The BMA has urged the new Chancellor to fix the GP pensions ‘crisis’ ahead of an emergency ‘mini-budget’ due to be announced on Friday.
In a letter to Chancellor Kwasi Kwarteng, the BMA today said that the Government must go beyond previously announced measures and make urgent reforms to the Finance Act.
BMA council chair Professor Philip Banfield said: ‘Pension taxation rules mean that senior NHS workers are being taxed multiple times on the same income and high inflation is then seeing more tax applied to non-existent pseudo-growth solely because of anomalies in the Finance Act.
‘The result is they are often better off reducing hours or in some cases even leaving the NHS entirely.’
He called on the Chancellor to ‘ensure these issues are addressed as part of the emergency fiscal statement’, saying it is ‘vital’ that he takes ‘urgent action’ to fix the ‘ongoing pension taxation trap forcing doctors out of the NHS’.
The letter said: ‘While we were encouraged by the Prime Minister’s commitment to “sort out” the problems with NHS pensions during the leadership campaign, the Government must do more than tinker with existing policies.
‘Proposals such as suspending “retire and return” restrictions, suspending abatement rules, or suggesting flexibilities, have twice now been rejected at consultation because they will not solve the problem. These approaches will have minimal impact on the overall numbers of doctors leaving the NHS and will not address the wider issues of huge unfair tax bills faced by senior doctors.’
The BMA’s proposals included:
- Amendments to the Finance Act as the ‘immediate priority to resolve this NHS pensions crisis’ in the upcoming fiscal statement to ‘address the perverse impact of rising inflation’
- The introduction of a ‘tax unregistered’ scheme for NHS staff similar to that already applied to the judiciary from next year, in the ‘longer term’
- Introducing the option for ‘partial retirement’ alongside ‘pensionable reemployment’ and ‘late retirement factors’
- A repeat of the 2019/20 annual allowance compensation scheme
- Reform of the Review Body on Doctors and Dentists Remuneration (DDRB), after its warnings against the ‘real-terms pay cut’ of this year’s pay award were ‘ignored’
- The energy bill support scheme announced today to be extended ‘beyond the six months promised currently’ to relive the ‘extreme pressure on GP practices’
Source: BMA letter and explanatory note
The letter said: ‘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.’
Professor Banfield added that the NHS is ‘facing unprecedented levels of pressure’ and that staff morale is ‘at rock bottom’, with GPs continuing to ‘face significant and growing pressures’.
Doctors who ‘made huge personal sacrifices’ during the Covid pandemic ‘now feel taken for granted by the same Government that encouraged the nation to clap for us but presided over continued erosion to our pay and a failure to fix longstanding problems with NHS pension taxation’, he said.
He added: ‘Doctors’ workloads are already rising as their colleagues leave and those remaining will increasingly be undervalued and underpaid.
‘They will find their pension becomes either a tax liability or diminishes in value to such an extent that they leave the job they once loved to seek better paid work, or retire at the earliest opportunity. This is happening now, and the exodus must be halted.
‘The Prime Minister’s new Government now has an opportunity to put this right.’
The letter was also copied to health secretary Dr Thérèse Coffey, who is due to make a statement on her plans for the NHS tomorrow.
BMA pensions committee chair Dr Vishal Sharma said: ‘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.
‘It is essential that the Government delivers the correct solutions, not fudges and vague promises.’
