A group of MPs concluded last week (October 31) that the current business rates system needs reforming and suggested the government prepare a consultation to “identify potential alternatives to business rates” in time for next year’s spring statement.

Alison McGovern, Labour MP for Wirral South, who led the inquiry into business rates on behalf of the Treasury Committee, said: “It’s abundantly clear that the current business rates system is broken. The tax represents an increasing burden on businesses, particularly those with a physical high street presence struggling to remain competitive.”

Commenting on the committee’s findings, Toby Anderson, CEO of Lloydspharmacy’s parent company McKesson UK, said he is “pleased to see that the need for the system to change has been formally recognised”.

In August, Mr Anderson “implored” the government to reimburse pharmacy business rates in the same way it reimburses GP and dentist practices.

“The social and healthcare value of community pharmacy should be recognised in the business rates system, in a similar way to GPs and dentists,” he reiterated to C+D last week (November 1).

The current system “is fundamentally at odds with the NHS long-term plan that relies on pharmacies stepping up and becoming a more integrated partner”, providing services in England such as the new Community Pharmacist Consultation Service, Mr Anderson added.

McKesson UK, Boots, Well and Superdrug were among the signatories of a letter coordinated by the British Retail Consortium and sent to chancellor Sajid Javid in August, which urged the government to “fix the broken business rates system” for the UK’s retail industry.

“Inconsistent valuation methodologies”

In its written evidence to the committee, the Company Chemists’ Association (CCA) – which represents the UK's largest multiples and supermarket pharmacies – wrote that the current system uses “inconsistent valuation methodologies” to determine how much tax pharmacies pay.

For example, when pharmacies share their premises with a GP practice, they are valued according to the GP practice’s patient list, which means that “the more patients the doctors have on their list, the more the pharmacies pay, whether those patients use the pharmacy services or not”, the CCA explained.

“We believe that rates should be more closely aligned to business performance, rather than an outdated rateable value system,” CCA CEO Malcom Harrison told C+D yesterday (November 5).

“We are pleased that the Treasury Select Committee’s report agrees with our view that the business rates system is in urgent need of reform [and we] call for a fairer way for obtaining rates from business,” he added.