A member of medical staff secures his face mask inside a theater at Queen Elizabeth Hospital Birmingham, part of the University Hospitals Birmingham NHS Foundation Trust, in Birmingham, U.K., on Monday, Feb. 20, 2017. Health care repeatedly appears near the top in surveys of voters' concerns. Photographer: Matthew Lloyd/Bloomberg
© Matthew Lloyd/Bloomberg

NHS chiefs are holding emergency talks on Monday to tackle a staffing crisis caused by large numbers of consultants turning down extra shifts for fear of being landed with huge tax bills.

The chair of NHS Improvement, which oversees NHS trusts, and the British Medical Association, representing 125,000 consultants and GPs, are meeting to find a solution to the crisis, which has reportedly left some hospitals having to “beg and borrow” for staff.

An investigation by the Financial Times has found widespread evidence of consultants — the most experienced hospital doctors — refusing to take on extra work to clear patient backlogs fearing extra pay would bust tax allowances on their pensions contributions, triggering punitive bills.

The FT’s investigation found the pension tax issue had increased the risk of delays in cancer diagnosis in some parts of the UK, and had lengthened waiting times for surgery, such as hip replacements. Critical areas including intensive care, emergency departments, radiology and pathology are also being affected.

“Due to the pensions tax risk I no longer offer to cover gaps in the weekend rota,” one emergency stroke consultant said on condition of anonymity.

“Many of my colleagues have done this now to avoid the tax charge. This is resulting in a precarious manpower situation where the hospital has to beg, bargain and borrow to try to get cover on a weekly or fortnightly basis for an area covering one-fifth of London.”

At Monday’s meeting, Dido Harding, chair of NHS Improvement, and Julian Hartley, who is leading the new NHS workforce improvement plan, will meet doctors’ unions and attempt to resolve the issue, which has worsened since the annual allowance taper was introduced in 2016.

Those with gross taxable incomes of more than £110,000 can fall into the “taper zone” and will have to restrict their annual pensions savings to as little as £10,000 to avoid incurring a tax charge.

Experts say “fiendishly complex” rules governing how the taper is calculated have left savers in schemes such as the NHS unable to predict the size of any tax charges for allowance breaches.

The FT has spoken to more than 40 NHS consultants who recently faced unexpected tax bills ranging from £6,000 to £87,000 for breaching the taper. Rigid pay and pension rules in the NHS mean doctors have few options to mitigate the impact of further tax bills — other than reducing their hours to limit pension contributions, quitting the NHS pension plan, or taking early retirement.

One emergency medicine consultant, aged 50, said he had pulled out of additional shift work in an understaffed and busy department after getting a £35,000 tax bill.

A senior histopathologist working in cancer diagnosis in northern England said he was now turning down extra work after being landed with a £30,000 tax charge.

“I have written to my MP about this, explaining that patients on a cancer pathway will not have their histology reported in a timely fashion and this leads to delays in planning treatment,” said the consultant.

A consultant in anaesthesia and intensive care in Scotland said he had stopped all waiting list activity and may drop his sessions further after being hit with a £6,000 bill.

“In our department, I believe every consultant now feels unable to take pay to extra work,” said the consultant. “This is the opposite of what we know is needed, but the consequences for us of inadvertently getting tax penalties are too difficult to contemplate.”

Ros Altmann, a former pensions minister, described the situation as “utter madness”, saying: “For pensions to be driving good medical staff away, the most senior and most valuable of all our NHS personnel, is a clear example of unintended consequences of pension complexity.”

The BMA has called on the government to scrap the taper for its members, saying the restriction affects doctors more than any other group.

NHS Employers, the body which represents NHS trusts, favours introducing greater “pension flexibility” over changes to the tax regime. “The NHS is suffering from a workforce shortage, and any suggestion that clinicians are looking to reduce or end their NHS commitments should be cause for alarm,” a spokesperson said.

A Department of Health and Social Care spokesperson said there were more than 15,000 more doctors on hospital wards since 2010 and “their dedication ensures patients get excellent, safe care”.

“It is incredibly important we retain and maximise our staff’s skills. We will publish a workforce implementation plan later this year which will consider what measures are appropriate to achieve this.”

Letter in response to this article:

Three changes to get rid of perverse tax incentives / From John Ralfe, John Ralfe Consulting, Nottingham, UK

Get alerts on UK tax when a new story is published

Copyright The Financial Times Limited 2022. All rights reserved.
Reuse this content (opens in new window) CommentsJump to comments section

Follow the topics in this article