Autumn statement is mixed bag for doctors
Posted on 6 December 2012 by Jon Ford
So, after all the speculation comes the Autumn Statement with, at best, a mixed bag for doctors.
The much feared abolition of higher rate tax relief on pension contributions failed to materialise as did the forecast draconian reduction in the annual allowance to £30,000. But the annual allowance was reduced to £40,000, and the lifetime allowance was cut to £1.25m. The former will apply from 2014-15 and past experience suggests the latter will come into effect later.
Early estimates suggest that around 21,000 NHS staff will be adversely affected by these changes, with the impact by no means restricted to higher paid individuals.
There will be some form of protection, as happened last time the allowances were changed, but details of this have yet to emerge. This is unwelcome and demotivating to those charged with maintaining the population’s health, coming on top of the plethora of other proposed changes to the NHS pension scheme.
On the plus side, the Chancellor confirmed that public sector pay rises would be available this coming year — albeit restricted to an average of 1%.
There was also some good news for the wider NHS. The spending plans outlined in the 2010 Spending Review are maintained and the health service has been spared the explicit 1 and 2% resource cuts levied on other spending departments to let the government afford its priorities.
The government also accepted the reports on local pay — something the BMA has lobbied hard on — from the pay review bodies. The Chancellor agrees there should be no new centrally determined local pay rates or zones but instead greater use of existing flexibilities. The Doctors and Dentists Review Body was not charged with this particular remit but many doctors feared there would be ‘read across’ from the NHS Pay Review Body that covers Agenda for Change staff, who were particularly at risk from the threat of local pay.
A cold financial wind seems to be blowing for everyone at the moment, including all higher earners. Never mind autumn, it feels like winter.
Did George Osborne deliver what you were expecting? Can some respite on local pay and protection for NHS spending go any way towards balancing out the reduction in the pension allowance?
We are interested in your views, so please comment below. And read our news story for more analysis.
Jon Ford is head of the BMA health policy and economic research unit