substantive point about the severance payment system having been shown not to be fit for purpose as a result of what happened in 2022.

Under Labour’s proposals, the three assistant Whips would have received not a quarter of their annual salary, but a quarter of their actual earnings, reducing their severance payments from £4,479 to £454, which is almost a tenth of what they originally received and a much fairer and more sensible amount. The hon. Member for Southport (Damien Moore) was at pains to point out in his recent comments to the Liverpool Echo that the payment he received was an automatic entitlement—in other words, he was just following the rules as they stand. The £4,479 that he received—compared with the £454 that would have been due had the legislation referred to on the Order Paper been in place—really says it all. The hon. Member for South Ribble (Katherine Fletcher) made a similar defence to the Lancashire Post, to which she said that severance payments

“are governed by Acts of Parliament”.

Our proposal would have seen her severance payment down from £5,593 to £562, which is much more proportionate to her time served.

I am more than happy with what both Members said in public, but I hope that they accept that in no other job would the severance payments from which they benefited be allowed. That was among the questions that the Minister did not address—in what other job is full severance pay available from day one in that way, or in the event of gross misconduct? Those are the reasons why the measures proposed by my right hon. Friend the Member for Islington South and Finsbury are so important.

The good news is that Conservative Members, including the beneficiaries of excessive payments, have the opportunity to make amends today.

[Jerome Mayhew]

The hon. Gentleman is making an interesting point, and I want to ask him to explore it a little more. The immediate availability of redundancy payments, if I can call it that, would not be affected by the motion, so is he suggesting that the motion is not fit for purpose either?

[Bill Esterson]

It sounded to me like the hon. Gentleman was defending the status quo, while we are trying to make the system proportionate and fair. He and his colleagues will have a chance to do something about this unfair system, which has been shown to be completely out of order by what happened in 2022. Those who took advantage of the rules can do something about it by voting with us tonight. Rules, to use the word of the hon. Member for Southport, can be changed, and Acts of Parliament, to use the words of the hon. Member for South Ribble, can be replaced.

This evening, all the Members who benefited from severance payments when the right hon. Member for South West Norfolk resigned can do something about the excessive nature of those payments. They can take advantage of the opportunity that we are offering and take the logical step of voting to change the rules by supporting Labour’s proposal for a fairer and more proportionate severance payment system for Ministers.