NHS Pensions

Debate between Philippa Whitford and Stephen Hammond

Wednesday 26th June 2019 Westminster Hall

[Stephen Hammond]

Let me make it clear that not only are the changes having an impact, they are likely to continue to have an impact. I recognise that; the hon. Gentleman will hear later in my remarks that we recognise that point.

My hon. Friend the Member for Poole was right to talk about the long-term plan and the cash settlement that goes with it. He was also right, though, to mention that any plan will work only if it works: if we make sure the people delivering it can do so with the numbers and experience required. The hon. Member for Newport West (Ruth Jones), although she said she was not expecting to speak this morning, made a thoughtful speech and raised a number of issues from her direct experience that informed the debate.

My hon. Friend the Member for Winchester (Steve Brine) represents the place where I was born and spent my childhood, so for that and other reasons, I always listen carefully to what he says. He was right to stress at the start of his speech that this is not about tax breaks for particular people, although that is the headline; the reality is that perverse disincentives are being created against providing the care that we need. I listened carefully to the hon. Member for Glasgow North East (Mr Sweeney), who has just intervened on me to reiterate the point he made in his speech about the experiences of some consultants, and I recognise that those experiences are not unique to Glasgow North East.

The hon. Member for Central Ayrshire (Dr Whitford) always makes many informed remarks, given her experience. She made a point that perhaps has not been picked up, but is important in informing the debate: this is not just about losing a number of potential outpatient appointments and clinicians to service them, but about the impact on training. In many of the places that I have had the honour to visit as Health Minister, it is clear that the mentoring and support provided by senior staff to more junior staff is an important contribution, not only to the wellbeing of those junior staff, but to their education and, therefore, to the benefit of patients. That is undoubtedly one of the consequences of what we are talking about today.

[Dr Whitford]

Obviously, senior clinicians are critical to clinical teaching, which is part of the work. However, as other Members have highlighted, consultants are refusing to take on the extra sessions involved in organising that teaching and running rotas for either junior doctors or medical students. Without that, it will just be chaos.

[Stephen Hammond]

The hon. Lady is right to make that point; as I said in my remarks about her speech, I recognise the impact on training. There is clearly concern that unless we address this matter, it will have a number of impacts, of which that is one.

The hon. Member for Oxford East (Anneliese Dodds), speaking for the Opposition, rightly opened her remarks by pointing out the scale of the cost of tax release for pensions to the Treasury. She made valid points about doctors’ knowledge about that liability, and about the interaction of core tax principles with particular schemes. I was rather hoping that she would also welcome the long-term plan and the cash settlement, but I suspect that element of unity was probably a step too far.

As my hon. Friend the Member for Poole may have mentioned at the beginning of his speech, we have fewer Members here and a lower number of contributions. However, those contributions, combined with some of the interventions, have meant that we have had a debate of high quality.

Needless to say, I have heard the representations from everyone in the Chamber. It will not surprise anyone that I have received, as has the Department, representations from NHS employers reporting exactly what we have been discussing—that consultants are increasingly no longer willing to work additional sessions. The lost capacity is clearly difficult to replace, especially in some clinical areas where there are already shortages, and it can be expensive, as employers can pay a premium for locums to fill the gap. It is obvious and right that where there is evidence of an impact on the delivery of services, the Government should be prepared to take action.

At the outset, I reiterate that the Secretary of State and I take seriously the concerns of doctors. That is why we have been involved in a number of discussions with the Treasury, which has resulted in the 50:50 flexibility and the consultation. I will come to that in a moment, but, as Members will hear as I develop my remarks, that will not be the end of our conversation with other Departments.

Looking at the case for pension flexibility, it is true that outside public service, employers in some cases have flexibility to adjust benefit packages to allow high-earning employees to target a lower level of pension saving and so reduce the potential for large regular annual allowance tax charges. That flexibility is not currently present in the NHS. The NHS pension scheme does not allow any flexibility over the level of pension growth. Staff who participate in the scheme must pension all regular earnings from their employment. The Government are right to take the view that it is important to ensure that staff have a good level of pension savings, but senior clinicians, particularly consultants and GPs, have a unique degree of flexibility over their workloads and obviously can reduce their commitments. Consultants can reduce the number of additional sessions undertaken, and many GPs are self-employed. That can create incentives for clinicians to seek to control their income and pension growth by limiting or reducing their NHS work to avoid breaching their annual allowance. As a number of Members have discussed, that clearly has an impact on the delivery of patient care.

