NHS Pensions and Staffing
Debate between Dan Poulter and Nigel Evans(2 years, 5 months ago)
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Dr Poulter
I agree with the hon. Lady, who, like all Members who have intervened, is strongly advocating for her constituents and for healthcare workers throughout the country. I have been written to by doctors in Scotland in advance of the debate and I know how serious this issue is. I thank all the Scottish National party Members who have come to this debate for their support in raising this issue, which is important for those working in Scotland.
Turning to the technical information—this issue is very technical—why is this happening? The pensions annual allowance allows for the value of a pension to increase by up to £40,000 without incurring penalties. That is completely unsuited to defined-benefit schemes such as that in the NHS, and it should be scrapped in defined-benefit schemes. That view has been supported by Treasury advisers and by the Office of Tax Simplification. However, the Government did not agree with the recommendations and instead only raised the annual earnings taper thresholds to £200,000 and £240,000. Pensions experts were clear at the time, and have been ever since, that although this approach mitigates some of the issues around the taper, it is not an effective solution to issues with the annual allowance, as the unfair interactions between pension taxation and the NHS pension scheme regulations remain. Crucially, it does nothing to affect the punitive effects of the general annual allowance, which is set at £40,000, nor the lifetime allowance, which is set at just over £1 million.
Not only has the rise in taper thresholds not fixed the problem, but the situation has reached a further crisis point due to the combination of levels of stress and burnout across the NHS, the freezing of the lifetime allowance in 2021 and, most significantly, the rapid rise in inflation and the CPI. That is compounded by a flaw in the Finance Act 2004 such that its provisions no longer operate as originally intended—that is, measuring pension growth above inflation. So the situation has reached a crisis point.
To address the long-standing issues of the interaction of pension taxation policies with the NHS pension scheme, it would be sensible to introduce a tax unregistered scheme similar to that made available to the judiciary—as the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) outlined—who face similar recruitment and retention problems to those we are beginning to face in the NHS.
It is worth asking why the CPI rise has turned the crisis in retention and recruitment into a disaster for the NHS, particularly this year. There are three major impacts of CPI inflation. First, the Department of Health and Social Care has suggested that, even though CPI is likely to hit 10% by September 2022, the likely pay award for hospital doctors nearing retirement age with final salary schemes will be 2% or 3%. This unprecedented gap between the level of inflation and the likely pay award risks significantly devaluing the pension of members aged 59 or above if they delay retirement by even a single year. There are no late retirement factors in the 1995 pension scheme—the scheme that the vast majority of staff approaching the age of 60 are in. That means that, for every year spent working beyond the age of 60, the level of annual pension that could have been received if they had retired at 60 will effectively be lost.
A doctor may be well over £100,000 worse off if they retire at 61 rather than at 60. That cannot be right; it is a perverse reward for years of dedicated service to patients. The consequence of the current pension rules will be to push more experienced doctors, nurses and other healthcare professionals to take early retirement at the very time when they are most needed to reduce the covid backlog.
The second pressing issue is that two different measures of inflation are used in the NHS pension scheme. That has a particular impact on those who are on a career average revalued earnings scheme; as GPs are wholly within a CARE scheme, it has the biggest impact on this group of doctors. The current rules use a different CPI value for the opening value: it is based on the CPI rate in September last year, whereas the revaluation of earnings that is built into the NHS pension scheme is based on the CPI rate in September this year. When inflation is stable, last year’s CPI rate and this year’s are similar, so that does not usually present a major problem. However, when inflation changes rapidly, as is happening now, it becomes a very significant problem for many GPs.
For example, CPI in September 2022 is likely to be approximately 10%. Under the scheme rules, the pension will be revalued by inflation plus 1.5% and will therefore increase by approximately 11.5%. However, the opening value of the pension will increase by only 3.1%, which is the September 2021 CPI figure. Therefore, even though the annual allowance is only supposed to test pension growth above inflation, the discrepancy caused by those two different measures of inflation will result in a purely inflationary growth being tested against the annual allowance. For many people, that will use a significant proportion of the available annual allowance, and in some cases it will exceed it entirely, resulting in an additional tax charge simply as a result of inflation. A GP from Scotland who wrote to me before this debate told me that it would result in her receiving a tax bill of about £19,000.
