Ministerial Severance: Reform

Catherine West Excerpts

Tuesday 6th February 2024 Commons Chamber

[Emily Thornberry]

I am proud to say that my party is full of good ideas, but unfortunately we are unable to put them all into one motion. Let us have a little discipline today by concentrating on the motion at hand and the important issue we are raising. We believe that five particular problems were highlighted by the chaos in 2022-23. I will go through each of them, give an example and explain why the changes we want to put forward will solve those problems, and why we would therefore ask the House as a whole to seriously consider our proposal to ensure that we can pass legislation to change the situation, because it does need to be fixed.

First, let us look at what I call the short stayers problem. More than two dozen individuals occupied Front-Bench roles for just nine weeks at the fag end of the Johnson Government, or just seven weeks during the bedlam of the Truss experiment, all of whom walked away with three months of severance pay. Let us look at the hon. Member for Stoke-on-Trent North (Jonathan Gullis) as an example. Never a shrinking violet when it comes to calling out others, he served just 49 full days as a Minister in the Department for Education, earning less than £3,000 in wages, yet when he returned to the Back Benches he received almost double that in severance—three months’ severance for 49 days’ work. Perhaps the Minister for common sense will tell us whether that makes sense to her.

Secondly, we have the problem of the short-lived promotions: individuals who found themselves elevated from junior ministerial roles to more senior positions, and whose severance was therefore calculated not based on the salary they had earned for most of the year, but based on the much higher salary they had earned for only a few weeks. Let us think of the example of the right hon. Member for Middlesbrough South and East Cleveland (Sir Simon Clarke), who spent a year as Chief Secretary to the Treasury, earning a salary of almost £32,000, but then spent seven weeks as Levelling Up Secretary on a salary of more than double that amount. As a result of those seven weeks alone, the right hon. Gentleman received severance pay of almost £17,000. Again, I look forward to the Minister for common sense explaining where the sense is in that.

Thirdly, we have what I might call the quick returners—more than a dozen Ministers who claimed their three months’ severance pay after quitting the Johnson Government, or being sacked by his successor, but who ended up returning to the Front Bench a matter of weeks later while still enjoying the benefits of their severance payments. Take the Minister for Veterans’ Affairs, the right hon. Member for Plymouth, Moor View (Johnny Mercer), who not only accepted three months in severance after only two months as Veterans Minister, but told Plymouth Live point-blank that he had not accepted a severance payment, and then had the sheer chutzpah to return to exactly the same job seven weeks later without repaying a single penny. Once again, I hope that the expert on these matters will tell us whether that sounds like common sense.

Fourthly, there is a much smaller category—I have decided it is best not to give them a name at all. We also saw severance payments awarded in 2022-23 to two individuals, Peter Bone and Chris Pincher, who left their Front-Bench jobs while under investigation at the time for acts of gross misconduct. The 1991 rules are silent on this issue, and we can only assume that it was thought that any individual forced to quit in those circumstances would have the basic decency not to accept a handout from the taxpayer. However, I am afraid what the Pincher and Bone cases have shown us is that we cannot rely on the decency of individuals like that.

Finally—perhaps most incredibly—five severance payments in the last financial year were made entirely by mistake because the Government forgot to apply the age limit that says no one over the age of 65 can receive one, which is how Peter Bone and Nadine Dorries received their payments. Before the current incumbents of the Cabinet Office tell themselves that they have brought order to all this chaos, it is worth noting that the largest of those mistaken payments, which was made to a Minister in the Lords, was made not during the chaos of the summer and autumn of 2022, but in what one might call the cold light of day in January 2023.

The proposed changes to the severance rules set out in Labour’s motion would address each of the five issues that I have set out.

[Catherine West (Hornsey and Wood Green) (Lab)]

Does my right hon. Friend agree that had any of our constituents been face to face with the Department for Work and Pensions in a similar situation to that which she describes, the results might have been different?

