Proposed rises to National Insurance (NI) paid by employers and changes to pension taxation could lead to the closure of more GP surgeries, practice managers and GPs have warned ahead of the Autumn Budget.
The Institute of General Practice Management (IGPM) has written to health secretary Wes Streeting outlining its concerns about plans for either employer NI contributions to rise or for employers to have to start paying NI on pension contributions.
The proposals have been the subject of media speculation as chancellor Rachel Reeves is due to deliver her first Budget this Wednesday (30 October).
However, these changes pose ‘a substantial threat to the financial stability of general practices across the UK,’ the IGPM told Mr Streeting.
It has estimated that introducing NI on pension contributions could cost practices around £1.30 more per patient.
‘For many practices, this will represent a considerable additional financial burden, given that they are already operating within tight budgetary constraints while striving to meet the increasing needs of patients,’ it said.
And the IGPM warned: ‘The cumulative impact of these financial pressures may compel practices to consider difficult measures, such as reducing staffing levels, limiting services, or even facing the risk of closure.’
It has urged Mr Streeting to ensure extra funding is available to general practice if the changes in NI contributions go ahead.
Meanwhile, the BMA has agreed that any NI rises could cause the closure of more practices. It has asked the Government either to exempt the NHS from these increases or meet the cost in full centrally.
However, its pensions committee has also raised concerns about reports of changes to the lump sum pension allowance and changes to wider pension taxation.
It has written directly to Rachel Reeves to warn that the impact of these fiscal measures could ‘result in doctors retiring on an unprecedented scale.’
A letter sent by the BMA’s pension committee chair Dr Vishal Sharma also warned that the proposals could ‘have irreparable damage for the NHS and the government’s ambitions to improve waiting times for patients’.
The BMA has called for the Government to ensure the Autumn Budget:
- Doesn’t reintroduce the pension lifetime allowance as doing so will result in large numbers of doctors retiring early.
- Doesn’t introduce a flat rate tax relief on pension contributions since there is already tiering of employee contributions within the NHS pension scheme that adjusts for higher rate tax relief.
- At least indexes the annual allowance threshold in line with inflation and provides a solution for the ‘poorly designed annual allowance taper,’ which can trigger additional tax charges of up to £22,500 as a result of just £1 of further earnings – and is therefore a disincentive for doctors to do additional work.
- Doesn’t reduce tax-free pension lump sum allowances since this would cause ‘a large number of doctors to retire immediately’ in order to avoid being hit by huge unplanned tax bills.
The pension lifetime allowance was scrapped just last year to try and reduce early retirement among NHS staff.
