MoD seeks out-of-court resolution over compensation battle with gay veterans

Next week a high court judge will decide whether two former personnel, Steven Stewart, 55, and Mark Shephard, 49, can proceed with a judicial review of the government’s LGBT financial recognition scheme that was established in 2024 under Keir Starmer’s premiership.

The case has raised questions over whether the Labour government is prolonging an injustice against people who were persecuted by the armed forces, with veterans who resigned under pressure potentially receiving thousands of pounds less than those who were formally dismissed.

Stewart, a former Royal Military Police corporal, and Shephard, who served in the Royal Air Force, brought the challenge forward because they say they were targeted owing to their sexuality, which forced them to leave.

Neither qualified for the scheme’s £50,000 dismissed or discharged payment because their departures were recorded as resignations, rather than formal dismissals. Instead, Stewart received £7,000 and Shephard £5,000 under a separate payment recognising the impact of the ban on LGBT personnel.

Legal challenge and government response

The defence secretary told the Guardian the Ministry of Defence was holding talks this week in the midst of the high court challenge over rules that blocked some veterans receiving £50,000 payments despite being forced out of military service.

Streeting stopped short of promising to change the rules or confirming that any sort of settlement was being considered. The defence minister said he would be “careful” what he said because the case “might be subject to judicial review”.

Gay men and lesbian women were banned from serving in the British military until 2000. Proper records have not been held but about 200-250 personnel were thrown out each year because of their sexuality.

Allocation and future steps

Streeting said the government had tried to balance cases where formal dismissal records existed with the experiences of veterans who had left without records. “It’s tricky,” he said. “The balance the review tried to get was making sure that where we’ve got records of dismissal, we’re able to act.”

He added: “But also recognising there’ll be lots of people who left for whom there were no formal records, and making sure they’re still eligible to apply for support, which they are.”

The government has allocated £75m to the scheme, with over £60m already paid out. Streeting urged veterans who have not yet applied to do so, saying the money is there.

Streeting, Britain’s first out gay defence secretary, said some veterans had already died without receiving justice. “For me, a lot of these veterans, they’re getting older and some of them sadly have not lived to see justice,” he said.

He acknowledged that the payment “can’t do is erase the pain and the indignity of asking people who serviced their country faithfully to leave a career, to leave a service they loved because of who they are.”

Broader context

The looming high court hearing means the government could soon face a judicial examination of whether the rules intended to address historical discrimination have left some of its victims facing another injustice.

Streeting said he had a personnel responsibility to make sure that we don’t see a repeat of those indignities and those injustices for our trans service personnel. “Talent is everywhere. Opportunity isn’t,” he said.

Asked whether he had been involved in approving new MoD guidance on the use of single-sex spaces and whether he would consider it, Streeting said: “We’re still finding our way on this … we’re not inundated with huge numbers of trans people serving.”

He added: I want every member of our armed forces to know I’ve got their backs. I want every trans person serving in the armed forces to know I’m proud of them and their service.