Ministerial Severance: Reform

Debate between Catherine West and Justin Madders

Tuesday 6th February 2024 Commons Chamber

[Justin Madders]

I thank my hon. Friend for making that very good point. I am sure Peter Bone’s former constituents, many of whom will have had calls from the Department for Work and Pensions when benefits overpayments were made and they had to pay them back, will expect him to have done exactly the same as they had to do. It is clearly a matter of public interest.

[Catherine West]

Does my hon. Friend agree that people who have £1,000 to make a bet—on anything—may be a bit out of touch with how most people live their lives in this day and age?

[Justin Madders]

Yes, anyone who can afford to wager that sort of sum on anything, never mind a matter as important as national public policy, does not experience the lives most of our constituents live.

In the 2022-23 financial year, four Ministers left office after facing allegations of misconduct or for breaching the ministerial code. Two received the full severance payment, one selected a reduced payout, and another turned it down altogether, but regardless of the circumstances of their dismissal, they were entitled to those payments as a right. All those forced out of their position while facing allegations of misconduct or falling below expected standards were entitled to payments totalling tens of thousands of pounds. That only half of them took the money is immaterial; what is at issue is the principle that those individuals had an entitlement that no one outside Government has access to.

In any other workplace, an employee against whom gross misconduct allegations are upheld would surely expect to be dismissed immediately without pay. Likewise, if they had been found to have acted in a way that was below the standards expected of them, they would be liable to dismissal with no automatic right to compensation. In the real world, the only protection offered to an employee who has been dismissed for reasons other than gross misconduct is a statutory notice period, which that employee still has to work—unlike Ministers, who do not have to work a notice period—and the notice period is just one week until an employee has two years’ service. In stark contrast, Ministers have, from day one, minute one, an automatic entitlement on dismissal to a quarter of their salary without even having to work any notice period. Those are day one rights that most people can only dream of having.

The evidence is clear when we look at the eyewatering sums Ministers have gobbled up, in some cases qualifying for them after only a matter of weeks’ service. Our analysis finds that a total of 57 Ministers were in post for less than three months before taking their ministerial severance payment. To put it another way, they were able to cash in on their party’s chaos and receive more money in severance pay than they earned doing the job in the first place. I will say that again, because I find it absolutely staggering: 57 Ministers got paid more for leaving the job than they were paid for doing it. That sums up what a shambles the last few years have been.

The story does not end there though. There are now nine former Ministers who spent a grand total of just 37 days as a Minister in their whole career, all within that disastrous 44-day lettuce premiership, which we are still feeling the effects of. When they were effectively sacked by the current Prime Minister, they were all allowed to pocket £5,593—not far off three times the amount they earned actually doing the job. A Government who hit the pockets of millions of Britons with their unfunded tax cuts also hit the public purse with these giveaways.

In the real world, thanks to this Government’s lack of regard for workers’ rights, an employee has to be in a job for two years before they get any kind of compensation. That is an outrageously long period. In addition, for ordinary people, after two full years of continuous service, the redundancy payment is modest compared with what Ministers can expect. Depending on the age of the individual, between eight and 12 years of continuous service are required to entitle them to 12 weeks’ redundancy pay, which is the equivalent of what Ministers are entitled to no matter how long they have served. It is galling that Ministers who had served for a matter of weeks were able to claim a level of payment that it would take those relying on statutory protections up to 12 years to accrue—and let us not forget that if this is someone’s only wage, the commitments made on the back of it are likely to be substantial, which means that the sense of jeopardy if things go wrong is palpable and the consequences of failure are real. The deal offered to Ministers who are effectively made redundant has none of those strings attached.

I think it abundantly clear that the generosity of the 1991 Act has been tested beyond breaking point over the course of the past two years. I cannot believe that when the Major Government introduced the Act, they ever thought we would have such a rapid turnover of Ministers—it is hardly a basis for good government—but, as we know, many conventions have been tested to the limit in recent years.

