has said the Ministry of Defence (MoD) is seeking an out-of-court resolution to a legal challenge over compensation for gay veterans dismissed from the because of their sexuality.

The challenge is being brought by two former service members, Steve Stewart and Mark Shephard, who are represented by Irwin Mitchell. Both say they were forced out of the military under the MoD’s “gay ban”, which was in place until 2000.

Gay veterans seek judicial review of the LGBT financial recognition scheme

Stewart, from the South West, served for seven years in the British Army as a corporal in the Royal Military Police before leaving following an arrest under the ban in 1995.

Shephard served in the Royal Air Force (RAF) between 1995 and 2001 as an aircraft fitter. He says he was pressured into taking “voluntary redundancy” following an interrogation about his sexuality.

The pair are seeking a judicial review of the LGBT financial recognition scheme, established in 2024 under Keir Starmer’s government.

What is the LGBT financial recognition scheme?

The scheme was designed to compensate service personnel forced out of the Armed Forces because of their sexuality between 27 July 1967 and 11 January 2000. It offers payments of up to £70,000 to eligible veterans, including a £50,000 payment for those who were formally dismissed or discharged.

Neither Stewart nor Shephard qualified for the £50,000 payment because their departures were recorded as resignations rather than formal dismissals. Instead, Stewart received £7,000 and Shephard £5,000.

A High Court judge is due to decide next week whether their case can proceed.

Wes Streeting wants to find an out-of-court resolution

Streeting, the Secretary of State for Defence, said the government wants to find a solution without further legal action.

When asked whether the rules could be changed to include veterans who were forced to resign, he told : “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.”

Addressing the difficulties surrounding cases in which veterans’ dismissals were not formally recorded, Streeting described the issue as “tricky”, explaining that the scheme aims to support veterans even when formal records are missing.

“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.”

The LGBT Financial Recognition Scheme is scheduled to close to new applications on 12 December 2026.