Government severance pay: time to end chaos of £1m pay-outs to merry-go-round of Cabinet ministers

Despite only spending three months on the backbenches during the dying embers of Boris Johnson’s reign and the chaos of Liz Truss before returning to Cabinet under Rishi Sunak, Gove was still paid £16,876 in ministerial severance pay. 

Grant Shapps was out of government for just six weeks between his time as Transport Secretary and Home Secretary (for six days), and got the same pay-out. While Brandon Lewis 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.

Besides the problems this level of ministerial churn causes to good governance, under the current system it’s also bad value for money for the taxpayer. Almost £1 million was spent on severance payments in the 2022/23 financial year, which encompassed the mayhem of Johnson and Truss (both of whom took home a payout of 18,860).

The rules, brought in under John Major in 1991, entitle ministers to a “loss of office” payment regardless of whether they resign or are sacked. If they take a new role in Cabinet within three weeks they are supposed to pay it back, and over 65s are not supposed to be paid (although there have been some mistakes). 

Currently, it doesn’t even matter if the minister has misconduct allegations hanging over them. Both Chris Pincher and Peter Bone were paid north of £5,000 when they resigned in disgrace, despite both having the whip removed over sexual misconduct. 

It’s not as if these ministers are going on the dole, they’re just going back to the £86,584-a-year job which they were elected for - as well as the ample expenses they’re able to claim. Many are still pocketing extra cash from second, third or fourth jobs, which still haven’t been banned.

Jon Ashworth, Labour’s Shadow Cabinet Office Minister, has said: "When the drafters of the 1991 legislation put the 'loss of office' rules in place, they surely never expected them to produce the kind of payments that we saw in 2022/23 under this shambles of a government: £933,086 going direct from the taxpayer into the pockets of Tory MPs as a reward for political chaos and a crashed economy, including almost £50,000 of payments to ministers who were over the age limit to claim them.

"Among the beneficiaries were MPs who had never served as ministers before filling out the front bench in the dying days of the Johnson administration; acolytes of Liz Truss, whose time in government began and ended with her own short reign in No.10; and a host of Rishi Sunak favourites quitting their jobs to put pressure on his predecessors, then returning a few weeks later when he became Prime Minister.

"Most disgraceful of all, 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.” Sunak's official spokesman said he was “not aware of any plans to change that approach”.

However, Labour has a plan which it says will cut the amount paid out to ministers by 40%, and could be a workable compromise instead of scrapping severance pay completely. It says instead of receiving a quarter of their final annual salary, departing ministers would get 25% of their earnings over the previous 12 months - no including any time covered by other payouts.

This would stop MPs serving for a few weeks, and then claiming three months of severance pay. And Labour says anyone returning to the front bench within that period, would have a proportion of the previous payout clawed back.

Thirdly, and perhaps most importantly, the party would suspend payments for anyone under investigation for allegations of breaching the ministerial code, like Pincher and Bones. They would only be paid out if they were cleared. 

These may seem like minor changes, compared with issues such as the cost of living crisis and wars across the globe, however they would go some way in restoring trust in politics, which is in dire straits.

Ralph Blackburn is NationalWorld’s politics editor based in Westminster, where he gets special access to Parliament, MPs and government briefings. If you liked this article you can follow Ralph on X (Twitter) here and sign up to his free weekly newsletter Politics Uncovered, which brings you the latest analysis and gossip from Westminster every Sunday morning.