National Health Service Pension Schemes (Member Contributions etc.) (Amendment) (No. 3) Regulations 2022

Debate between Lord Allan of Hallam and Baroness Masham of Ilton

Wednesday 11th January 2023 Lords Chamber

[Baroness Masham of Ilton (CB)]

I thank the noble Lord, Lord Davies of Brixton, for this regret Motion. This is an important matter, because we are losing some of our experienced consultant doctors because of this pension scheme system. We cannot afford to lose these doctors early—they are so valuable. Surely this is something that the Government can put right. This is urgent, and I hope that the Minister will have some good news tonight. If not, people will continue to be worried.

[Lord Allan of Hallam (LD)]

My Lords, regrettably I do not have an interest to declare in respect of the NHS Pension Scheme. I say regrettably because I was an NHS employee during much of my 20s but foolishly opted out of the pension scheme. Older me would have words to say to younger me about the lack of foresight in that decision, because the NHS pension was and is an excellent support in retirement, as the noble Baroness, Lady Altmann, has pointed out. If only I had had someone like her to advise me back then, I would be in a better position today.

Apart from that reminder of personal grief, I am grateful to the noble Lord, Lord Davies of Brixton, for enabling us to have this debate today, as it allows us to return to a key topic that we rightly discuss regularly in this House—the issue of staff shortages in the health and social care sector. He and the noble Baroness, Lady Altmann, have described some of the really quite profound structural challenges related to NHS pensions and taxation, and I hope that the Minister will agree to look at them in some detail.

On the narrower subject of the regulations themselves, the response to the consultation on this instrument is enlightening in describing the nature of the staffing pressures that the NHS faces, which brought around the original changes made in the Covid legislation that have then been prolonged in a series of statutory instruments, and especially in describing those that relate to staff sickness absence rates. I note that the consultation response was written last autumn but accurately predicted the fact that those staff sickness absence rates would continue through the winter. If anything, they have been worse than anyone anticipated, through the combination of Covid and flu. That makes the case for us not disincentivising experienced staff who are past retirement age from returning to help us out at a time of national crisis. It is of special note that, in this consultation, 98% of respondents said that, yes, this should go ahead and we should continue to offer some relief to those who are coming back into work, with only 2% against. That is quite a majority for any consultation.

If the consultees had any criticism, it was that the easements did not go far enough. I note that the Government have agreed to remove the 16-hour rule permanently from 1 April this year, and I hope that the Minister will confirm that this is the case. It was the pension scheme board itself that said that there was no rationale for requiring people who agreed to work past retirement to stick to a 16-hour limit.

The response also goes into some detail about the position of special class status members who can retire at 55, and what happens if they return to work before the age of 60. It included a graph that showed how much a nurse in this category could work before abatement applied. I understand that the word “abatement” in this case means that there is a limit to the number of additional hours that a nurse could work before losing, pound for pound, some of their pension entitlement. In other words, if they work past that amount of time, effectively they are working for free. The Minister may correct me if I have misunderstood, but the chart implied that there would be a straightforward loss.

The chart tells us that the most experienced nurses, those with 35 years of pension entitlement, would be able to work around 0.5 of a full-time equivalent before the pension ceiling kicked in. The Government in their consultation, because they were not lifting the abatement permanently, put a glass-half-full spin on it, saying, “Look, these people can come back and work half time”. But of course there is a glass-half-empty angle on it as well, which is that we are potentially losing half the time that those experienced staff could give to us if they did not feel that, by working those extra hours, they would lose out on their pension entitlement. I note that the abatement for this group has been extended to 2025, acknowledging that concern, but that there is still no permanent solution. Again, I hope that the Minister today has some ideas for how we may go further and ensure that the NHS can persuade retired staff of all classes to put in as many hours as they feel fit to do. We do not want to be in the position whereby someone is willing to work more but, purely for financial reasons, feels unable to do so.

I am sure that we will return to the theme of the impact of NHS Pension Scheme rules on staffing levels over the coming months. As the noble Baroness, Lady Altmann, pointed out, it is clear that there are unforeseen and unwelcome consequences of some of these rules, which I suspect is because they were crafted in a different climate for NHS staffing, at a time when people would retire and plenty more people were coming in. Today we are in quite a different situation where, frankly, we are desperate for those people who can still work, who are at retirement age, to postpone in many cases well-earned retirements to come back and assist us. In that climate, it is essential that the Government commit to revising rules where that would make a material difference to staffing levels and therefore to the health of the nation.