Rishi Sunak insists pensions tax cut for wealthy will reduce NHS backlog

The tax cut for people with pension pots worth more than £1 million will help reduce NHS waiting lists, the Prime Minister has insisted.

Rishi Sunak argued the change will get doctors to take on more hours, but could not say how many will stay in work because of it.

Chancellor Jeremy Hunt used his Budget last week to abolish the tax-free limit on pensions savings, which had stood at £1.07 million.

But Labour has criticised it as a “giveaway to the richest 1%”, arguing a bespoke pensions scheme for doctors would be fairer.

Mr Sunak defended the tax break, which will cost £2.75 billion over the next five years, saying the current allowances were pushing doctors into declining extra shifts or into early retirement.

“This is about cutting waiting lists,” he said in an interview with BBC Breakfast.

“We need our best doctors, our experienced doctors, we need them working, and they want to work, they want to help get the waiting lists down, they want to work longer hours, they don’t want to retire. And because of the pension regime, they were stopped from doing that, it was preventing them from doing that.

“And I want to get the waiting list down and that’s why we’ve made the change that we’ve made, and it’s going to benefit everyone to get healthcare quicker.”

Budget 2023
Chancellor Jeremy Hunt scrapped the limit on pensions savings in his Budget (Stefan Rousseau/PA)

The Office for Budget Responsibility has estimated the tax break could boost the workforce by 15,000 as people who might otherwise have retired to avoid breaching the lifetime allowance decide to stay on instead.

When it was put to the Prime Minister that only hundreds of doctors might stay on, he said: “There’s thousands of doctors that leave the NHS every year; about two thirds to three quarters of them have said that they don’t provide extra hours.

“It’s not just about whether they leave or stay; it’s about whether they’re doing the extra shifts, because that’s what’s going to help us get the backlog down.”