London Daily

Focus on the big picture.
Friday, May 23, 2025

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
The Daily Debate: The Fall of the Dollar — Strategic Reset or Economic Self-Destruction?
UK Justice Secretary Advocates for Good Conduct Release Policies to Alleviate Prison Overcrowding
Trump Administration's Tariff Policies and Dollar Strategy Spark Global Economic Debate
UK Transfers Chagos Islands Sovereignty to Mauritius in Strategic Agreement
Bitcoin Surpasses $111,000 Mark for the First Time
Key Developments in UK Business and Economy
OpenAI Acquires Jony Ive’s Startup for $6.5 Billion to Build a Revolutionary “Third Core Device”
Turkey Weighs Citizens in Public as Erdoğan Launches National Slimming Campaign
Leaked Secret Report: How the Muslim Brotherhood Is Expanding in France—With Qatari Funding
BYD Surpasses Tesla in European Electric Vehicle Sales
West Nile Virus Detected in UK Mosquitoes for First Time
UK Exposes Russian Cyber Campaign Targeting Ukraine Aid Networks
UK Inflation Rises to 3.5% in April Amid Household Bill Increases
UK Suspends Trade Talks with Israel Amid Gaza Offensive
Taiwan claims China is using cash to win over developing nations
European Parliament Suspends Huawei Lobbyists Amid Corruption Probe
Industry Leaders Express Skepticism Over EU's New Single Market Strategy
European Parliament Considers Lifting Immunity of Five MEPs in Huawei Investigation
‘Plane Full of English Animals’: Footage Documents EasyJet Flight Chaos to Ibiza
Trump and Ramaphosa Hold Contentious White House Meeting Amid Diplomatic Strains
US Billionaires' Wealth Surges by $365 Billion Amid Tax Cut Debate
Sean 'Diddy' Combs Faces Federal Trial on Sex Trafficking and Racketeering Charges
India Blocks Thousands of Social Media Accounts Amid Tensions with Pakistan
Iran and U.S. Set for Fifth Round of Nuclear Talks Amid Rising Tensions
Russia Expands Military Presence Near Finland Amid Rising Tensions
Indian Scholar Arrested in Crackdown Over Pakistan Conflict Commentary
Ontario Manufacturers Warn U.S. Tariffs Could Create Economic 'Ghost Town'
UK and EU Reach Landmark Post-Brexit Deal to Reset Relations
Israel Eases Gaza Blockade Amid Internal Dispute Over Military Strategy
President Biden’s announcement of advanced prostate cancer sparked public sympathy—but behind closed doors, Democrats are in panic
Trump Demands Probe into Kamala Harris for Paying Celebs to Fake Endorsements
At Age 92, the World’s Oldest President Has No Succession Plan — and That Could Spark a Crisis
U.S. Concerns Mount Over Chinese 'Kill Switch' Components Found in Solar Power Infrastructure
Bipartisan Criticism Surrounds Trump's Cryptocurrency Ventures
Diplomatic Efforts on the Russia-Ukraine Conflict
Mexican Navy Ship Collides with Brooklyn Bridge, Injuries Reported
A Chinese company made solar tiles that look way nicer than regular panels!
U.S. and Philippine Forces Test High-Powered Microwave Weapons in Joint Exercise
China Unveils Advanced AI Surveillance Tools at 12th Police Equipment Expo
Japan's Three Major Banks Report Record High Net Profits for Second Consecutive Year
The Chinese Dragon: The True Winner in the India-Pakistan Clash
US and EU Make Progress in Trade Talks, While Vietnam Negotiations Also Advance
Sean 'Diddy' Combs Trial: Ex-Girlfriend Cassie Ventura Testifies About Alleged Abuse
Former Wales Rugby Star Jamie Roberts to Pursue Medical Career
Australia's Venomous Creatures Contribute to Life-Saving Antivenom Programme
Passenger Travels Under Wrong Identity on British Airways Flight
Former FBI Director James Comey Questioned by Secret Service Over Social Media Post
The Spanish Were Right: Long Working Hours Harm Brain Function
After 108 Years: Moody’s Downgrades U.S. Credit Rating
Did Former FBI Director Call for Violence Against Trump? Instagram Post Sparks Uproar
×