London Daily

Focus on the big picture.
Wednesday, Mar 04, 2026

Budget 2023: Pensions tax cut for all is wrong, Labour leader says

Budget 2023: Pensions tax cut for all is wrong, Labour leader says

Pension tax breaks aimed at keeping doctors in work should not have been given to all, Sir Keir Starmer has said.

It comes after Chancellor Jeremy Hunt scrapped the overall £1m lifetime limit on tax-free pensions savings in Wednesday's Budget.

The Labour leader branded the move a tax break for "the richest 1%" that showed the "wrong priorities".

He added that any pensions tweak should be "tailor-made" for doctors.

Doctors have said the current tax-free pension allowances are pushing some of them into declining overtime shifts or into early retirement.

Mr Hunt, a former health secretary, says the changes to the pension pot rules are a "very important measure to get the NHS working".

At the Budget, he announced he was abolishing the current £1.07m cap on how much individuals can build up in their private pension pots over their career without having to pay additional tax.

The annual tax-free allowance on pensions will also increase from £40,000 to £60,000.

The chancellor said the changes would stop doctors retiring early - but would also contribute to the government's wider drive to persuade retirees back into work.

"I have realised the issue goes wider than doctors. No one should be pushed out of the workforce for tax reasons," he told MPs.

The financial watchdog, the Office for Budget Responsibility, estimated the changes to the allowance would increase overall employment by 15,000 workers.

The combined cost will be more than £1.1bn a year by 2027/8, according to official estimates.


'Billion pound giveaway'


However, the decision to opt for a wider change to pension rules has been criticised by Labour, which branded it a "one billion pound pensions bung" for the wealthy.

The party has committed to overturning the government's changes if it wins power at the next general election, and replacing it with an alternative scheme just for doctors.

It has not yet offered details of its alternative approach, but has suggested it could be based on a scheme for judges introduced in 2022, under which the tax allowances are disapplied.

Shadow health secretary Wes Streeting has previously told the Telegraph in September he favoured "doing away with" the savings cap.

Speaking earlier, Mr Hunt said it suggested Mr Streeting had previously advocated the government's approach.

But Mr Streeting insisted his previous comments were about how the allowance affected doctors - and he had "consistently argued" they should have their own carve-out from the rules.

He told BBC News this would cost "a fraction" of the blanket change proposed by ministers, which he called "a sledgehammer to crack a nut".

Mr Hunt defended making a rule change across the board, arguing it was the "simplest and quickest way" to resolve the issues facing doctors.

He added that the change could be introduced in two weeks, delivering help to the NHS when it "most needs support".

He pointed to Royal College of Surgeons statistics, saying the organisation had found that 69% of their members had reduced their hours because of the "way pension taxes work".

On Wednesday, Treasury Minister John Glen said a targeted scheme risked legal challenges from other highly-paid public sector workers, such as senior civil servants.

Speaking to BBC2's Politics Live, he added that a wider change to the rules would also have a "positive effect on the economy as a whole".

The announcement was welcomed by NHS Providers, which represents hospitals in England.


'Poor value'


Chief executive Sir Julian Hartley said it would help "stem the flow of senior NHS staff either taking early retirement or not taking on extra work for fear of punitive tax bills".

But the independent Institute for Fiscal Studies said the change would "encourage a relatively small number of better-off workers to stay in the workforce a bit longer" and was "unlikely to have a big effect on overall employment".

The Resolution Foundation think tank, which focuses on people on low to middle incomes, described the policy as "hugely regressive and wasteful".

Chief executive Torsten Bell said: "It's a big victory for NHS consultants but poor value for money for Britain."

