Did George Osborne’s stringent pension tax rules push senior doctors away for good?
How many times have you heard it said:
The NHS is overworked and understaffed?
Staffing issues and retention are one of the major problems that the National Health Services faces right now.
Some believe that private healthcare is to blame.
Controlled workloads, predictable hours, better pay; it’s hardly surprising that the private sector does indeed attract many qualified workers into its fold. (Click here to read “Is private healthcare ruining the NHS?”)
But senior doctors have been reducing the NHS hours for another reason.
And it’s all because of stringent pension tax rules. Here’s what happened…
What were the rules?
Punitive pension tax rules set out by the Government in 2016 led to senior doctors refusing to work extra hours, retiring early or avoiding new roles.
George Osborne’s rules introduced a tapered annual allowance for any worker earning over £110,000. Effectively, a £40,000 pension contribution would shrink to just £10,000 for anyone earning more than £100,000.
Quite a difference, right?
The Royal College of Paediatrics and Child Health’s survey found that some half of respondents altered their working hours to avoid exceeding the annual allowance.
Unsurprisingly, the problem has exacerbated lengthy NHS waiting times as operations and consults have had to be pushed back even further as a result.
The Academy of Medical Royal Colleges stated that “it seems highly likely that this capacity will be lost permanently. Thus the benefits of increases in medical student numbers are being wiped out by the current loss of capacity.
“Crucially, this reduction in available medical capacity is directly impacting on services and thus on patient care. It has become apparent that maintenance of service provision is reliant on consultants doing additional hours, and that is increasingly becoming untenable financially.”
A long-overdue solution
Under pressure to change the rules and facing ever decreasing numbers in the NHS workforce, the health secretary, Matt Hancock, put temporary measures in place from December 2019 to the end of the 2019/20 financial year.
The temporary plans allowed the NHS to pay doctors enough extra money to offset the costs and money they’d lost under Osborne’s pension rules.
The stop-gap solution meant that doctors received thousands of pounds in extra pay to boost their pension packages back to the levels they were before they had to pay the sky-high tax bills.
Then, changes in the Budget for the 2020/21 financial year set out that no one with an income of £200,000 or less would be hit by annual allowance tapering. The measure is expected to cost the Treasury £2.2bn over the next five years.
But the solution has been long overdue. And who can say whether it’s too little too late? Will the 69% of surgeons who cut back their hours back in 2016 thanks to the punitive taxes really want to start working more again?
Only time will tell how much difference the latest changes to tax rules will make to the NHS’s workforce numbers.
Some good news for the NHS
In the meantime, extra funding and special measures are being put in place to address staff retention and bring the NHS back to where it ought to be.
For example, nurses are being offered two-year courses to become surgical care practitioners as part of a drive to ease waiting times. And students are being offered new grants to encourage more people into the sector.
Of course, it’s going to take time for such measures to make a difference in staff retention. But it will happen.
Just two years have passed since NHS Employers started the National Retention Programme and national turnover rates for nursing and clinical mental health are now at their lowest in five years.
It’s statistics like these that breed hope for the future of our NHS.
But they also prove that, whatever happens, it’s got to be a long-game solution that saves the service, and we all need to be patient while improvements are made.
The only sustainable solution
While we wait, the best thing that anyone who’s able to can do to relieve further pressure on the NHS is to use an alternative source of healthcare.
Rather than allowing the NHS to continue to pick up more of the spending on private services, why not do it yourself?
If you’re able to pay for private healthcare rather than rely on the NHS, you’ll not only be contributing to the most sustainable way forward for the public service, but you’ll also:
- Get seen quicker
- Access more treatment
- Benefit from nicer facilities
- Have far greater control