In a highly political appointment, Hay was made First Naval Lord in March 1886 when the Marquis of Ripon became First Lord of the Admiralty but had to stand down just five months later when William Gladstone's Liberal Government fell from power in August 1886. He was advanced to Knight Grand Cross of the Order of the Bath on 30 July 1886. He became Commander-in-Chief, Plymouth in May 1887, and having been promoted to Admiral of the Fleet on 15 December 1888, he retired in August 1892. He died at his home, Fulmer Place, at Fulmer in Buckinghamshire on 4 May 1916.