It is clear that retaining and maximising the contribution of our highly-skilled clinical workforce is crucial to the NHS and the long-term plan for the NHS. While any pension tax regime should seek to achieve the fiscal ambition of distributing pension saving incentives fairly, it has to be recognised that, in combination with the fixed structure of the NHS pension scheme, that could produce—listening to the evidence today and the evidence I have directly received—unintended consequences for service capacity and the delivery of patient care. The Government are prepared to change the rules to give clinicians more flexibility.

Alongside the publication of the “Interim NHS People Plan” earlier this month, my right hon. Friend the Secretary of State announced our intention to consult on new flexibility for clinicians. The consultation will be published in the coming days—I hope very shortly—and will set out proposals for a 50:50-style option, offering 50% pension accrual and halved contributions. Earlier this year, as part of the new five-year GP contract, the BMA and NHS England asked the Government to consider introducing that option. While I recognise that the BMA has not been unequivocal in its support, it has welcomed the proposal as a step in the right direction.

The Government believe that a 50:50 option balances the benefit of flexibility with the fiscal impact to the Exchequer. The 50:50 option will allow clinicians to build up their pensions more slowly and at a lower cost. Clinicians will still need to make their own personal assessment as to whether their financial interests are best served by taking advantage of the 50:50 model or continuing with full-rate accrual, but I have heard—not necessarily in the debate today, but directly from a number of consultants—that the 50:50 option is not flexible enough and that other measures should be considered.

The new pension flexibility should be viewed as a positive development for clinicians. My hon. Friend the Member for Winchester mentioned that he has asked me about the consultation period on the Floor of the House and that he has spoken to consultants about it. The consultation will be an opportunity to listen to a range of views before any final proposition is agreed. I encourage all Members here today to encourage their local clinicians to take part in that consultation. Equally, I encourage anyone from the health system in its widest context to take note of the debate and take part in the consultation. We want not only to hear any suggestion that there is a generic case for tax changes, but to listen carefully to what clinicians say using their own personal examples to provide evidence for any change they seek.

[Stephen Hammond]

The consultation is both. I recognise, as I said a few moments ago, that the 50:50 option has not received unequivocal support from the BMA, but to its great credit, it has asked us to consider that. We have come forward with this proposal. The BMA has welcomed it, but has said that it would want to discuss further options for flexibility and other pension matters. We have said that the consultation will look at the merits of the 50:50 option—or question it—but we will rightly open up that consultation to other suggestions. My hon. Friend will have just heard me say that I hope Members will encourage their local clinicians to use the consultation as a way of expressing their concerns about the 50:50, if they have any, and to express their views on other measures they would like to see introduced in terms of pension contributions. I stress that point again in response to his intervention. He will probably be interested in my next set of remarks, which are on flexibility.

Although the 50:50 option provides a new flexibility, we recognise that it does not provide unlimited flexibility for clinicians to target their own personalised level of pension growth and contributions. The financing model for the scheme means that any flexibility that reduces contribution income has an immediate fiscal impact on the Exchequer. The 50:50 option does not set aside the annual and lifetime allowance tax policies, but will give clinicians a new flexibility to manage their pension growth.

Where 50% accrual reduces pension growth by more than they wish, clinicians can use the contribution savings from the 50:50 model to buy additional pension to customise their own pension growth incrementally. Additional pension can be purchased in units of £250. That clearly adds some flexibility to their ability to manage their own contributions. However, some clinicians may continue to experience annual allowance tax changes, even with accrual rates reduced to 50%. For that group, while 50:50 reduces the charge, it does not eliminate it. We recognise that a number of individuals may wish to target a lower level of pensions growth. We will listen carefully to that suggestion through the consultation.

[Dr Whitford]

Is the Minister suggesting that senior consultants in three pension schemes sit and manage whether they are going to use the 50:50 or add in top-ups? That creates a whole job for people who work often 50 to 60 hours a week doing the thing that they are actually meant to do; it would give them almost a side job to try to manage their pension. Could we not go back to something simpler, whereby they get their payslip with a fair amount of pension tax taken off, but not what is happening at the moment?

