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Labour vows to reform ministerial severance pay after Tories handed £1m last year

Labour has pledged to reform the rules surrounding ministerial redundancy payments after it emerged that the high turnover of cabinet ministers under the past three prime ministers generated a severance bill worth more than £930,000 in the last financial year.

Since 1991, sacked ministers under the age of 65 have been able to claim thousands of pounds in redundancy pay as long as they have been out of a ministerial post for at least three weeks. The receive the payments irrespective of how long they have stayed in their latest post, or the circumstances under which they left.

Keir Starmer’s party has said it would introduce three changes to the rules. Labour believes it could make savings every financial year of more than 40% if it ensures ministers receive only a quarter of their actual earnings over the last 12 months as a minister, instead of their final annual salary, minus any period covered by a previous severance entitlement.

The party would also ensure that the relevant amount would be taken back from any MP who returns to a ministerial position while still receiving a payout from a previous appointment, to stop ministers receiving a full three-month payout even if they return to the frontbench during that period.

Finally, any minister who left a job while under investigation for allegations of misconduct or breaches of the ministerial code would have their severance suspended and quashed entirely if the allegations were upheld, bringing their treatment into line with the rules for civil servants and special advisers.

If Labour’s rules were enforced over the last financial year, the party says only 76 payments would have been handed out, instead of 98. The severance bill of the last financial year could have been slashed by more than 40%, from £933,086 to £555,093.

Chris Pincher and Peter Bone received severance payments despite being investigated for misconduct. Pincher quit in 2022 after allegations of groping and was handed £7,920 on leaving his deputy chief whip role.

Bone was given £5,593 after he stepped down when voters in his constituency chose to trigger a byelection following a finding by the parliamentary watchdog that he had broken the MPs’ code of conduct on four counts of bullying and one of sexual misconduct.

The former Wellingborough MP was one of five frontbenchers handed payouts in error, as he is six years over the age limit. If the age limit was properly enforced by the Conservatives, Nadine Dorries would not have received £16,876, Deborah Stedman-Scott would not have received £17,742, and both Sir David Evennett and Maggie Throup would not have been handed £10,072.

Rehman Chishti, who spent just two months as a Foreign Office minister in the late stages of Boris Johnson’s premiership (including two days as a candidate for the Tory leadership), would have had his payout cut from £5,593 to £936 under Labour’s rules.

Brandon Lewis, who received two payments totalling £33,572 in just four months after leaving his jobs as Northern Ireland secretary in July 2022 and justice secretary 16 weeks later, would have had his entitlement cut to £13,594.

Alec Shelbrooke, Jackie Doyle-Price and Rob Butler, who had short spells on the frontbench under Liz Truss and left with severance payments totalling £21,433 plus a knighthood, a damehood and an OBE respectively, would have had their payouts reduced to a total of £2,682.

Jonathan Ashworth MP, the shadow Cabinet Office minister, said: “We saw individuals who were never fit for ministerial office in the first place being forced to quit after their shameful conduct was exposed but still walking away with a payout from the taxpayer.

“Under the current rules, every single one of those Tory ministers was legally entitled to three months of severance at their final-salary level, no matter how long they had been in post, no matter the circumstances of their departure, and – in most cases – no matter how quickly they returned to the frontbench. These are the glaring loopholes that Labour’s proposed reforms will seek to close.”