Blunkett got £18,000 payoff (and then came back)

David Blunkett, who resigned as Home Secretary in December last year following a furore over the visa of his former lover's nanny, received a pay-off of more than £18,000, even though he returned to the Cabinet five months after quitting.

The Government was accused last night of a "grotesque abuse" of taxpayers' money after it emerged that ministers who have resigned from their jobs - and then returned to government - had received thousands of pounds in compensation.

Alan Milburn, who has left the Cabinet twice, was due two official pay-offs. He was entitled to about £17,800 in redundancy cash, after he resigned as Health Secretary in 2003, and £18,700 after he resigned last month as Chancellor of the Duchy of Lancaster.

MPs called yesterday for reform of the ministerial redundancy payments, and said that members who returned to government should pay the money back. Norman Baker, the Liberal Democrat MP for Lewes who obtained the official figures, said: "This is a grotesque abuse of taxpayers' money to financially reward politicians who have to leave their jobs in government. It is a resettlement grant for those who have settled back into government.

"It is questionable at best whether ministers leaving office should receive any handouts, but they certainly shouldn't when they return to office with hardly any time elapsing. I call on them to hand back this money."

A number of Labour ministers have been entitled to double pay-offs, the Government says. They include Peter Mandelson, who "would have received" payments of £11,300 in 1998 and £16,543 in 2001 after leaving the Government twice, according to the Cabinet Office.

Beverley Hughes, who was forced to quit as immigration minister in April last year, was entitled to £9,449, even though she returned to the government as children's minister in last month's reshuffle. Harriet Harman, who was Secretary of State for Social Security, and returned as Solicitor General, is now a constitutional affairs minister.

According to the figures provided by the Cabinet Office, she was entitled to £11,300. Ministers are entitled to receive a quarter of their salary when they leave office - even if they are appointed to another paid ministerial position more than three weeks later.

They do not have to pay tax on these severance payments and are also exempt from National Insurance contributions on the funds. Many ministers earn more than £100,000 a year, because they also receive MPs salaries of about £59,000.

A spokesman for David Blunkett said yesterday: "These arrangements were introduced under the last Conservative government and recognise the need for a modest period of readjustment.

"That is why the Labour government introduced 30 years ago the redundancy payments scheme, which has protected the interests of millions of workers since that time."

The spokesman added: "I presume Norman Baker will now pledge to forego his severance should he resign or lose his seat at the next general election."

Lucrative cabinet farewells

DAVID BLUNKETT

Why he quit: Left as Home Secretary in 2004 after controversy about the visa of his former lover's nanny.

Payment due: £18,215

BEVERLEY HUGHES

Why she quit: Left as immigration minister in 2004 following a controversy over visas for Eastern Europeans.

Payment due: £9,449

HARRIET HARMAN

Why she quit: Left as Social Security Secretary in 1998 following a power struggle with her then deputy, Frank Field.

Payment due: £11,300

ALAN MILBURN

Why he quit: Left as Health Secretary in June 2003 to spend more time with his family and in May 2005, as Chancellor of the Duchy of Lancaster, to spend more time with his family.

Payments due: £17,850 and £18,725

PETER MANDELSON

Why he quit: Left as Secretary of State for Trade and Industry in 1998, over £373,000 home loan from Geoffrey Robinson and again in 2001 as Northern Ireland Secretary in 2001 after claims he intervened in a passport application.

Payments due: £11,300 in 1998 and £16,543 in 2001