After days of confusion within the sector, it appears pharmacies will have to cover the costs of the budget’s employer NIC increase themselves, with no extra support from the government.
The government will provide additional funding for public sector businesses but will not extend this support to independent contractors such as GPs and pharmacies, the Treasury this week (November 5) told C+D.
Read more: IPA warns ‘wrecking ball’ budget will cost sector over £125m
In response to C+D questioning, a government spokesperson said that “we have taken tough decisions to fix the foundations so a £22 billion boost for the NHS could be announced at the Budget”.
“The employer national insurance rise doesn’t kick in until April, and we will set out further details on allocation of funding for next year in due course,” it added.
This will include budgets and priorities for GPs and pharmacies, C+D understands.
“Kick in the teeth”
It comes after the National Pharmacy Association (NPA) said last week that a rise in employer NICs would “inevitably lead to more [pharmacy] closures” and would be a “real kick in the teeth” to the sector.
NPA chief executive Paul Rees stressed that the “vast majority” of a pharmacy’s income is dependent on the NHS, adding that it is “only right to include them in any support that is being offered to the public sector”.
Read more: Minimum wage to rise 6.7% as National Insurance hike confirmed
Last week’s Budget saw Chancellor Rachel Reeves announce that employer NICs will rise by 1.2 percentage points to 15% from April 2025.
The national living wage is also set to rise by 6.7% to £12.21 an hour in April.
The Employment allowance – which supports small businesses with their employment costs – will increase from £5,000 to £10,5000 the Budget also said.
“Struggling for survival”
Independent Pharmacies Association (IPA) chief executive Dr Leyla Hannbeck warned these two changes were “a wrecking ball to the sector that is already struggling for survival”.
She said without a rise in pharmacy funding the “tsunami of overhead increases” would “push even more community pharmacies over the edge”.
Read more: National Insurance rise would be ‘kick in the teeth’ for pharmacy, NPA warns
And an IPA analysis revealed that the “overall cost” of the rise in employer NICs and national minimum wage would come to more than £125 million for the sector as a whole.
Community Pharmacy England (CPE) said it will do “everything it can to push for funding to cover those additional costs for pharmacy owners”.