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Emergency budget must fix pensions to prevent staff exodus, BMA warns

Emergency budget must fix pensions to prevent staff exodus, BMA warns

By Jess Hacker
21 September 2022

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This week’s emergency budget must go beyond tinkering with existing policies and fully address the NHS’ pension crisis, the BMA has warned.

Chancellor Kwasi Kwarteng’s first announcement, the ‘mini-budget’ will take place on Friday (23 September) and is expected to put forward only a handful of legislative proposals.

Annual budgets usually take place in November.

In a letter to the chancellor and the new health secretary Therese Coffey, the BMA stated that the pension taxation trap is encouraging doctors to leave the NHS, adding that the Finance Act must be amended to stem early retirements.

During her leadership campaign, new Prime Minister Liz Truss promised to unveil radical reforms to NHS pensions to prevent doctors from retiring early. Some reports suggested she would consider changing the rules around lifetime pension caps.

Professor Philip Banfield, BMA chair of council, warned that the ‘perverse impact of rising inflation’, with ‘anomalies’ in the Finance Act resulting in ‘tens of thousands of senior doctors incurring extremely large tax bills, with the only way to mitigate this being to retire this financial year’.

He also suggested the Chancellor must adopt a tax unregistered scheme similar to that already provided to the judiciary, and called for an adequate financial settlement for the NHS.

He said: ‘In primary care, high levels of inflation and higher than expected wage costs have placed extreme pressures on GP practices, which are struggling with retention and recruitment whilst coping with high levels of demand. For many a GP practice the energy crisis will become a question of financial viability.’

Dr Vishal Sharma, chair of the BMA pensions committee, said: ‘This may be the Chancellor’s first announcement, but it is his last chance to tackle the ‘greatest workforce crisis’ in the history of the NHS. Without urgent action to address the punitive pension taxation rules, the NHS faces an exodus of its most experienced staff this year, a loss from which it may never recover.’

Also ahead of the budget, the NHS Confederation called for action on several key areas, including granting the NHS an immediate funding top-up of £4bn to make up for the budget shortfall caused by soaring inflation.

The Confederation also said the Government must ensure ‘fair treatment of pension growth’ or risk preventing doctors from doing extra work to help elective recovery. This follows a major public survey which found that 83% of people in the UK agree improving current working conditions for NHS staff is vital to fix the workforce crisis, with 77% supporting a pay increase for NHS staff.

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