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

Exclusive: West Streeting says MoD in talks amid legal challenge by LGBT staff forced out of military

Wes Streeting is pursuing an out-of-court resolution to a legal battle over compensation for gay veterans who were forced to resign from the armed forces because of their sexuality.

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

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.

The defence minister said he would be “careful” what he said because the case “might be subject to judicial review”.

When asked if he would review the rules to make sure those who were not formally discharged could also be eligible for the dismissal payment, Streeting told the Guardian: “We do want to get this right so we’ll keep the conversation going and see if there’s a way forward that doesn’t require legal action.”

Streeting stopped short of promising to change the rules or confirming that any sort of settlement was being considered. 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.

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.

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. 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.

“I’d say to people, if you are one of those veterans who haven’t yet applied please do, the money is there, we’ve got £75m allocated to this. Over £60m has already gone, but I’m sure there are still more people who could benefit so we want to make sure we get people the compensation that they’re owed.”