The impact is compounded by the fact that the opposite scenario will occur next year if, as predicted, inflation returns to more normal levels. Although workers in the NHS will receive only one NHS pension, following the public sector pension reforms, many NHS staff are in the 1995, 2008 and 2015 pension schemes. Under the Finance Act, those schemes are all considered separately, so even though one scheme may have negative growth, it is not offset against positive growth in other schemes. For example, if a member had £20,000 negative growth in the 1995 or 2008 scheme and £60,000 positive growth in the 2015 scheme, even though their combined pension growth was £40,000 and within the standard annual allowance, the 1995 or 2008 scheme growth is considered to be zero. Instead, the member is taxed on the £20,000 excess in the 2015 scheme.
In addition, the negative growth in the 1995 or 2008 schemes cannot be carried forward or backward to offset previous positive growth in these years. That effectively means that GPs in particular will face additional annual allowance tax bills of tens of thousands of pounds this year for pseudo growth, the majority of which will be lost next year but with no refund or reduction in the extra tax paid this year. That cannot be right; it will push many GPs into early retirement. This year, a typical GP with median partner earnings of £115,000 will receive an annual allowance charge of more than £32,000 as a result of this flaw in the Finance Act, which incorrectly measures pension growth above inflation.
Thirdly, the current high levels of inflation have exacerbated the impact of the decision to freeze the lifetime allowance.
Let me very briefly offer the Minister some possible solutions. First, we need to address the issue of CPI and rising inflation and amend the Finance Act. As I have outlined, only growth above inflation should be tested against the annual allowance. In this rapidly moving inflationary environment, section 235 of the Finance Act does not do so; two different values are used. Simply amending section 235 to ensure that the opening value is aligned with this year’s CPI—not last year’s—so that the inflationary uplift of benefits is tested in the same year will ensure that only “growth" above inflation would be subject to testing against the annual allowance, as was clearly originally intended by the spirit rather than the letter of the legislation. At the same time, it is imperative to amend section 234 of the Finance Act 2004 to recognise years of negative growth and allow them to be carried backwards or forwards to measure real growth over a longer period.
Secondly, in the year 2022-23, we should allow the NHS in all four nations to replicate the 2019-20 compensation scheme to protect clinicians from pension growth so that they are freed up to work at maximum capacity in the NHS. This is not a “tax perk” for one group, but rather recognises that the annual allowance charges are largely based on non-existent pseudogrowth.
Thirdly, to solve the wider and long-term issues facing senior and experienced NHS staff, we should move to a non-tax-registered scheme. It is clear that in the long term, the solution to this problem is a scheme of that kind for those impacted by pension taxation in the NHS. When faced with similar recruitment and retention problems with the judiciary because of these punitive pension taxes, the UK Government introduced a non-tax-registered scheme which immediately addressed the issue, and resulted in the appointment of more judges. That is a fundamentally fair system. It ensures that the correct amount of tax is paid on pension growth, and as no tax relief is provided on employee pension contributions, there is no requirement to subject scheme members to either the annual or the lifetime allowance.
Senior and experienced NHS workers are not asking for special treatment. They are, however, asking for a fair system: a system that does not penalise them for working more shifts, taking on leadership roles, or staying in the NHS after the age of 60. It cannot be right, at a time when the NHS is desperate to retain its workforce—particularly the senior workforce who are so crucial in training new doctors, nurses and other frontline staff or workers, and advising on the most complex cases—that senior clinicians will actively lose money from their pensions for working for longer, or face huge tax bills on pension growth that they will never see materialise.
If the Government are serious about valuing NHS staff, if the Government are serious about helping healthcare staff to meet the covid care backlog, and if the Government are serious about meeting the needs of patients, they must act now to reform NHS pension rules.
Mr Deputy Speaker (Mr Nigel Evans)
I call the Minister, and welcome him to his new role.
Health and Social Care
Debate between Dan Poulter and Nigel Evans(4 years, 11 months ago)
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Dr Dan Poulter (Central Suffolk and North Ipswich) (Con)
I want to bring the Secretary of State back to social care. We have a duty in this Parliament to resolve this issue, which for many decades has been kicked into the long grass. Does my right hon. Friend agree that it is not just about funding, but what service we want to deliver for people? The discussion about the future of social care should also be about service delivery, putting together not just a sustainable funding model but a model of delivery that is driven by integration of the health and social care services. We often talk about that, but it has not been delivered for patients and people on the ground.
Mr Deputy Speaker (Mr Nigel Evans)
Before the Secretary of State answers that, may I just gently remind him that 40 people are trying to get in? It would be generous if he could at least keep that in mind as he takes interventions.
HEALTH
Debate between Dan Poulter and Nigel Evans(12 years ago)
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Mr Deputy Speaker (Mr Nigel Evans)
For the wind-ups, the guideline on speeches is 10 minutes, but the clock will not be in operation.
