HCSA President Dr Claudia Paoloni issues an update on the Association's campaign for pensions tax reform.
HCSA members will probably have seen claims by the government this week that “the pensions crisis is resolved” following the announcement of a new plan which involves greater flexibilities from next April. You may have seen HCSA’s response, which was covered widely by the national press.
While other organisations representing hospital doctors welcomed the changes, even appearing alongside the government in the official press release, HCSA feels that this sends a signal that pension flexibilities will “do the job” and resolve the issues which so many hospital doctors have experienced.
Going along with such a narrative in the public sphere, while claiming to members to be pressing for more privately, undermines the campaign to raise awareness of the issue and threatens to set it back by months as the crisis worsens. It also risks leaving the profession outflanked on the vacancies problem which has been exposed by the pensions issue: the government and others will be able to turn the focus onto doctors who do not take up the option of flexibilities to work longer hours, even if the terms of doing so are poor.
The testimony from HCSA members on the personal and care impact in response to our pensions survey last month was at times harrowing and shocking, but it was also consistent. Across the UK, doctors are cutting back on PAs to reduce their exposure to the current punishing tax thresholds.
The findings have been reported in exclusives for the BMJ, HSJ and Guardian, and your detailed testimony has underpinned much of our ongoing work with the media on the issue: once again HCSA members have proven themselves invaluable.
Half of you said you have stopped doing additional hours, and a quarter of you have reduced them. The slow burn impact of this reduction in agreed PAs across the country will have an ever-growing impact.
While other organisations have sent mixed signals, we are clear that the reforms announced this week are not a case of “job done.” We have been consistent in meetings with ministers, senior politicians and in our briefings to MPs. Flexibilities are not the answer.
We are clear in our belief, although we would be delighted to be proven wrong, that the proposals currently on the table will aid some individuals but will not resolve the systemic issues at the heart of the crisis. That will require tax rule changes.
The government’s proposals, which follow intense criticism by HCSA, employers and others of the previous 50:50 approach (our critical stance was covered by the Financial Times and elsewhere), include three strands.
- It is proposed that from next April hospital doctors will have an option of reducing pension contributions at the start of a tax year in a gamble on their eventual earnings and liabilities at the end of it. For instance, an NHS Pension scheme member could opt to pay 30 per cent of contributions or 70 per cent, with that drop matched by the employer contributions. The final detail will be revealed following consultation: but it is clear that the government prefers to leave it to employers to decide whether to pass on to doctors any employer contribution saved.
- There will be an encouragement for doctors to backfill any under-shooting of contributions by purchasing additional pension, although there is no employer contribution element to this and no lump sum benefit.
- The government has also said it will pursue the phasing in of the pensionable component linked to pay increases to ease leaps in growth.
We also await details of a more immediate local stopgap measure which currently appears to be to encourage members to reduce contributions to zero this year.
The million-dollar question is: will increasing the complexity of NHS Pensions resolve the impact of the £110,000 taper threshold and the annual allowance trap on doctor behaviour?
HCSA fears not, as all of these measures place the burden on the individual doctor to decide whether to deploy workarounds to “game” a broken system. Put frankly, the tax framework is complicated enough and these measures will only increase the questions and uncertainty for individual doctors.
Worse, by presenting flexibilities as the solution, this could delay a real solution further, past the next Budget.
Currently, the government has committed without a firm timeframe to “take a look” at the impact of tax allowances on the public sector. This is not enough: we need a firm commitment to change at the next Budget, which is expected in two months’ time.
Today, the NHS statistics for June reflect the deepening issue, with diagnostic six-week waiting times rising by nearly 40 per cent on June 2018, large increases in the number of patients waiting longer to start treatment, and waiting lists up 22 per cent in 12 months and on track to hit 5 million within the year.
The pensions crisis and the understaffing it has exposed are key factors in this decline in service.
HCSA shall be maintaining relentless pressure for a real solution and working hard to ensure that politicians, the public and media do not see the announcement this week as the end of the matter.
Dr Claudia Paoloni