[Emily Thornberry]

Any of our constituents struggling to get to the end of the week on their wage packet, and who see the amount of money being handed out—essentially as payment for failure—would be astonished that it was allowed. That is why we are trying to change the rules today.

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[Catherine West (Hornsey and Wood Green) (Lab)]

When I saw the amounts being talked about in this debate, I could not help but think about an organisation called Haringey Giving, which does brilliant work in my constituency. It was set up and managed by residents, and it allows various groups to make applications to it. In the five years that Haringey Giving has been operating, it proudly boasts that it has been able to support 136 local grassroots organisations and help thousands of people in the community through the provision of £900,000 of funding. That is £900,000 of funding painstakingly raised and distributed over five years, and it is still not as much as the amount that this Government were able to spend on severance payments in the single year of 2022-23.

When I have been knocking on doors—in recent times I have done rather a lot of that, in really interesting parts of the country—one thing that people have fed back to me is that they do not like chop and change. The motion is not, as the right hon. and learned Member for Northampton North (Sir Michael Ellis) suggested, a critique of salaries for doing political work such as being an MP in general; it is criticising the chop and change of the various Governments since 2019.

At Christmas, Haringey Giving held its annual fundraising drive, with local residents and businesses all playing their part, and it managed to raise £17,000. That is about the average amount received by the 20 Cabinet Ministers who claimed severance payments in 2022-23. In fact, the right hon. Member for Great Yarmouth (Sir Brandon Lewis), who has been mentioned many times today, could have kept one of his severance payments and donated the other to Haringey Giving—if he is listening to the debate, he still has a chance to do that. That would have been double the total it raised in December.

I say that because it highlights the difference with the real world and the lives of so many of our constituents. When we talk about these severance payments, it is vital to remember exactly what is happening in the country as a whole, which we see at our advice surgeries. Sometimes families come to the advice surgery and a child has no teeth; they have stubs for teeth because there have been no dental appointments. I have heard from a family who have had a pair of shoes that one child wears to the sixth-form one day and then they are available at the weekend for another child to wear to do a part-time job. This is the sort of child poverty we are talking about.

The headline 12-month inflation rate started the year at 9% and ended it at 10%, and peaked at 11% in October 2022, the month in which 38 Ministers claimed severance payments. Food prices rose especially fast, with ordinary families facing a 19% increase in the cost of their weekly shop from March 2022 to March 2023. These amounts of money really matter because they buy things like food and shoes, and they should not be going into the pockets of Ministers who have failed and who have been through the revolving doors and become Ministers again.

The average pump price for petrol and diesel hit an all-time high, with petrol rising to £1.91 per litre in the last week of June 2022 and diesel hitting almost £2 per litre in the first week of July 2022, the same week that 21 Ministers claimed severance payments after joining the coup against Boris Johnson.

Of course, there are also mortgage payments. The Bank of England base rate started the year in April 2022 at 0.75% and ended the year in March 2023 at 4.25%, with the biggest spike taking place in the wake of the kamikaze Budget. Millions of households saw their mortgage rates soar and millions more have felt the pain since their fixed-rate deals have come to an end. That pain has been made all the worse thanks to the direct actions of the Government.

So there we have it: 2022-23, a year when families across the country were struggling more than ever in the face of the cost of living crisis—struggling to put food on the table, struggling to fill up their cars, struggling to pay their mortgages and keep a roof over their heads, facing impossible choices and having to make incredible sacrifices. That is without even mentioning the record peacetime tax burden that the Government have also imposed on the country during that period.

What were Tory Members doing while all this was going on? They were fighting with each other, and scrabbling around for promotions, pay rises, severance payments and resignation honours like they were prizes in a game show. During that disastrous year for the country, their only priority was looking after their own backs and filling their own boots. I hope that this evening they will think about their constituents struggling to make ends meet, and all the charities in our constituencies who work for every penny they raise. They should think about people at the Haringey Giving scheme scraping and striving to raise a few thousand pounds. They should show a bit of contrition and vote to let these reforms proceed.

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[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.