Steps to reproduce the issue

Install Joomla 3.7.1
Set up content and menu items.
Set Global Configuration > Search Engine Friendly URLs to "No"
Navigate to a page on the front of the site other than the home page.

Expected result

The pages menu item should have the class 'active'.

Actual result

The pages menu item does not have the class 'active'.
The home page menu item still has the class 'active'.

System information (as much as possible)

Joomla 3.7.1
mod_menu 3.0.0

Additional comments

This issue is brought about by the line echo JHtml::_('link', JFilterOutput::ampReplace(htmlspecialchars($item->flink)), $linktype, $attributes); in mod_menu > tmpl > default_component.php.
This line changes the & signs in the URL into &.
The implications of this are far more reaching than the 'active' class on the menu item. If your template uses JFactory::getApplication(); and $app->getMenu(); to get any parts of the current URL such as Itemid then it either won't work or the website will throw errors.