[Stephen Hammond]

I have listened carefully to what the hon. Lady has just said, and she will want to listen to my next remarks, but I think she will reflect on the fact that a system of annual and lifetime allowances has been in place for some time. They were first introduced by the previous Government, although there have been some changes. Whether or not she thinks it would be better to have an even simpler system, some people will have recognised over time that it is important to look at their own pension contributions. Although tax relief on pensions is one of the most expensive reliefs, and the NHS pension scheme is rightly one of the better schemes available, I absolutely recognise that annual allowances and negative tax rates have a huge impact on some clinicians and consequently on the services for patients.

Consultants have raised with me the issue of the tapered annual allowance that Members have spoken about. I have been asked why the taper threshold is currently set at £110,000, which cuts across, as many people have pointed out, the typical earnings of an NHS consultant, although some people might perceive £100,000 as a high level of income. Unsurprisingly, tax policy is not something that I can speak to, but I have asked the Treasury and it advises that the threshold income test is designed to ensure that only those on the highest incomes can be affected by the annual taper. In the Treasury’s opinion, the £110,000 threshold balances the desire to restrict the annual allowance taper to those on the highest incomes, while trying to minimise the reduction in the value of the individual’s annual allowance.

I have also been asked why the annual allowance taper calculation takes into account both pensionable and non-pensionable earnings. Again, with the obvious proviso that I cannot design tax policy, the Treasury advises that if non-pensionable pay is excluded from the annual allowance taper calculation, there is the possibility that an unscrupulous employer could reclassify some pay as non-pensionable. To ensure fairness, the Treasury includes all sources of income in the taper calculation. However, hon. Members will not be surprised to hear that I think the concern about unscrupulous employers is not one that applies to the NHS. I recognise the issues raised by hon. Members on behalf of their consultants with regard to the taper threshold, and I am grateful to the Treasury for the discussions we have had, which have resulted in the 50:50 flexibility, but I can assure hon. Members that that discussion has not concluded. We rightly recognise that other pension issues need to be resolved.

I am grateful that the Treasury continues to engage with concerns about the taper threshold and how it impacts upon the workforce. I am happy to assure hon. Members that the Department intends to continue having discussions so that the matter can have a resolution that we hope will sort the matter out in an equitable and fair way, and not only for tax principles. We want to ensure that the dedicated staff working in the NHS feel valued and understand that they will not be penalised through the creation of perverse incentives so that they do not do what we want them to do, which is to provide excellent patient care.

In closing, I again thank my hon. Friend the Member for Poole for raising this important issue. I hope that I have been able to do three things: first, show hon. Members that the Department and I as the Minister responsible for people in the health system recognise the concerns raised by hon. Members on behalf of their consultants. The issues have also been raised with me directly. Secondly, I hope people will recognise that the 50:50 option is an important first step in looking at issues associated with lifetime contributions. I urge hon. Members to encourage their consultants to use the consultation. Thirdly, I recognise there are still issues around the taper threshold and the annual allowance, and I give the Chamber a commitment that the Department will continue to discuss with the Treasury ways in which we might be able to resolve those matters. I conclude by reiterating how important the debate has been this morning.

Interim NHS People Plan

Debate between Philippa Whitford and Stephen Hammond

Wednesday 5th June 2019 Commons Chamber

[Stephen Hammond]

My right hon. and learned Friend the Father of the House is completely correct. We want to make sure it is clear that the EU nationals who work in the national health service—there are more than 63,000 of them—are valued and make a huge contribution to our NHS. He will probably be aware that my right hon. Friends the Secretary of State and the Home Secretary are in continuing negotiations, to ensure that there is no change to that position. I guarantee that we want to see EU nationals continue to work in and contribute to our great health service.

[Dr Philippa Whitford (Central Ayrshire) (SNP)]

I welcome the interim NHS people plan. Workforce is the greatest challenge across all four health services, but the 41,000 nursing vacancies in NHS England are simply a patient safety issue and cannot be parked on some shelf or kicked into the long grass. The plan identifies the removal of the nursing bursary and the imposition of student fees leading to a drop of over 30% in new student nurses. Will the Minister commit to re-establishing the bursary? Scotland preserved the bursary and free tuition, and our nursing vacancy rate is less than half that. The plan also calls for 5,000 new GPs. I remember the former Secretary of State promising 5,000 new GPs by next year, and rather than being close to delivering that, there are 1,000 fewer. How will the Minister deliver 5,000 extra GPs? Will he increase funding to Health Education England to deliver it?

