Ministerial Severance: Reform

Debate between Emily Thornberry and Esther McVey

Tuesday 6th February 2024 Commons Chamber

[Esther McVey]

I will carry on for a little while longer. I want to talk about what the Opposition are doing today, which is, as I said at the outset, seizing the business of the day and trying to make this a case for emergency legislation, which it is not. So many emergencies confront the country and the world, and it is striking that of all those emergencies—it could be the middle east, it could be Ukraine, it could be illegal migration—the Opposition deem this to be the most important. We know why that is: it is because they have no plan to deal with any of those big issues of the day. They do not know what to say, they do not have a clue, and they change their minds, flip-flippity-flop, all the time, so they have been reduced to talking about this issue.

Given the importance that the right hon. Member for Islington South and Finsbury attaches to the issue—wanting to seize the business of the day, wanting to push through emergency legislation—can she confirm that this will be the first piece of legislation that any new Labour Government would introduce?

[Emily Thornberry]

No, because we are going to win the vote today. Common sense will prevail, and we will know that this has to be sorted out now. There is no need to wait for a Labour Government; you guys can help us to pass this legislation.

[Esther McVey]

So it is not going to happen today, but in fact the Opposition are not going to do it if they come into power—which, hopefully, they will not. That is how much of an emergency it is.

However, there is some good news here. The right hon. Lady is putting herself at the vanguard of cutting waste, which must be a first for the Labour party. Will she take this opportunity to apologise for the private finance initiative schemes that her party inflicted on the country and on much of its public services? Will she take this opportunity to apologise for the hundreds of billions of pounds’ worth of waste? I will give way to her if she would like to make an apology for those huge amounts of PFI waste.

[Emily Thornberry]

Could we perhaps talk about the £10 billion wasted on personal protective equipment? I really think that the Minister ought to consider talking about ministerial severance reform, but that is, of course, a matter for her.

[Esther McVey]

So the right hon. Lady could not apologise. She could not, or did not want to, stop the waste of hundreds of billions of pounds.

I will say this: the Government accept that the current legislation is now a third of a century old, and that this may be an appropriate time to review it and consider changes, but this is not the right time or place to take action. Proper consideration must be given to new legislation.

As Members will know, severance pay is governed by legislation. The statutory provision for ministerial severance pay is contained in the Ministerial and other Pensions and Salaries Act 1991. It has therefore been in place for successive Administrations, and has been paid to Members of all three parties who have made ministerial office during this period. Under the Act, Ministers who leave office are entitled to a payment equivalent to a quarter of the annual salary that they were being paid in respect of the ministerial office that they are leaving. To be eligible for a payment, they must be under a certain age—65—and must not be reappointed to ministerial office within three weeks of leaving their previous office.

I note—and I thank the right hon. Lady for drawing it to my attention—that in 2022 a small number of severance payments were made incorrectly to departing Ministers. I want to make it clear that the Cabinet Office guidance to Departments is that they should seek to recover any mispayment in line with His Majesty’s Treasury’s guidance, “Managing Public Money”. While the incorrect payments were caused by an administrative error and the former Ministers concerned were at no personal fault whatsoever, it is important that the Government seek to recover that money. I am sure I am not the only one who recalls the catastrophic overpayment of tax credits when Labour was last in office, and the fact that many families got into huge difficulties because of that. It is such a shame that the right hon. Lady was not so exercised about that when they were in office.

[Esther McVey]

No, because we are talking about waste. We are talking about appropriate measures taking place and this faux emergency legislation that the right hon. Lady wants to bring in.

Turning to ministerial severance pay more generally, it is important to note that this is the long-standing policy that successive Governments from both sides of the House have retained. The reason they have retained it that the principle of paying severance remains sound. The Prime Minister, in his constitutional role as a principal adviser to the sovereign, can recommend the appointment and removal of Ministers at any time. This flexibility, necessary as it is within our political system, means that having a reasonable severance pay policy to reflect the uncertain nature of ministerial office has had wide support from across the House since its introduction.

