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The annual allowance and taper system for public sector pensions is proving a nightmare for the NHS, with thousands of staff being hit by increased tax bills.
As in the case of Kate Lovett, the dean of the Royal College of Psychiatrists, some have received huge bills leading them to question their future in the health service.
She said the government had made it “impossible” for her to stay in her job long term after receiving a tax bill which is £20,000 more than her total annual salary.
“I’m not very motivated by money but it doesn’t seem to take a rocket scientist to work out that this is demotivating for even the most committed,” she wrote on Twitter.
With staffing levels already fragile across the country, the NHS can ill afford for senior doctors to be disincentivised to work. But that’s what’s happening.
Although the government has reiterated its determination to help senior clinicians manage their pensions more effectively, with a review currently ongoing, trusts need quicker action to be taken.
Northumbria Healthcare FT has come up with its own possible workaround, which is to form a limited liability company for a group of its orthopaedic consultants – with it potentially being expanded “if the programme proved successful”.
LLP arrangements aim to offer more flexibility to senior clinicians, whereby they work additional hours on top of their programmed activities and, in exchange, receive non-pensionable pay.
Chief executive Sir James Mackey told HSJ ignoring, or not dealing with, the issue would have a “huge impact” on the trust’s services because “we’ve got more work than we can cope with”. He added: “We need to keep our clinical staff [and enable them to be able] to work.”
Media coverage of the crisis have so far centred on consultants, but the government has yet to propose any remedies for non-clinical staff such as senior managers.
One HSJ reader commented: “The Daily Mail is not going to print a story about hospital CEO’s hit with massive tax bills (as Joe Public simply doesn’t care) whereas they will print the story of a six month waiting list for cancer surgery as all the surgeons have retired/cut hours due to the pensions taxes.
“The key thing though, is to not make this just about consultants. The taxes are having devastating impact…on other healthcare professionals and senior management and the subsequent impact that is having on the NHS is as great as from the impact on consultants.
“I am not asking to pay less tax, I am a high earner and I should contribute more, all I ask is they make the taxes predictable and transparent. Reintroduce the 50 per cent tax band for all earnings over £100,000, or whatever is needed for the Treasury to balance its books. Just make it fair.”
Many in the government would prescribe to many the theories of the original economist, Adam Smith, who argued taxation should follow four principles – certainty, convenience, fairness and efficiency. The current system feels far from it to those affected.