Newsletter

Related Articles

0:00
0:00
Close
Trump Says UK–US ‘Special Relationship’ Is Diminished Amid Middle East Dispute
UK Economic Forecasts Face Fresh Strain from Middle East Conflict and Rising Energy Costs
UK Reaffirms Close US Ties After Trump’s Public Criticism
Reeves Stresses Stability and Fiscal Discipline in UK Budget Update as Growth Outlook Shifts
UK Deploys Royal Navy Destroyer HMS Dragon to Cyprus After Drone Strike on RAF Base
Green Party Surges Past Labour in New UK Poll as Traditional Party Support Crumbles
Majority of Britons Oppose U.S. Use of UK Military Bases in Iran Conflict
UK Intensifies Evacuation Efforts from Oman, Working with Airlines to Boost Flight Capacity
Trump Condemns UK and Spain in Unusually Sharp Rift Over Iran Military Action
Trump Repeats UK Claims That Diverge from Verified Facts Amid Diplomatic Strain
UK Arrests Prominent Figures Linked to Epstein Network as Questions Mount Over US Action
Trump Says UK ‘Took Far Too Long’ to Approve Use of Airbases for Iran Strikes
Scope of Britain’s Role in the Expanding Middle East Conflict Comes Under Scrutiny
Trump Says He Is ‘Very Disappointed’ in Starmer Over Iran Comments
U.S. Embassy in Riyadh Struck by Drones Amid Escalating Iran Conflict
Starmer Confronts Strategic Test After Drone Strike Near British Base in Cyprus
Rolls-Royce Chief Signals Openness to Germany Joining UK-Led Fighter Jet Programme
UK Stocks Slip as Escalating Iran Conflict Triggers Global Market Selloff
UK Overhauls Asylum System to Make Refugee Status Temporary
Starmer Warns of ‘Reckless’ Iranian Strikes Amid Escalating Regional Tensions
British Base in Cyprus Targeted as Drones Intercepted Amid Expanding Iran Conflict
Starmer Diverges from Trump on Iran Strategy, Rejects ‘Regime Change from the Skies’
U.S. and Israel Intensify Strikes on Iran as Conflict Expands to Lebanon and Gulf States
Violent Pro-Iranian Protesters Storm U.S. Consulate in Karachi
Missile Debris Sparks Fires at Dubai’s Jebel Ali Port Near Palm Jumeirah
Iran Strikes U.S. Fifth Fleet Headquarters in Bahrain Amid Wider Gulf Retaliation
When the State Replaces the Parent: How Gender Policy Is Redefining Custody and Coercion
Bill Clinton Denies Knowing Woman in Hot Tub Photo During Closed-Door Epstein Deposition
Former U.S. President Bill Clinton Testifies on Ties to Jeffrey Epstein Before Congressional Oversight Committee
Dyson Reaches Settlement in Landmark UK Forced Labour Case
Barclays and Jefferies Shares Fall After UK Mortgage Lender Collapse Rekindles Credit Market Concerns
Play Exploring Donald Trump’s Rise to Power by ‘Lehman Trilogy’ Author to Premiere in the UK
Man Arrested After Churchill Statue Defaced in Central London
Keir Starmer Faces Political Setback as Labour Finishes Third in High-Profile By-Election
UK Assisted Dying Bill Set to Fall Short in Parliament as Regional Initiatives Gain Ground
UK Defence Ministry Clarifies Position After Reports of Imminent Helicopter Contract
Independent Left-Wing Plumber Secures Shock Victory as Greens Surge in UK By-Election
Reform UK Refers Alleged ‘Family Voting’ Incidents in By-Election to Police
United Kingdom Temporarily Withdraws Embassy Staff from Iran Amid Heightened Regional Tensions
UK Government Reaches Framework Agreement on Release of Mandelson Vetting Files
UK Police Contracts With Israeli Surveillance Firms Spark Debate Over Ethics and Oversight
United Airlines Passenger Hears Cockpit Conversations After Accessing In-Flight Audio Channel
Spain to Conduct Border Checks on Gibraltar Arrivals Under New Post-Brexit Framework
Engie Shares Jump After $14 Billion Agreement to Acquire UK Power Grid Assets
BNP Paribas Overtakes Goldman Sachs in UK Investment Banking League Tables
Geothermal Project to Power Ten Thousand Homes Marks UK Renewable Energy Milestone
UK Visa Grants Drop Nineteen Percent in 2025 as Migration Controls Tighten
Barclays and Jefferies Among Banks Exposed to Collapse of UK Mortgage Lender MFS
UK Asylum Applications Edge Down in 2025 Despite Rise in Small Boat Crossings
Jefferies Reports Significant Exposure After Collapse of UK Lender MFS
×