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Mini Budget: ‘Chancellor must address NHS pensions crisis’

by LLB Reporter
21st Sep 22 10:42 am

The anticipated emergency “mini-budget” on Friday must go beyond tinkering with existing policies and properly address the NHS pensions crisis, the BMA has told Kwasi Kwarteng and Thérèse Coffey.

In a letter to the new Chancellor of the Exchequer and the new Health Secretary, who is due to make her own statement on her plans for the NHS on Thursday, Professor Philip Banfield, BMA chair of council, has warned that with the health service facing the greatest workforce crisis in its history, the pension taxation trap forcing doctors out of the NHS requires nothing less than an amendment of the Finance Act to stem the flow of early retirements.

“The same Government that encouraged the nation to clap for us” during the COVID-19 pandemic has presided over “continued erosion to our pay and a failure to fix longstanding problems with NHS pension taxation”, says Professor Banfield in the letter. “The Prime Minister’s new Government now has an opportunity to put this right”.

Pointing to the new Prime Minister’s commitment to “sort out” the problems with NHS pensions during the leadership campaign, the letter urges substantial action beyond the minor adjustments floated so far. The most urgent threat identified is from the “perverse impact of rising inflation”, which due to anomalies in the Finance Act “will result in tens of thousands of senior doctors incurring extremely large tax bills, with the only way to mitigate this being to retire this financial year.” The Chancellor is urged to use this opportunity to amend the Finance Act accordingly, and in the longer term adopt a tax unregistered scheme, similar to that already provided to the judiciary, to end the tax trap problem once and for all.

Alongside pensions, Professor Banfield conveys the outrage of doctors over “yet another real-terms pay cut” after junior doctors, GP partners and a significant proportion of staff and associate specialist (SAS) doctors were held to multi-year pay deals “made in good faith prior to the exceptional circumstances of a global pandemic and the highest inflation rates the UK has seen for 40 years”. The Chancellor is urged to “lead from the front and work with DHSC to address almost 15 years of real-terms cuts to doctors’ pay”.

He further calls for an adequate financial settlement for the NHS, which, “like the rest of the country, is being hit hard by the current levels of inflation. It has often been asked to do more with less, now it is being asked to even more with even less. The NHS cannot hope to clear the backlog without additional funds made available in the face of rising costs”.

He adds: “In primary care, high levels of inflation and higher than expected wage costs have placed extreme pressures on GP practices, which are struggling with retention and recruitment whilst coping with high levels of demand. For many a GP practice the energy crisis will become a question of financial viability.”

Commenting, Dr Vishal Sharma, chair of the BMA pensions committee, said: “This may be the Chancellor’s first announcement, but it is his last chance to tackle the ‘greatest workforce crisis’ in the history of the NHS. Without urgent action to address the punitive pension taxation rules, the NHS faces an exodus of its most experienced staff this year, a loss from which it may never recover.

“In the Conservative leadership campaign we were encouraged to see a promise to address NHS pensions from the now-Prime Minister. However, it is essential that the Government delivers the correct solutions, not fudges and vague promises.

“Today we have set out a detailed, thorough set of proposals that if implemented will not only allow doctors to remain in the NHS and maximize the care that they can provide for patients but will ensure doctors pay the correct amount of tax and remain fair to the taxpayer. NHS recovery and potentially the long-term future of the NHS potentially rest on the decisions the Chancellor makes this week and we urge him to implement our recommendations in full.”

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