The Parliamentary Under-Secretary of State for Health (Dr Daniel Poulter)
I have very much enjoyed sitting through this debate on health. I remember that when we had the equivalent debate last year, many speakers did not have the time they wanted to make their speeches. The fact that we have had longer today has enabled many right hon. and hon. Members to make valuable contributions on a number of subjects, focusing not only on health care issues in their constituencies and on important individual cases that highlight the need for changes in the system, but on the big challenges that face the NHS in tackling long-term medical conditions.
In the time available to me, I will do my best to answer the questions and points put across by Members on both sides of the House. My hon. Friend the Member for Stafford (Jeremy Lefroy) and I have met on a number of occasions, along with my hon. Friend the Member for Stone (Mr Cash), to talk through the challenges facing Mid Staffordshire trust. My hon. Friend the Member for Stafford has been a great advocate for, and a great support to, the patients and staff at that trust. I would like to put on record my thanks to him for all that he has done for all his constituents. His advocacy during his time in this House has been tremendous.
My hon. Friend the Member for Stafford raised some important issues. We know that it is desirable, not only because it makes good health care economics but, more importantly, because it is good patient care, to keep people well and looked after in their own communities and in their own homes. My hon. Friend threw up a legitimate challenge when he said that if we are to deliver good care in the community and in people’s homes, we need to find a way of moving from the current situation. At the moment we have a crisis management response by default, where people are rushed into A and E, and he is right to highlight the fact that some parts of the country do not have an adequate GP out-of-hours system to look after people around the clock. We need to ask how we go from a system set up around crisis management to one that is better placed to meet the future needs of preventive care and looking after people with long-term conditions such as diabetes, dementia and heart disease in their own homes and communities. The Government are taking steps to address this issue by making sure that GPs and local health care commissioners, through clinical commissioning groups at a local level, will hold a lot of the health care budget. That will ensure that the focus is on primary preventive care and on better looking after people with long-term conditions.
My hon. Friend is right to say that we need sufficient numbers of hospital beds, but as time passes there might less need for beds in some hospitals if local CCGs effectively meet the challenge of ensuring that that they invest in community and preventive care. In the interim, we need to support good commissioning of beds locally. We must have intermediate care beds available at community hospitals and in other care settings in the community for step-up care, step-down care and respite care.
On the other side of the River Thames, the clinical director of St Thomas’ hospital, Ian Abbs, is looking into year-of-care tariffs, which look after patients with long-term conditions such as diabetes and heart disease in a holistic way that enables them to be supported when they need a hospital bed and need to be looked after in the community. That has to be the right way forward. We in the Department’s ministerial team will work with clinicians, medical directors, trusts and commissioning boards to make sure that Eurocare tariffs are in place, so that we can shift the focus away from the community, but in a managed way that means that hospital beds will still be available as people require them.
The hon. Member for Easington (Grahame M. Morris) has been a strong advocate—he has raised his concerns many times—for constituents and others throughout his part of the country who are patients who need access to cancer care, cancer services, the cancer drugs fund and, indeed, high-quality radiotherapy. It is worth setting out some of the background—he outlined it himself in his speech—to the Government’s commitment to improving care for patients with cancer.
In 2011 the Government made a commitment to expand radiotherapy capacity by investing more than £150 million more over four years from 2011. As the hon. Gentleman knows, that was to increase the utilisation of existing equipment, support additional services and ensure that all high-priority patients with a need for proton beam therapy get access to it. In April 2012, the then Secretary of State announced that the Department had set aside up to £250 million of public capital, to be invested by the NHS in building proton beam therapy facilities at the Christie hospital in Manchester and the University college London hospital, to treat up to 1,500 patients each year. In October we announced a £15 million radiotherapy innovation fund for 2012-13, which brings this Government’s additional investment in radiotherapy over the spending review period to more than £165 million. The fund is designed to ensure that, from April 2013, radiotherapy centres will be ready to deliver intensity-modulated radiotherapy to all patients who need it.
The hon. Gentleman was right to say that, in spite of that increased investment, there are ongoing concerns about the variability of access to radiotherapy services in the NHS. I hope that it will reassure him that, in response to the requests of radiotherapy centres to the fund, we will go beyond the original commitment and will this week notify the centres of allocations totalling almost £23 million. We have taken on board the hon. Gentleman’s concerns and are making sure that we continue to invest in high-quality radiation in the years ahead. I know that he will hold the Government to that task in the coming years.
