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NHS Pensions: Taxation

Volume 798: debated on Tuesday 9 July 2019

Private Notice Question

Asked by

To ask Her Majesty’s Government what action they are taking to tackle the 50% increase in waiting times for NHS patients due to the changes in rules on pension contributions for consultants which affect the number of clinical hours they are able to work.

My Lords, we will be consulting shortly on proposals to make NHS pensions more flexible for senior clinicians in response to evidence that shows that pension tax charges as a result of the tapered annual allowance are having a direct impact on retention and front-line service delivery. These proposals aim to maximise the contribution of our highly skilled workforce, who are crucial to delivering the NHS long- term plan.

My Lords, I declare my interest as a past president of the BMA. Can the Government state exactly when the consultation will begin, how long it will run for, how it will be organised and when it will report? Do they recognise that, of 4,000 consultants recently surveyed, 60% said that they would retire at or before 60 years of age, and over half of those cite the sudden unexpected tax bills as a reason? This is particularly urgent because in August we have new graduates starting, who need additional supervision as they begin to get used to working in the clinical arena, yet we are already seeing consultants dropping sessions, which will adversely impact on clinical services. Doctors seem to have only two options now: to retire or to leave the NHS pension scheme, and until they can do that, they are financially penalised for working. One paediatric intensivist I was talking to said that he is £300-plus out of pocket by working a weekend.

I thank the noble Baroness for her important Question, which she has asked before. Retaining and maximising the contribution of our highly skilled clinical workforce is crucial to the delivery of patient care. We are preparing to provide pension flexibility that appropriately balances the benefit of new flexibilities with their affordability. We have listened, and we are discussing the issue with the Treasury. As a first proposal, the consultation will set out a potential 50:50 option, offering 50% pension accrual and halved contributions. The BMA requested this as an option earlier this year and has welcomed it as a step in the right direction. The consultation will be an opportunity to listen to a range of views and will be genuinely flexible and open; we will bring it forward as a matter of urgency. I hope that that is a reassuring answer for the noble Baroness.

The briefings that I have received from the BMA and other places say that the 50:50 solution may not prevent the problem. How many people will have to wait longer for their operations before the Minister’s colleagues, the Chief Secretary to the Treasury and the Secretary of State for Health and Social Care, concentrate on their day jobs—that is, getting together and talking about how to solve this problem instead of campaigning for whoever they are campaigning for to be the leader of her party? Surely their time could be better spent sorting this problem out.

The noble Baroness knows that I cannot answer for the Chief Secretary to the Treasury, although I know that this issue has been raised with the candidates as part of the leadership campaign and that they see it as a priority. As I said in my Answer to the noble Baroness, Lady Finlay, we recognise that the 50:50 flexibility option does not provide unlimited flexibility for clinicians to target their own personalised level of pension growth. Other options, such as additional pension accruals to purchase individual units alongside a pension, may be considered as part of the consultation. The message going out to the sector is that we want as much flexibility as possible to try to find the right solution to meet the complex needs of the system.

My Lords, is my noble friend aware that this issue was raised on the Floor of the House? I was one of those who contributed; I hastily declare an interest as a trustee of the Parliamentary Contributory Pension Fund. Against the background of what was raised some three weeks ago and the evidence that was already in the field, I do not blame any particular Minister, but is there not a pensions section in Her Majesty’s Treasury that must know what options are available to Her Majesty’s Government in coming to a decision that will ensure that the consultants affected will not be forced to retire when they reach 60? That evidence must be there by now; surely, we can have some fast decisions on this major issue.

I absolutely share my noble friend’s desire for a speedy response. He is right that the evidence has come forward and that the issue is affecting front-line services, which is why we are keen to bring the consultation forward as quickly as possible and resolve it. He is also right that those in the Treasury will have seen the evidence and it is right for them to consider it. It is important to understand that the consultation is about the implementation of tax policy, not changing it. That would be a separate question for the Treasury team.

My Lords, the Nuffield Trust found that two-thirds of GPs are retiring early for tax reasons, and because of burnout, the level of extra training required and stress. The Secretary of State is reported as saying that this tax issue is the area that concerns him most about the GP workforce—and well he might worry. Given the Minister’s earlier reply to the noble Baroness, Lady Finlay, when will we see the figures on the decline in GP early retirement?

The noble Baroness is right that this is an important aspect of the recruitment and retention of GPs in particular, which is why we are bringing forward the consultation. As I said, we have been working closely with representative bodies, including the BMA and others. When we brought forward the five-year contract for general practice, announced in January, part of that was to provide greater certainty for GPs to plan ahead. Part of the work we have done is looking at other aspects that will ensure recruitment and retention. This includes, as we have discussed before, funding towards 20,000 extra staff working in practices, remaining committed to recruiting an extra 5,000 GPs and looking at targeted enhanced recruitment schemes, which include a £20,000 salary supplement to attract doctors into GP specialty training. The noble Baroness will understand that it takes a little time for these policy changes to be reflected in the data, but she can have no doubt that this is a policy area in respect of which the Government are absolutely determined.

My Lords, there is currently a disparity in pension arrangements between clinical academics and NHS consultants. Can the Minister confirm that any discussions the Department of Health and the Treasury have will include the university sector? Otherwise, a disparity between pension arrangements will be created, which might affect the recruitment of clinical academics.

The noble Lord raises an important point. I am afraid I do not have the specific details about NHS clinicians and academics within the university sector. I will ask about this and write to him.

My Lords, the BMA makes it clear that the Defence Medical Services are the most impacted group of medics. Will the Minister confirm that we are today sending medics out to battlefields such as Afghanistan, who work all hours to serve their wounded comrades and are having to call home to tell their families to take out a second mortgage to pay an unexpected £20,000 to £40,000 tax bill, which hits them because of the peculiar pension consequences? Will this be remedied immediately?

I can confirm that it has been made absolutely clear that NHS clinicians have been impacted by these reforms, and front-line care has been impacted. This is unacceptable and that is why we are bringing forward the review to find a solution as quickly as possible. The noble Baroness is right to raise the issue and we are determined to resolve it.

My Lords, I am sure the Minister agrees that this was an unintended consequence of changes to the tax system. The reality is that the cliff edge of the taper is forcing consultants to pay tens of thousands of pounds for doing one small extra shift, sometimes voluntarily. Could she look at offering financial advice to each individual consultant who may be affected? They will not all face this tax charge, but they are all frightened that they might, so they are not undertaking the extra shifts we need them to undertake. Can she also note to her departmental colleagues that high-paid people potentially affected by the taper in other areas of the public sector received some assistance and mitigating measures from their departments, whereas it has been almost impossible for consultants to plan ahead? We are now seeing the problems occurring belatedly.

My noble friend speaks with particular expertise on this issue. As the whole House will appreciate, NHS consultants are often asked to take on additional shifts at short notice and they face peculiar challenges when calculating the consequences for their pensions. This is one of the reasons why the BMA has put up its calculator. However, the pension rules we are discussing today mean that some who take on extra work may find they have inadvertently incurred a substantial tax charge in moving into the taper. This is why we have brought in the consultation. It is obviously important that those facing pension charges should seek advice. NHS England is considering this issue closely at its most senior levels and working with the department to better understand the impact on clinicians, but also on NHS performance, and we are determined to resolve the situation to get it right.