The Ministry of Defence (MoD) is facing a legal challenge from two former service personnel who claim the LGBT financial recognition scheme unfairly excluded them from the top tier payment. The case, filed on 23 October 2026, centres on whether a resignation recorded on paper can be considered a dismissal that qualifies for the £50,000 compensation allocated to those forced out because of their sexual orientation.
Background of the LGBT financial recognition scheme
Established in 2024 by the government of Keir Starmer, the scheme aims to redress the legacy of the MoD’s historic “gay ban” that persisted until 2000. It offers up to £70,000 to veterans who were expelled or otherwise compelled to leave the armed forces between 27 July 1967 and 11 January 2000. The highest tranche – a £50,000 lump sum – is reserved for individuals whose service records show a formal dismissal or discharge. Those without such documentation receive a reduced amount, typically ranging from £5,000 to £7,000.
The claimants and their respective service histories
One claimant, Steve Stewart, spent seven years as a corporal in the Royal Military Police before an arrest linked to the ban in 1995 forced him to leave. Although his file lists a resignation, Stewart argues the circumstances amount to a de-facto dismissal. He was awarded only £7,000 under the current rules. The second veteran, Mark Shephard, served as an aircraft fitter in the Royal Air Force from 1995 until 2001. Shephard says he was pressured into taking a “voluntary redundancy” after an interrogation about his sexuality. His payment was limited to £5,000. Both men are represented by the law firm Irwin Mitchell and are seeking a judicial review of the scheme’s eligibility criteria.
Government reaction and prospects for an out-of-court settlement
Defence Secretary Wes Streeting told reporters that the MoD prefers to resolve the dispute without further litigation. Referring to a recent interview with the Guardian, he said, “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 acknowledged the difficulty of handling cases where no formal dismissal record exists, explaining, “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.” A High Court judge is slated to decide next week whether the claimants’ case can proceed, while the scheme itself will close to new applications on 12 December 2026.