At the time of its introduction, the condition in the rules that outgoing Ministers can only receive the payment if they do not return to the Government within three weeks was probably seen as an extremely unlikely scenario—after all, ministerial appointments are not meant to be a carousel—but we now know that 20 Ministers decided to take, and keep, their severance payments despite finding themselves returning to a Government role within three months of their initial departure, and some returned even more quickly than that. It just shows how much the Tories love fire and rehire, although in the real world the worker does not become thousands of pounds better off as a result. Perhaps Ministers think that everyone gets thousands of pounds for no reason when fire and rehire happens to ordinary people. That, I think, is the only possible explanation of why they allow that outrageous practice to continue.

This money merry-go-round is self-evidently against the spirit of the “loss of office” system and the original Act. The severance payment is designed to help an individual to make the financial transition after being in the Government, not to be effectively a bonus for Ministers who are temporarily out of the fray. Those who drew up the rules simply could not have foreseen the level of chaos to which the Government have subjected us. It is hard to escape the feeling that there is a profound injustice in the system and the way in which it was exploited in 2022. Nearly £1 million of public money was handed out in the form of severance payments during that year, a figure which, had the reforms that we are proposing today been in place, would have been reduced by 40% to just over £550,000.

I return to the question “What makes a Minister so special?” Are a couple of weeks of being a Minister equivalent to the eight or even 12 years’ service that our constituents would have to give to receive the same level of payment? I think we can all agree that that should not be the case. This is not just about levelling down Ministers’ payments; it is about improving workers’ rights, and our new deal for working people will transform working conditions for everyone in the country.

I want to make a point, which I think is important, about the lack of transparency surrounding these payments. My hon. Friend the Member for Cardiff West (Kevin Brennan) has already mentioned the payment to the former Member of Parliament for Wellingborough. I accept that this has been the case for many years, but we only find out what payments have been made by a particular Department when it publishes its annual report for the preceding financial year, which Departments are not required to do until 31 January in the subsequent financial year. Anyone who has recently filed a self-assessment tax return will note that the annual reports work on exactly the same timetable. By 31 January, people must report on what their financial situation was at the end of March in the previous year—although I suspect that Departments do not experience the frustration experienced by my constituents who wait for hours on end to speak to someone at the end of the HMRC helpline.

The reason it is only today that we are debating the final severance bill of £933,000 is that we only learned about the final group of payments last week, when the Department of Health and Social Care published its report adding another £41,000 to the total. However, this also means that we are eight weeks away from the end of the 2023-24 financial year, and we do not yet know whether a single severance payment has been claimed by any of the Ministers who left their jobs in that year.

We know that several Cabinet Ministers have had to resign in disgrace or have been sacked, but we do not know whether their bad behaviour was rewarded in the same way as other Ministers’ actions. What we do know is that the last reshuffle, in November 2023, created a theoretical severance entitlement of £112,000, although we do not know how much of that was claimed or by whom—and here is the crucial point: as things stand, we are not entitled under law to be told any of the answers to those questions until 31 January 2025, which is, of course, beyond the final date by which a general election must be held. In other words, a number of former Ministers will be standing for re-election but taxpayers will not have the right to know what severance payments they received over the previous year. If we cannot even have transparency, we ought to at least have some reform.

The frequency of reshuffles over the past few years has taken the idea of Government instability to a new level—a level that frankly makes a mockery of us all—and when that absurdity not only has no negative consequences for those in charge but sees them rewarded for their misdemeanours, it is little wonder that so many members of the public look at this place and think it is inhabited by people who are totally out of touch with reality. A Minister losing their job has none of the risk attached to it that many of our constituents face every day, including the uncertainty of not knowing whether they will be given enough hours next week to put food on the table because they are on a zero-hours contract, the risk that because they are in bogus self-employment they have no comeback if they have a dispute with the company, and the fact that they have to be in a job for two years before they get any protection against unfair dismissal.

Precariousness, risk and uncertainty are the defining characteristics of work for too many, but the defining characteristic of Ministers’ jobs is reward, and this reward comes whatever the length of service and whatever the reason for their departure. That is why so many of my constituents feel that there is one rule for the elite and another for everyone else. We know that in most workplaces if you break the rules you are out, with no compensation. Here, if you break the rules, you might be out, but you might be back again a few weeks later, but either way you still win because you can expect a handsome payoff, no matter the reason for your departure. We have a Government who are literally rewarding bad behaviour. It is no wonder so many people look at this place and think politicians have no understanding of how the real world works. It is about time we refreshed the way we do politics and put the service of the public ahead of the service of ourselves.