London Daily

Focus on the big picture.
Wednesday, Sep 23, 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
Piddington Residents Back Symbolic Independence Vote Over Asylum Accommodation Plan
Reform UK Names Helen Jenner as New Leader in Wales
England Expands Devolution of Transport, Skills and Economic Development Powers
Liberal Democrats Call for Temporary Fuel Duty Cut to Ease Cost-of-Living Pressure
UK Farmers Warn Drought Has Caused Crop Failures and Reduced Harvests
UK Fixed Mortgage Rates Approach 6% as Lenders Raise Borrowing Costs
YouGov Poll Puts Labour at 23% With Conservatives and Reform UK on 21%
Badenoch Presses Burnham to Increase Defence Spending and Cut Welfare Costs
UK Military Figures Warn of Growing Threats to Undersea Infrastructure and National Readiness
BP Moves Ahead With Sale of UK North Sea Oil and Gas Business
UK and ASEAN Endorse New Framework for Trade and Economic Cooperation
UK Consumer Confidence Falls to Three-Year Low as Borrowing Costs and Job Concerns Rise
UK Inflation Rises to 3.1% as Motor Fuel Costs Push Prices Higher
Bank of England Sets Multi-Year Plan to Wind Down Quantitative Easing Holdings
UK Borrowing Rises to £18.3 Billion in August Ahead of October Budget
Michelin Guide Faces Industry Questions Over Restaurant Inspection Coverage
English Woodlands Face Renewed Weather Stress From Dry Conditions and Strong Winds
Research Finds Extensive Alcohol, Gambling and Unhealthy Food Branding During 2026 World Cup
Five Charged After Newborn Baby Dies From Stab Wounds in Sheffield
BT Could Reap £2 Billion From Recycling Copper as Full-Fibre Network Expands
FCA Urges Young Adults to Trace £1.5 Billion in Unclaimed Child Trust Funds
Reform UK Names Helen Jenner as New Leader in Wales After Dan Thomas Steps Down
Resolution Foundation Calls for Broad-Based Tax Rises to Fund Higher UK Defence Spending
Ed Davey Calls for Global Treaty to Halt Development of Super-Intelligent AI
Scotland Consults on Legal Price Caps for Essential Foods
NHS Productivity Reforms Could Prevent More Than 20,000 Early Deaths a Year, Report Says
United Kingdom and ASEAN Deepen Trade and Investment Cooperation
United Kingdom Deploys RAF Refuelling Support to Saudi Arabia After Houthi Attacks
UK Fiscal Headroom Shrinks as Higher Borrowing Costs Complicate Autumn Budget
UK Public Borrowing Jumps to £18.3 Billion in August, Raising Pressure Before Budget
Andy Burnham Reaffirms UK Net-Zero Target With £30 Million Community Energy Fund
Scottish Labour Leader Backs Rosebank and Jackdaw North Sea Projects
UK Consumer Confidence Falls to Three-Year Low
UK Diesel Prices Approach £2 a Litre as Global Supply Shortages Intensify
Chiltern Railways Returns to Public Ownership as UK Rail Nationalisation Advances
British Museum Faces Questions Over Peter Thiel’s Private Bayeux Tapestry Viewing
Earl Spencer Memoir Excerpts Renew Public Debate Over Diana’s Death
Liberal Democrats Gather in Brighton for Autumn Conference
Mothercare Shares Plunge as Middle East Store Closures Threaten Long-Term Solvency
Kent Police Treat Folkestone Hotel Fire as Suspicious
Caribbean Governments Advance Reparations Campaign Seeking Engagement With Britain
Scottish Labour Leader Backs Rosebank and Jackdaw North Sea Projects
FCA Urges Young Adults to Trace £1.5 Billion in Unclaimed Child Trust Funds
UK Competition Regulator Opens Inquiry Into McCormick-Unilever Foods Deal
Public Inquiry Into Tees, Esk and Wear Valleys Mental Health Failings Set to Begin
Nigel Farage Looks to US Immigration Enforcement Model for UK Border Policy
Chiltern Railways Moves Into Public Ownership
Security Review Raises Concerns Over Sensitive UK Police Data Stored on Microsoft Cloud
Burnham Government Warns of Difficult Autumn Budget as Fiscal Headroom Narrows
Bank of England Holds Rates at 3.75% as Inflation Rises to 3.1%
×