Labour under fire over pledge to restore cap on retirement pots

‘More doctors would quit’: Labour under fire over pledge to restore limit on consultants’ retirement pots

• Rachel Reeves vowed Labour would reverse doctors’ pension shake-up 
• Ex-pensions minister Sir Steve Webb made the warning after Labour’s U-turn

Labour’s pledge to reinstate a cap on retirement savings could lead to more doctors quitting the NHS, a former pensions minister warned yesterday.

In an extraordinary U-turn, shadow chancellor Rachel Reeves vowed that a Labour government would reverse this week’s Budget pensions shake-up, which was designed to prevent thousands of consultants retiring early.

But pensions experts warned that Labour’s tactics could result in more doctors leaving the profession in the short term as they seek to top up their pensions ahead of the next General Election.

Former pensions minister Sir Steve Webb said: ‘If people fear that a future government might overturn all of this, they will be likely to max out on their pension savings over the next year or two and then, where possible, cash out their pensions by retiring just prior to a change of government.’

Doctors’ leaders had welcomed Jeremy Hunt’s decision to scrap the lifetime tax-free pension allowance of just over £1million in Wednesday’s Budget.

In an extraordinary U-turn, shadow chancellor Rachel Reeves (pictured) vowed that a Labour government would reverse this week’s Budget pensions shake-up, which was designed to prevent thousands of consultants retiring early

The Chancellor also raised the annual pension saving allowance from £40,000 to £60,000. Mr Hunt said he was making the changes because ‘I do not want any doctor to retire early because of the way pension taxes work’.

Labour’s health spokesman Wes Streeting called for the ‘crazy’ pensions cap to be axed in September last year, saying: ‘I’m not pretending that doing away with the cap is a particularly progressive move.

‘But it is one that sees patients seen faster, and will inevitably save lives. I’m just being hard-headed and pragmatic about this.’

But Miss Reeves yesterday said the £1billion plan was a ‘bung’ for the richest 1 per cent in society and vowed to scrap it.

‘At a time when families across the country face rising bills, higher costs and frozen wages, this gilded giveaway is the wrong priority, at the wrong time, for the wrong people,’ she said.

A Tory source accused Labour of ‘rank hypocrisy’, adding: ‘They are all over the place on this.’

In the Commons, Work and Pensions Secretary Mel Stride said Labour had to choose between ‘political opportunism or standing shoulder to shoulder with our National Health Service and the millions of people up and down this country who depend upon it’. 

Miss Reeves said Labour would support a ‘targeted scheme for doctors’ but said a wider lifting of the cap could not be justified.

But ex-pensions minister Sir Steve, a former Liberal Democrat MP, said savers, including consultants, might retire just before a change of government after pouring as much money into their pensions as possible ‘over the next year or two’.

Ministers believe the plan could save money overall by cutting the £3billion that the NHS spends each year on locum doctors.

In the Commons, Work and Pensions Secretary Mel Stride (pictured) said Labour had to choose between ‘political opportunism or standing shoulder to shoulder with our National Health Service and the millions of people up and down this country who depend upon it’

The British Medical Association, which has been campaigning for the change, today said doctors were already postponing their retirement as a result of Wednesday’s announcement.

Dr Vishal Sharma, a cardiologist and BMA pensions committee chairman, welcomed the ‘decisive action’ by Mr Hunt.

He told BBC Breakfast the NHS has been ‘losing doctors ever since pension rules started to be tinkered with’. 

Dr Sharma said the number of hospital consultants retiring early had tripled in the past decade, while the number of GPs quitting because of pension rules had quadrupled.

‘Hopefully those people will now start to stay,’ he said. ‘We’ve already had lots of people contacting us saying they want to cancel their retirements, we’ve had people who’ve already retired contact us saying they want to come back, so it’s looking positive, but we have to wait and see how it impacts.’

Downing Street said official figures suggested that around a third of those hit by the pensions cap were likely to have been NHS staff.

The PM’s official spokesman said it was quicker to scrap the cap that to attempt to devise a bespoke scheme for doctors.

He said: ‘Firstly, a targeted scheme would take time to introduce when we don’t think we have time to waste. Equally it would have excluded valuable workers… for example senior medics in the armed forces.’

He added that consultants were ‘providing the best possible care to people in our hospitals, and I think anyone who has a family member in hospital would want the best possible care for their loved ones.’

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