Government 'will solve NHS pension tax crisis by April 2020'

The government is committed to resolving NHS workforce problems caused by tax on pensions by the end of the current financial year, the health and social care secretary has told MPs.

Health and social care secretary Matt Hancock (Photo: Chris J Ratcliffe/Getty Images)
Health and social care secretary Matt Hancock (Photo: Chris J Ratcliffe/Getty Images)

But, speaking in an evidence session with the House of Commons health and social care committee, Matt Hancock also said that for many doctors the impact of pension taxes on their income was not 'nearly as big as feared' - and urged them not to rush into early retirement or to reduce working hours.

He said a consultation on proposals to ease the impact of pension taxes on the NHS workforce would go ahead 'as soon as possible', and that the government had held 'constructive' talks with the BMA this week.

However, the health and social care secretary was unable to give details of any further proposals that could be included in the consultation beyond the '50:50' pension option proposed last month by the government - which the BMA has warned would not stop doctors being forced to cut back on shifts.

Consultation

BMA GP committee chair Dr Richard Vautrey told GPonline that there was 'no point' consulting solely on a proposal that would not solve workforce problems created by punitive pension taxes. He urged the government to 'act quickly' and warned that the consultation must offer wider solutions.

The BMA and financial experts have called on ministers to consider 'radical' proposals including removing or significantly raising the annual allowance limit that has left many doctors facing heavy tax charges.

Mr Hancock told the health and social care committee that taxes responsible for forcing one in three GPs to reduce working hours or refuse extra shifts were a 'very serious' issue.

The health and social care secretary said he was 'absolutely determined to solve the problem', and that the government was 'committed to resolving it by the new financial year'. Mr Hancock told MPs that the Treasury was treating the problem as an 'urgent priority'.

Pension flexibility

He said: 'The 50:50 option would go some way to solving some of the problems. The consultation will include open questions as to how best to solve this problem - everybody will be able to respond to the details that we put out explaining how they think best to solve the problem. We are just working on the final details after meeting with the BMA yesterday.'

His comments came a day after NHS Providers warned that the health service was facing an 'immediate, major problem' that was having a growing impact because doctors were unable to take on extra work to fill shifts, forcing hospitals to delay surgery.

Health and social care committee chair Dr Sarah Wollaston said problems with GPs reducing their work had been exacerbated by problems obtaining information from primary care support services.

She said some GPs were refusing to take on extra work because they had been simply unable to find out what impact the additional income would have on their future tax liabilities. 'Many doctors are not willing to take on extra hours because they simply don’t know where that is going to wind them up,' she told Mr Hancock.

Information gap

'Isn’t there sthg you need to do to sort out the speed with which people can get information about where they are with their pensions?'

Despite acknowledging the problem, the health secretary said that 'in many cases people raise concerns that are not fully founded'.

He told the committee: 'I have looked into anumber of cases where the problem for an individual is not nearly as big as they worry about. That is one of the reasons I want to solve this as quickly as possible.

'I think we can give reassurances to a lot of people. In some cases, people have said they are faced with a very large upfront tax bill, but we have already changed the rules to ensure that people do not have to pay cash tax bills upfront and can ensure that that is swallowed within a rising pension pot.

'There are a number of areas where people are understandably concerned because they have heard rumours and the rumours are much worse than the reality. I will fix the substance, but I also want to provide people with the reassurance that in many cases doing extra work does increase their total remuneration and the problem isn’t nearly as big as feared.'

Dr Vautrey said it was not sustainable for the NHS to be in a position where GPs and hospital doctors 'realise they are paying to work extra hours' and that taxes on pensions were having a serious impact on general practice and hospitals.

A BMA Scotland report published last month warned that four in 10 primary care doctors have reduced their workload or considered doing so because of taxes on pension contributions that have left some paying £2 for every £1 earned.

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