MPs have said the compensation fund for veterans who were dismissed from the armed forces for being gay is not generous enough.

Labour MPs said the £50 million that has been allocated under a Government scheme means LGBT veterans who were forced out of their jobs could get about £12,500.

The so-called “gay ban” in place in the armed forces was lifted in 2000.

Previously LGBT service personnel faced lengthy investigations before being sacked, with them being stripped of their medals and rank.

A review by Lord Etherton in 2023 examined the experience of LGBT veterans, which led to the compensation scheme being established.

Labour MP for Burnley Oliver Ryan, who convened the adjournment debate, told the Commons: “Although the previous government offered a formal apology and took meaningful, meaningful steps to implement many of the reviews recommendations, the allocated £50 million compensation scheme fund falls short, inadequately compensating the estimated 4000 LGBT veterans and those affected by discriminatory practices.

This amount is insufficient to address the depth of the harm inflicted or the number of people whose lives have been trashed in many cases

“This amount is insufficient to address the depth of the harm inflicted or the number of people whose lives have been trashed in many cases.

“We must advocate for a more substantial commitment to financial redress, one that reflects the true scale of injustice endured by these individuals, and that seeks to make amends in a meaningful way.”

Hundreds of armed forces personnel were sacked for their sexuality every year in the 1980s, LGBT activist Peter Tatchell has previously said.

Veterans who are affected can apply for restorative measures on the Government website.

The application window will be open at the end of the year, Veterans Minister Al Carns said, and remain open for two years. Before entering the Commons, Mr Carns had served in the Royal Marines in Afghanistan and was awarded the Military Cross.

Chris Ward, Labour MP for Brighton Kemptown and Peaceheaven referred to Steve, a constituent who was dismissed by the RAF in 1985 over a relationship with a male officer.

He said: “He made the mistake of telling the truth and was sentenced to six months in jail. He lost his rank, he lost all his financial benefits, he lost his family and he lost a career he loved.

“When he was released he was 28 years old, homeless and with nowhere to turn.

“I’ve met Steve, he’s a man of huge honour and courage, but these are the words he said to me ‘I felt washed in shame, my career was shattered, I had a criminal record, I had no pension and I had to live hand to mouth for the rest of my life surviving on benefits.

“As we’ve heard today it’s not even an outlier.”

He added: “While I also recognise the financial situation this government operates under, can capping payments at an average of £12,500 per person really be appropriate for the level of injustice suffered by people like Steve and so many other LGBT veterans.”

Mr Ward’s Labour Party colleague, Tim Roca (Macclesfield) said: “I am worried, as others are, that a cap was placed on the compensation scheme for the 4,000 veterans that lost their careers because of institutional bigotry by the British state.

“How can it be right that £12,500 be deemed sufficient for your own chaplain initiating an investigation and subsequent interrogation by the Special Investigation Branch?

“In exchange for their willingness to serve, the British state treated many thousands of people with contempt, exposing them to state sanction, institutionalised homophobia, leaving them isolated from their friends and family.

“I am glad we are building a new consensus, but let’s go a step further with that consensus and make sure those 4,000 brave, selfless service men and women get the compensation and redress that they deserve.”

How can it be right that £12,500 be deemed sufficient for your own chaplain initiating an investigation and subsequent interrogation by the Special Investigation Branch?

Mr Carns said he had spoken at the LGBTQ+ Defence Awards earlier this year and had told guests: “Anyone can dodge bullets, bombs or artillery fire, but to fight against the tide when everything is bearing down on you and continue the struggle in the fight for justice is commendable.”

He called the treatment of LGBT personnel from 1967 to 2000 was “completely unacceptable”.

“The ministry was on the wrong side of history,” he added.

Mr Carns added: “I have of course been aware of speculation, and have heard some figures in relation to this fund. I trust colleagues will understand that as we continue our work to finalise its modalities, it is too soon for me to comment on exact figures.”