MoD’s Financial Recognition Scheme

As Chair of Fighting With Pride, the LGBTQ+ military charity, I spend much of my time talking to veterans who were dismissed from the Armed Forces because of who they were, not what they did.

Many are now elderly. Some are in poor health. All were promised, by government, that the injustice they suffered would finally be addressed.

That promise matters. And how it is delivered matters just as much.

The Ministry of Defence’s Financial Recognition Scheme (FRS) for LGBT+ service personnel was created following the Etherton Review. Lord Etherton’s conclusions were clear: the ban on LGBT people serving openly caused profound harm, and redress should be real, not symbolic. The scheme was meant to be swift, fair and humane. If you believe that the gay ban was proportionate, administrative in nature and fair, I recommend you read the review.

Yet we now see a worrying pattern. Around 50 applicants have been rejected, appealed, and lost those appeals. In many of these cases, the individuals plainly fall within the moral intent of the scheme, but have been excluded by narrow interpretations, evidential hurdles, or rigid drafting of the rules. These are not people trying to game the system. They are people for whom the system has failed twice.

This is not simply a question of fairness and compassion. It is a question of good governance. Well-designed government schemes to recognise past wrongs serve a purpose beyond individual payments. They draw a line under past wrongs. They reduce the risk of litigation. They rebuild trust between citizens and the state. When they are administered inefficiently or inflexibly, they do the opposite. They prolong harm, increase costs, and undermine confidence in public administration.

From a classical liberal perspective, this should trouble us. The state created the injustice. The state accepted responsibility for it. Having done so, it has an obligation to resolve claims efficiently and proportionately. A scheme that is technically neat but substantively unfair is not a success. It is a failure dressed up as a process.

There is a practical solution: the Secretary of State for Defence already holds broad powers over departmental schemes. A clearly defined discretionary power could be introduced, allowing intervention in cases that fall outside the strict letter of the scheme but are clearly within its spirit. This would not open the floodgates to thousands of fake gays pretending they were sacked. It would simply provide a safety valve, exercised transparently and sparingly, to prevent manifestly unjust outcomes.

Such discretion is not alien to British public administration. It exists across tax, pensions and compensation frameworks precisely because no scheme can anticipate every human circumstance. The alternative is costly judicial review, adversarial proceedings, and years more delay for people who have already waited decades. Rigid application of administrative rules that exclude obviously “good” cases undermines the very purpose of the scheme.

The irony is that inefficiency here is not frugal or wise. Each contested case absorbs civil service time, legal advice and appeal resources. A modest discretionary mechanism would almost certainly cost less than the cumulative expense of defending decisions that fail a common-sense test.

For those of us working with affected veterans, the issue is painfully simple. A scheme designed to recognise injustice loses its purpose if it replicates the very rigidity that caused harm in the first place.

The Ministry of Defence has an opportunity to get this right. Doing so would honour not only the recommendations of the Etherton Review, but also apply a basic principle of sound governance: when the state admits it was wrong, it should put things right efficiently, fairly, and without needless obstruction.

That is not special pleading. It is the minimum that justice, and good administration, require.