Members will be aware that similar arrangements are in place for Members of Parliament, who also hold the status of officeholder. In certain circumstances, Members of Parliament who lose a seat at a general election are eligible to receive a loss of office payment. The eligibility for the loss of office payment is determined by the Independent Parliamentary Standards Authority, which is responsible for setting and regulating MPs’ salaries, pensions, business costs and expenses. Severance payments recognise the unpredictable nature of ministerial office. The fact that a Minister can lose their office with no notice when the Government or a Prime Minister change will inevitably lead to a substantial increase in the money paid out in that financial year—

[Emily Thornberry]

£1 million!

[Esther McVey]

From a sedentary position, I get £1 million quoted at me. I remember, although maybe the right hon. Lady does not, that it was over £1 million in 2010 when Labour lost office, and that is quite a long time ago.

It is for these reasons that the Government do not currently intend to reform severance pay for departing Ministers, although I am happy to review it, as I mentioned earlier. The current system respects the essential constitutional principle that Ministers serve at the discretion of the Prime Minister and that it is right to provide some protections associated with the loss of ministerial office. The principle has applied, as I said, to all Governments since the Act was passed in 1991, and we need to be careful not to change policy on the basis of exceptions that will occasionally occur under Governments of all forms.

--- Later in debate ---

[Esther McVey]

My hon. Friend makes a good point, and I think that that would be looked at under the review as well, should we review this, but the law that was set out at that time stipulated that age. That is something else that I agree would need to be looked at.

I want to be clear that severance pay cannot be looked at as a stand-alone issue. It is part of an overall picture that governs payments made to Ministers. More broadly, the Government have consistently demonstrated restraint and always sought to minimise the cost of government, at the same time as modernising ministerial office to bring it into the 21st century. This is most clearly demonstrated in the Government’s policy on ministerial pay.

Ministerial salaries today are lower than they were when this Government took office in 2010, which in real terms constitutes a significant pay cut. My noble Friend Lord Cameron introduced a 5% cut to ministerial pay when he came into office in 2010. Since then, Prime Ministers have asked Ministers to waive the increase in their statutory pay entitlement year on year. For example, ministerial salaries are roughly half—that is half—of what they would have been had Lord Cameron not introduced the salary reduction when he became Prime Minister. In April 2010, Ministers of State earned £42,370, which is £63,594 in today’s money, yet a Minister of State today receives £31,680.

I appreciate that the right hon. Member for Islington South and Finsbury did not want to reply to the question from my hon. Friend the Member for Southend West (Anna Firth), but will she confirm today that her party would continue with the ongoing cut in ministerial pay?

[Emily Thornberry]

That is not what the motion is about, so I am afraid that I cannot help the Minister. Is she aware that £2.9 million was spent on severance payments to all the special advisers who lost their job in the same year, 2022-23?

[Esther McVey]

That is well dodged again by the right hon. Lady. She will not confirm that Labour would keep a tight fiscal grip on ministerial pay. Obviously, one of the key things about today’s motion is waste and expenditure. We will see what happens. As always, money runs away with the Labour party.

This Government passed the transformative Ministerial and other Maternity Allowances Act 2021, which for the first time enabled Ministers to take paid maternity leave and be replaced in their Department. Several Members have now benefited from this legislation when in office, and I am sure it will continue to be of immense value. The Government are committed to returning to Parliament in due course to set out proposals on extending the Act.

I conclude by reaffirming the Government’s commitment to recovering the money paid in error to a small number of former Ministers. I reassure the House that departmental processes have been strengthened to ensure that this error does not happen again. For the reasons I have set out, the Government do not think there should be wholesale legislative reform on this matter during this Parliament. We believe that a Government committed to the principle of integrity in public life is the most effective way to control the cost of government to the taxpayer.

In that spirit, we will continue to demonstrate restraint in how we are paid and we will continue to modernise ministerial office to meet the expectations that the public rightly have of us. The right hon. Member for Islington South and Finsbury could not say whether her party would maintain our cuts to ministerial salaries, could not apologise for the last Labour Government wasting money on PFI schemes and could not say whether this Bill, because it is such important emergency legislation, would be the first piece of legislation introduced by a Labour Government, so we can safely conclude that the Labour party does not care about taxpayers’ money.