'Unfair' NHS pensions system to change amid rising waiting lists
Video report by ITV News Correspondent Allegra Stratton
NHS pension rules are to be overhauled after being blamed for deterring senior doctors from taking on additional shifts for fear of being hit with hefty tax bills.
The health secretary said the "unfair" system is being changed to ensure "more flexibility" for senior clinicians in England and Wales, enabling them to fully benefit from extra overtime.
Matt Hancock said: "We're taking action today to change the NHS pension system so that doctors don't have to face a huge tax bill when they do overtime."
He added: "It's good for the NHS and it's good for patients because it means that people will always be there to treat you, which is what people expect and need from the NHS."
The move fulfils a campaign pledge by Boris Johnson who made a promise during the Tory leadership contest to deal with the issue amid concerns it was affecting services to patients.
It follows warning that changes to the rules introduced in 2016 meant rising numbers of consultants and other senior staff were facing unexpected tax bills linked to the value of their pensions.
The move was linked to a rise in waiting times as clinicians refused to work beyond their planned hours because of the impact on their finances.
Some were reported to have had to remortgage their homes to cover their tax bills, while others were faced with the choice of cutting their hours, opting out of the NHS pension scheme, or taking early retirement.
Mr Hancock said the changes are aimed at keeping staff employed in the NHS.
"We need more people (working in the NHS) but the first step to getting more people is to keep the people that you've got and people who work overtime, who work flexibility in the NHS, at the moment, under the existing rules, they sometimes face a huge tax bill for doing just a small amount of extra overtime, that's clearly unfair."
In a joint statement the Department for Health and Social Care (DHSC) and the Treasury said the changes would provide an “immediate solution” for experienced doctors and nurses facing sizeable tax rises in the current financial year.
The DHSC will also shortly publish a consultation document proposing wide-ranging “flexibilities” to the pension scheme to ensure that from the next financial year, frontline staff can remain in it without fear of financial penalty.
Mr Hancock said: “These comprehensive proposals will give doctors the pension flexibilities they have called for and need to make sure they are rewarded for extra work.
“We are taking immediate action and I hope these flexibilities will encourage our top NHS staff to fulfil the dedication of their mission: to care for their fellow citizens in time of need.”
The move was welcomed by the British Medical Association (BMA), which has been leading the campaign to get the rules changed, as a “step forward” by the Government.
“After a year’s tireless lobbying by the BMA on the damaging and perverse effect that this legislation is having on our NHS, its doctors and patients, it is good to see the Government finally sitting up and taking notice and proposing action,” said BMA council chairman Dr Chaand Nagpaul.
However the HCSA union, representing hospital doctors, warned that it would not be sufficient to prevent another “winter meltdown” in the NHS.
HCSA president Dr Claudia Paoloni said: “A fifth of senior hospital doctors plan to quit in the next 36 months or have already left as a result of the issue.
“It is bitterly disappointing that the Government is resorting to spin and hot air when it has known for many months that the crisis was deepening.”
The announcement comes just days after Mr Johnson announced a £1.8 billion cash injection for the NHS – describing it as his “top priority” in government.
Chris Hopson, chief executive of NHS Providers, welcomed ministers’ commitment to address an issue which was having a “significant and direct negative impact” on patient care.
“These proposals are helpful next steps,” he said.
“But we won’t enable key staff to work the extra hours needed and put off ideas of early retirement until we have a clear, definitive solution fully in place. So we have to move fast.”
The 2016 rule changes introduced a tapered annual allowance which restricted the amount of pension growth for individuals earning more than £110,000 a year before tax charges applied.
It gradually reduced the allowance for those on high incomes, meaning they were more likely to suffer an annual tax charge on contributions and a lifetime allowance tax charge on their benefits.
Under the new changes, senior staff will be able to decide their level of pension accrual at the start of each year, enabling them to select a level which gives them the “headroom” to take on additional work without breaching their annual allowance.
Their employers would then have the option to recycle their unused contribution back into their salary.
At the same time, the Treasury will carry out a review of the way the tapered allowance operates “to support the delivery of public services such as the NHS”.
Chancellor Sajid Javid said: “Critical to that is introducing flexibility into the system so that our hospitals have the staff they need to deliver high-quality patient care, which is why we’ve listened to concerns and will be reviewing the operation of the tapered annual allowance.”
Jonathan Ashworth, Labour’s shadow health secretary, said despite ministers promising to boost the number of GPs “we’ve actually seen the first sustained drop in GP numbers in 50 years”.
He added: “Doctors have long been warning that George Osborne’s pension changes have undermined their ability to provide the care patients deserve. The truth is cuts and ministerial incompetence have left the NHS struggling to cope with 100,000 staff shortages.
“It is patients who are suffering the consequences with growing waiting lists and cancelled operations. Ministers need to do significantly more to provide the NHS with the staff it needs now and for the future.”
Unison head of health Sara Gorton said: “Introducing measures to help only a small proportion of the millions of active NHS scheme members looks alarmingly like the beginning of a ‘clinicians-first’ approach to pension strategy.”