Hancock in discussions with Treasury about changing GP pension tax rules
Exclusive The health secretary is in discussions over changing the tax treatment of pensions due to the effect on GP retention, he told Pulse in an exclusive interview yesterday.
In his first trade press interview since the publication of the long-term plan, he said that the tax charges on pensions is ‘the biggest concern I have raised with me’ by GPs.
The lifetime allowance for pensions tax relief was brought down from £1.25m to £1m in 2016, meaning for many GPs there is little benefit in continuing to pay into their pension fund – removing one of the main incentives to wait until retirement age.
Mr Hancock added he is currently in discussions with the Chancellor over the issue.
In a wide ranging interview, Mr Hancock admitted that the Government will not meet the target on recruiting the 5,000 new GPs by 2020, and said they weren’t implementing a new deadline, and that he believes there needs to be a ‘level playing field’ between Babylon and standard practices.
Mr Hancock’s exclusive interview with Pulse followed the publication of the NHS long-term plan this week.
The plan earmarked £4.5bn for primary and community care, and it was announced that the new GP contract will mandate practices to join networks.
However, there was little detail about workforce, with a further plan to be launched later in the year.
Speaking about retention, he told Pulse: ‘The biggest concern I have raised with me is around the tax treatment of pensions. Of course tax is a matter for Treasury, but I’ve had conversations with the Chancellor about looking at the details of tax treatment of pensions because I understand the impact that that has.’
When asked whether this would affect just GPs’ pensions or all pensions, Mr Hancock replied: ‘I’m not going to go into the details of the conversation because we’re not ready to publish anything on it. I know how important it is and I’ve being having discussions with colleagues about it.’
In response to Mr Hancock’s comments, Dr Richard Vautrey, BMA GP committee chair, said the BMA has ’persistently lobbied the Government’ on pensions, and said they ’welcome any signal from the Secretary of State hinting at reform’.
He added: ’Hard-working GPs – and doctors of all kinds - have been unfairly hit in recent years by complex regulations and tax changes impacting their pensions, meaning many are inadvertently facing huge bills at the end of the year.
’At a time of plummeting morale across the profession, and amid a deepening recruitment and retention crisis – particularly in general practice – such charges make taking on extra work, or even continuing to work full-time, an extremely unattractive prospect. A growing number of doctors, and not just older medics with years of experience under their belts, are effectively being penalised for working hard.
’We will continue to press on this, and be watching carefully how Mr Hancock’s words turn into actions.’
Deborah Wood, vice chairman of the Association of Independent Specialist Medical Accountants and healthcare services partner at MHA Moore and Smalley, said: ’It is pleasing to hear that Matt Hancock is fully aware of the impact of the pension tax charges on GPs and consultants and that he has taken up a discussion about this with the Chancellor
’As specialist healthcare accountants we find that many of our clients are having to make decisions about reducing working commitments or retiring early because the marginal effect of tax rates, particularly around the annual allowance tax charges, means they are seeing little net financial reward for working additional sessions.
’When recruitment and retention within the profession is crucial and there are highly experienced doctors willing and able to perform their services it cannot make sense for the tax issues to continue to drive them to these decisions. We, along with our fellow AISMA members, would welcome a review by the Treasury to alleviate some of these issues at the earliest opportunity.’
Professor Helen Stokes-Lampard, chair of the RCGP, said: ’We are desperately short of GPs across the country and we need to explore all possible options to both recruit more GPs to the profession, but also to retain our existing, hard-working and experienced workforce.
’There is some great work ongoing to increase recruitment into general practice, and we now have more GPs in training than ever before - but when more family doctors are leaving the profession than entering it we are fighting a losing battle.’
She added: ’Measures to keep GPs in the workforce longer, including taking steps to reduce workload to make working in general practice more sustainable and removing incentives to retire early for GPs who might not necessarily want to, would both be sensible places to start.’