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GP partners set for 5% pay cut next year

By Gareth Iacobucci

GP partner income is set to drop by thousands next year, following the Government's decision to overrule its own pay review body.

The decision to apply a 'prospective efficiency saving' on practice expenses means most GP partners will receive an effective pay cut for 2010/11, with accountants forecasting a dip in income of around 5%.

This would leave the average partner losing around £5,000 – and at least around £2,000 more than they did last year - when higher tax rates and other cost pressures are factored in.

The bleak outlook came after the Government overruled the Doctors' and Dentists' Review Body's recommendation to increase GPs' contractual payments by 1.34% - in itself designed to result in no net increase in GP income but to reflect rising expenses.

Instead, ministers chose to factor in an additional prospective efficiency saving of 1% on GP expenses, after rejecting the pay body's proposal that efficiency savings should only be taken into account retrospectively.

The Government said this would create a proposed uplift in GP pay of 0.8%, some way below the 2% called for by the BMA.

There was marginally better news for salaried GPs, after the Government accepted the DDRB's recommendation to increase their pay by 1%.

Pulse first revealed in December that the Government was looking to press ahead with phasing-out the MPIG, despite the plan to freeze net GP pay, leaving most practices facing a real-terms cut in income for 2010/11.

Financial experts said it was inevitable that GPs would suffer a big fall in income.

Paul Kendall, senior medical partner at accountants Dodd and Co, said GPs may be forced to take drastic measures such as freezing wages, merging with other practices, or not replacing departing partners to try and combat spiraling losses.

‘I wouldn't be surprised to see falls of 5% plus,' he said. ‘Most doctors do try to give their staff an annual pay rise - they will need to realise that from now on that will result in the doctor's income decreasing.'

BMA chair Dr Hamish Meldrum told Pulse most GPs would struggle to make efficiency savings without taking ‘a big hit'.

‘There is very little space to squeeze from the system,' he said.

‘We all understand the pressures of the economic situation, but for most GPs, this is the fourth pay cut in a row. It's small wonder GPs feel undervalued and discouraged.'

He added: ‘It is interesting that the Government accepted in full the salary increases recommended for MPs, yet chose to penalise dedicated and hard-working doctors.'

But health secretary Andy Burnham defended the decision to overrule the DDRB, claiming its approach was ‘not sustainable'.

He said: ‘In tough times, this package targets the pay rises we can afford to make where they can do most good for patients.'

‘They also take full account of the need for pay restraint — especially by top earners in the public sector.'

However, Dr Anoop Agrawal, a GP partner in Great Barford, Bedfordshire, insisted the deal ‘cannot be justified'.

‘We have to give the incremental increase to regular staff, but we are not getting any extra,' he said. ‘I would expect to receive 10% less than we had last year, not only because of the pay freeze but also more tax and less payment through PCTs and QOF. This cannot be justified.'

GPs income drop in numbers

- Tax payable on average GP income of £110,139 will increase from £37,701 in 2009/10 to £39,729 in 2010/11

- A 1% reduction in expenditure needed just to cover 1.8% increase in the tax bill

- 0.8% pay award means GPs will be 1% down before any other rises in expenditure

- Overall falls in income of 5% or more are likely

Source: Projections from accountants Dodd and Co

Dr Anoop Agrawal: 'This cannot be justified'