Finance (No. 2) Bill

Robert Syms Excerpts

Committee of the whole House
Wednesday 19th April 2023 Commons Chamber

[James Murray]

No; I am going to make some progress. The hon. Gentleman has intervened quite a lot and I am looking forward to his speech, as I am sure everyone in the Committee is.

When the Economic Secretary responds, I would be grateful if he could address the points set out by new clause 4, in particular by giving some much-needed clarity on the scale of the impact the Government expect their changes to pension allowances to have. Can he tell us how many people are expected to stay in work or return to work as a result of these policies? What sectors do they work in? How many of them are NHS doctors? Those are important questions, yet it has been hard to get exact answers from Ministers. The Office of Budget Responsibility has said the changes to pension contribution allowances will increase employment by around 15,000, but Paul Johnson of the Institute for Fiscal Studies has said that figure is “optimistic”.

When the Financial Secretary to the Treasury was asked on Second Reading of this Bill how many doctors would stay in the NHS because of these measures, she confidently quoted Department of Health and Social Care statistics that around 22,000 senior NHS clinicians would have been expected to exceed the £40,000 annual allowance this year. However, she may not have known that, at the very same time, the permanent secretary who oversees Government spending was appearing before the Treasury Committee, where the hon. Member for South Cambridgeshire (Anthony Browne) was asking her questions. When asked about the evidence on how many of those 22,000 NHS clinicians would have been discouraged from working by the cap, she said the evidence was “mixed” and that they would need to do further evaluation.

It seems clear that the Government simply do not know how many people will be brought back into work as a result of their changes to pension tax-free allowances. They certainly do not know how many NHS doctors will come back into work, and they have clearly failed to do the thinking on how a bespoke approach for NHS doctors could operate.

That is why we oppose the Conservatives’ pension changes and why we will be voting for a fair fix for doctors’ pensions to get them back into work. We will be voting to spend public money wisely. We will be voting against a Government who choose to cut tax for the richest 1%, while pushing up stealth taxes and council tax on working people across the country.

[Sir Robert Syms (Poole) (Con)]

I declare an interest, as I am in the parliamentary pension scheme and I think I am one of the older people in the Chamber today. Indeed, I am old enough to remember when the shadow Health and Social Care Secretary, the hon. Member for Ilford North (Wes Streeting), was musing about getting rid of the lifetime allowance—a matter of a few weeks ago, before the Government did it.

Doctors in Poole have said to me clearly over a number of years that at a certain stage of their career they have all the skills, but when they work they get annual bills, and when they look at their lifetime allowance it makes sense for them to retire. The tax policy of the lifetime allowance and the annual allowance have been improving the golfing skills of GPs and hospital doctors, because they get to a point where, if they do the extra work, they are penalised by the tax system and they say, “Why should I do this?” Many still do it, but it is totally wrong that we have a tax policy that discriminates against people who want to work and want to use their skills.

One key thing that the Government have done is put billions into the national health service to catch up with the backlog. If we are putting billions in and want productivity in our hospitals to improve, it is totally inconsistent to have a tax system in which the key people leading teams and doing tests find that it is a disadvantage for them to work. We will never get the lists down if people feel that they are penalised for working hard, and many want to work hard. I have talked to doctors since the changes, and the evidence in my constituency is that some have decided to delay their retirements, which they had already put in for, while others who had retired are now coming back to work part-time. The main improvements will be higher productivity and more patients being seen. I do not know whether there will be a massive advantage for doctors, but there will be for patients, because at the end of the day, there are people waiting to have tests and operations, and this will make the national health service rather more productive that it would otherwise be.

Also, because many early-retirement doctors will now stay working, they will continue to receive salaries and pay tax at the normal rate. I am somewhat sceptical about the £1 billion cost because, if significant numbers of people stay in our hospitals, they will ultimately continue to pay taxes and many of them are higher-rate taxpayers. The key point is that we have to focus on the patients, not on the providers of services. If the providers of services can work and have incentives to work, we will get through more patients, which is what people in this House want.

It is difficult to focus on the national health service alone. There are the anomalies not only of general practitioners—I come across general practitioners well into their 50s and nearing retirement who work only three days a week because of the tax system, and this measure will help them—but of dentists. We all get people writing to us about a shortage of dentists—particularly NHS dentists—and unless we fix these problems, which are pushing experienced dentists into early retirement, our constituents will not get the services that they need.

As my hon. Friend the Member for South Cambridgeshire (Anthony Browne) pointed out, many other high-skilled, high-paid public sector jobs are impossible for managers to manage because the people undertaking those tasks are penalised either by a big tax bill each year, or by the difficulty of seeing their lifetime allowances used, so there is no great incentive for them to continue working. If we have a problem in this country, it is one of productivity. This tax change improves productivity. If we improve productivity in people-facing services, such as those provided by dentists and doctors, the people waiting for those services will clearly be more and better looked after by the system.

When the Conservative party came into office, the lifetime allowance was £1.8 million, which was a significant sum 14 years ago. The reason it was reduced was that there was a suspicion that City slickers were putting millions into pension funds and not paying any tax. In reality, it has come down too far and is hitting people who we need to provide the skills that they have trained for over years. Doctors spend years training and decades getting experience, but at the time when they are needed most—to deal with the waiting list—they find that the pension system is forcing them into retirement or to play golf. What the Government have done is sensible.

I do not accept the figures from the shadow Minister, the hon. Member for Ealing North (James Murray). The main benefit of the changes will be for those in the health service, but we cannot differentiate between one person providing one skill and somebody else providing some other skill. From that point of view, the tax system has to be neutral. If we get into a position in which the more worthy people pay less tax, we may as well be saying, “Why should anybody in the NHS pay tax? Why not just give them a free ride?” That is an argument without a great deal of thought behind it. We have to have a neutral tax system without the Government trying to second guess about the public or private sector, or whether doctors are more worthy than others.

I think that the Government have done quite a brave thing, and it was the right thing to do. Government is about taking the right decisions, even if they are not always the most popular. They are the right decisions to provide better medical care for our constituents and to get the NHS backlog down. Of course, one of the Prime Minister’s key pledges is to do just that. This is one measure that will enable that by letting people work longer, harder and more productively.