There is no question but that the NHS across the UK will need non-UK staff. How will the Minister attract both EU and non-EU staff when there has been a 90% drop in European nurses coming here, and non-EU doctors are leaving because of visa charges and the £400 a year they pay per member of their family to access NHS services? What is he going to do about the pension tax allowance rules that are driving young consultants out of the NHS?

[Stephen Hammond]

I thank the hon. Lady for welcoming the plan. I think she will accept that this is a good interim plan; it is a stepping stone. She asks what we are doing to fill nursing places. I point out yet again that we are increasing applications and ensuring that there are 5,000 extra clinical placements available, which is a 25% increase on last year. Far from being complacent about the number of nursing applicants, we are looking to ensure that more nurses can be trained in this country, beyond the 35,000 who are being trained at the moment.

The hon. Lady asked about doctors. The Royal College of Physicians has made it clear that we need more medical school students. We are committed to increasing the number of undergraduate medical school places for domestic students by 1,500, with the first 630 being taken up last year. By 2020, there will be five new medical schools across England, helping to deliver—[Interruption.] Of course it takes time, but if we do not take that step now, we will never make the end of that journey. That has been a consistent problem for many years. There are still more doctors coming through now, but we need to do more, which is why this plan is being put in place.

The hon. Lady will have heard me say to my right hon. and learned Friend the Father of the House that there are more than 63,000 EU nationals working in the health service. That is more than there were in December 2017, and over 5,000 more than there were in June 2016. She is right to point out that we want those skills in the right clinical areas. I reiterate what I said a moment ago: we wish to make it absolutely clear that the contribution of EU nationals working in the health service is extraordinary and valued and will continue to be so.

The hon. Lady briefly mentioned pensions. She will have noted that we launched a consultation yesterday, setting out some ideas. I am pleased to say that the British Medical Association has welcomed them but asked us to look at other flexibility within the pension rules. I encourage the hon. Lady and all consultants to take part in that consultation.

Oral Answers to Questions

Debate between Philippa Whitford and Stephen Hammond

Tuesday 7th May 2019 Commons Chamber

[Stephen Hammond]

My hon. Friend is completely right. One would have hoped that all Members on both sides of the House celebrate the fact that the number of nurses and the number of doctors in the NHS are now higher than they have ever been in its 70-year history, and that the Government are backing that up with a commitment to invest £33.9 billion.

[Dr Philippa Whitford (Central Ayrshire) (SNP)]

Cuts in lifetime and annual pension tax allowances are causing senior doctors to retire earlier and younger consultants to avoid working extra hours, as they can end up paying more in tax than they earn from the extra hours of work. What discussions has the Secretary of State had with the Chancellor about the fact that these recent changes are driving doctors from the profession and increasing workforce shortages?

[Stephen Hammond]

The hon. Lady raises a very important matter. The Government recognise the concerns that have been expressed by NHS doctors, and my right hon. Friend the Secretary of State is engaging in numerous conversations with the Chancellor. I am reluctant to give a running commentary on the nature of those internal discussions, but I can say that we hope to resolve the matter soon.

NHS: Staffing Levels

Debate between Philippa Whitford and Stephen Hammond

Tuesday 11th December 2018 Westminster Hall

[Dr Whitford]

Will the Minister give way?

[Stephen Hammond]

I would give way, but I cannot—

Oral Answers to Questions

Debate between Philippa Whitford and Stephen Hammond

Tuesday 27th November 2018 Commons Chamber

[Dr Philippa Whitford (Central Ayrshire) (SNP)]

Last week, the Secretary of State claimed that the number of GPs in England had increased by more than 1,000 from June to September, when the data actually showed a drop of 10 full-time equivalent doctors. In 2015, his predecessor promised an extra 5,000 GPs by 2020, but so far there are 1,000 fewer, so how does the Secretary of State plan to meet that target in just the next year?

[Stephen Hammond]

As the hon. Lady knows from a previous answer, we are committed to making sure that 5,000 extra GP places are available. There are more GPs in training than before, and 52,000 nurses are now in training. We will ensure that the number of GPs in training meets the target.

[Dr Whitford]

I find that hard to believe when there is only a year left of the five-year promise.

Scotland has 30% more GPs per head of population, but last year we lost 14% of our EU doctors, and England lost 19%. Does the Secretary of State recognise that the hostile language of the Brexit debate is making the UK seem unwelcoming and making it harder for all four UK health services to recruit?

[Stephen Hammond]

There are currently more doctors from the EU treating patients in the national health service than on referendum day. We are committed to the 5,000 target.