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My Lords, the Government recognise that pension tax may contribute to decisions by doctors to limit their NHS commitments. The NHS continues to work tirelessly to ensure that patients receive timely and appropriate care, so we are consulting on proposals to make the NHS pension scheme more flexible, so that doctors can continue to conduct vital NHS work while tailoring their pensions growth. The Treasury is also reviewing how the tapered annual allowance supports the delivery of public services such as the NHS.
I thank the Minister for her reply and draw attention to my interests in the register. This problem goes back to 2016 but, as of this week, the BMA, the doctors trade union, revealed that a recent survey showed that 42% of GPs have already reduced their hours spent caring for patients and 30% of hospital consultants have already reduced their hours. There have been similar figures from the Royal College of Physicians. Doctors are attracting massive tax bills as a result of working harder to care for their patients; indeed, half are now retiring younger. I am afraid that the appearance is of a dilatory Government where infighting between HM Treasury and the Department of Health is taking precedence over urgent action to deal with this problem. Will the Minister encourage the Government to get a move on and get this sorted out before even more patient time is lost?
I thank my noble friend for that very direct question. Our estimate is slightly different—that around one-third of GPs and consultants have earnings high enough to potentially be affected by the tapering of the annual allowance for tax-free pension savings. Not all clinicians are affected—it depends on the personal circumstances—but we accept that there is a need for urgent action in this area. That is why NHS employers have published guidance for short-term approaches that could have a mitigating effect on pension tax for the workforce this year and throughout the winter. We have also opened our consultation, which will close this Friday. We have already had 750 responses to it, and stakeholders are broadly supportive of the additional flexibility that has been proposed. We intend that flexibility to be available by April.
My Lords, I apologise for asking another direct question. The results of a recent survey carried out by the Royal College of Surgeons of nearly 1,900 surgeons were that 68% of consultant surgeons are considering early retirement because of the pension tax situation, 64% have been advised to work fewer hours in the NHS and 69% have reduced the amount of time they spend working in the NHS. What effect does the Minister think that might have on surgical care?
The noble Lord is exactly right to raise this issue and we have taken it very seriously. I have met the president of the Royal College of Surgeons to take on board his concerns. It is exactly why we have brought forward this consultation as a matter of urgency and why the department is making strenuous representations to the Treasury, which is reviewing the operation of the annual tapered allowance, and it is why we will continue to make those representations. However, it is also why we are taking other actions around elective surgery so as to reduce the pressure on surgeons up and down the country.
The noble Lord is quite right. We must make sure that we do not undermine the important benefits of the tax relief on contributions. It is one of the most expensive reliefs in the tax system, costing around £50 billion, around 60% of which was claimed by higher and additional-rate taxpayers. We will expect any review that comes forward from the Treasury to be targeted. An evidence-based approach will be adopted where there is evidence that any problems with the pension tax are affecting the delivery of front-line services, as we have found with the specific group of high-paying clinicians.
My Lords, the noble Baroness will be aware that the royal colleges are all sounding alarm bells, and she is probably also aware that all our doctors serving in the Armed Forces are affected by exactly the same tax hits. The whole NHS workforce is in crisis and we really cannot afford to lose highly trained clinicians. The problem has been known to the department for some considerable time. Can she tell us exactly when the Government expect there to be a sensible, workable solution?
As I said in an earlier answer, we are expecting the consultation proposals to be implemented in April. However, I reassure the noble Baroness that these proposals would also apply to clinicians working in the Armed Forces and in medical schools, provided they are in the NHS pension scheme. I hope she find that encouraging.
My Lords, this is not just a problem for the NHS; it applies across the public sector—to senior people in the police, the fire service, the Army and elsewhere. It is a problem of the Government’s making. It was the Government who put a limit on the size of people’s pension pots and this is the unintended consequence. We are losing the most experienced, dedicated people. It is a false economy. My noble friend answers for the Government as a whole, not just on the health service, and it is not good enough to say that the Treasury is considering this matter. It has been brought up time and again, and it is time for the Treasury to admit that it made a mistake that is costing the public service dear.
As usual, my noble friend speaks with alacrity and force. It has been made quite clear by the Treasury that it will look at the impact on front-line services across the system and not just in the NHS. I am of course speaking for the Department of Health and Social Care, but where sensible evidence is brought forward by other services, it will be looked at by the Treasury in its review.
My Lords, is the Minister not aware that when she speaks from that Front Bench she speaks for the entire Government, not just for the department for which she works? Anybody speaking in this House as a Minister speaks for the whole Government. The noble Lord, Lord Forsyth, is entirely right: the idea that, although we know what the problem is, there will be no implementation until the spring is unacceptable. This has to be done much sooner than that.
I apologise if I gave the noble Baroness the impression that there will be no action before the spring. NHS Employers has already published guidance for employers that would mitigate the effect of pension tax on their work force in this tax year. In addition, consultation is under way to allow measures to come into place in April. The Treasury is also looking at the effect of the allowance and taking further action with effect not just for NHS workers but for those who work across the public sector where there is evidence of an impact on front-line workers. I hope that that reassures the noble Baroness and the entire House.