The right hon. Member for Wentworth and Dearne (John Healey) has rightly raised issues of principle arising from the Vinny Duggan case. I want to put on record my best wishes to the family concerned. I will deal with two issues: first, the issue that arose from the way in which the trust handled the complaints procedure, and secondly, the wider point about the Nursing and Midwifery Council.
First, as the right hon. Gentleman has highlighted, the trust clearly failed to acknowledge to any adequate degree that mistakes happened and that the quality of care was not of the standard that it should have been. That much was clear in this regrettable episode in the trust’s history. Two years is an unacceptable amount of time to wait for an apology or for an adequate explanation for what went wrong. The right hon. Gentleman is absolutely right to say that what patients want when things go wrong is a sincere apology and an explanation as to why things happened. We all know, no matter how good the care is in the NHS, that bad things will sometimes happen, but we need to know that that mistake has been recognised, that there has been an apology and that lessons have been learned for the future. We cannot rewrite history or always unpick mistakes, but we can learn lessons for the future and make sure that such bad things do not happen again. That is what good medicine is about. Clearly, in this case there were problems with the way in which the complaints were addressed.
Secondly, on the wider point raised by the right hon. Gentleman about the NMC and the disparity between how different professional regulators approach the complaints process, he is right that the NMC can review or reopen a case only when new evidence is available. If old evidence is reconsidered or if it changes, as in this case, it is very difficult to review it. There are differences between the medical and other professional regulators with regard to how such cases are handled, and the Law Commission has rightly highlighted those inconsistencies. There needs to be more consistency throughout all parts of the medical, nursing and allied health professional groups, in order to make sure that patients know that, when complaints are made and concerns are aired, they will be looked into and, where necessary, complaints can be reopened and reinvestigated.
The Law Commission proposals are expected to be introduced to the House in 2014. The right hon. Gentleman asked whether we could do anything sooner than that, but, as he will know, if we brought in a section 60 order, it would take about two years for it to get through the full parliamentary process. Given that the Law Commission proposals are holistic and apply to not just the NMC, but all health professions, we believe that the right approach is to consider those proposals in 2014. We hope that that will bring a lot more consistency, which I think we all feel is desirable, to future cases involving the professional conduct of all medical, nursing and other health care professionals.
I thank my constituency neighbour, my hon. Friend the Member for Suffolk Coastal (Dr Coffey), for her kind comments about the work that I, other Suffolk MPs and, indeed, the Minister of State, Department of Health, my hon. Friend the Member for North Norfolk (Norman Lamb), have done in relation to problems with the East of England ambulance service. People in more rural counties, particularly North Norfolk and parts of Suffolk, appear to be getting a service that is not of the standard that we would expect. We need more transparency with regard to response times, not just on a regional level, but on a county-wide level. My hon. Friend the Member for Suffolk Coastal asked whether there could be a breakdown by postcode. That is a little more challenging, because it is possible that, in any given month or response period, not enough people in a particular postcode will need an ambulance. There is a desire, however, for more transparency with regard to sub-geographical regions.
My hon. Friend the Member for Waveney (Peter Aldous) has also taken a keen interest in the issue and has recently been out with the ambulance service on a number of evenings.
Jim Dowd
Nobody disputes the Minister’s last point. That is why there is a reconfiguration process especially for that purpose. That is what should be used, rather than this back-door method.
Mr Deputy Speaker (Mr Nigel Evans)
Order. Please complete your contribution within 60 seconds, Minister, so that we can move on.
Dr Poulter
I will do so, Mr Deputy Speaker.
I am sure that my right hon. Friend the Secretary of State will take those considerations into account when he receives the report and comes to his conclusions in due course. I know that the hon. Member for Lewisham West and Penge will continue to make his views clear.
Finally and importantly, I turn to the good remarks made by the right hon. Member for Leicester East (Keith Vaz). He is right to point out that one of the big challenges facing this country in health care terms is to better look after people with long-term conditions. Diabetes is a key challenge. Patients with diabetes have a higher risk of coronary heart disease, stroke, amputation, vascular disease and a number of other medical problems. One key way to deal with that is to focus more on prevention, rather than cure. That means investing in more GP-led care and primary prevention, rather than picking up the pieces in hospital. We should focus on helping people with type 1 diabetes to have a normal life by educating them to understand their condition, through the use of insulin pumps and by helping younger people to manage their condition.
The Government are committed to preventing diabetes and bad lifestyle habits from developing in the first place by focusing on better education in childhood. When local authorities have control of public health budgets, that will be a key priority for them. We must set good lifestyle habits from the early years to ensure that people do not develop diabetes later on.
Thank you, Mr Deputy Speaker.
Transport