The single activity fee will be lowered by 3p – from £1.29 to £1.26 – from November “in order to keep within the funding envelope”, the negotiator said this morning (October 22).

The recovery of excess margin will be continued following a pause over the summer, but at a reduced level of £10 million per month – compared with £15m up to August 2018.

“This is to repay excess margin earned by pharmacies in previous years, in particular 2015-16, for which the results of the margin survey show that there was significant over-delivery of margin,” the Pharmaceutical Services Negotiating Committee (PSNC) explained.

The £2.592bn funding is £208m lower than the £2.8bn the sector received for 2015-16, before the government cut the sector’s funding for two years.

Current level an "improvement"

However, PSNC stressed that the current funding level is “an improvement” on a further £33m cut intended for 2018-19, which had been revealed during its High Court challenge to the original funding cuts.

“After a lengthy and difficult debate, PSNC unanimously accepted this funding offer,” it said.

The sector is the “very early stages of rebuilding a constructive working relationship with [the] government, its only payer, and needs to demonstrate its desire to move away from the adversarial relationships that has halted progress for the past two years”, PSNC stated.

PSNC chief executive Simon Dukes recognised that “many community pharmacy contractors will be disappointed to hear that there is no more money available for pharmacies this year”.

“Accepting this funding offer was a difficult decision for PSNC to make,” he added. “But we were very mindful of the proposals we have seen previously to reduce funding by £33m this year and, in that context, along with the backdrop of uncertainty in the wider economic climate, we knew that pharmacy was not going to get a better offer from [the] government.”

PSNC also warned contractors they would notice a “cashflow dip” at the end of January as a result of the drop in the single activity fee. Read C+D's coverage here and editor James Waldron's initial thoughts here.

Have funding cuts affected your pharmacy in the last 12 months? Is the picture different in Scotland, Northern Ireland and Wales? Take the C+D Salary Survey and tell us how community pharmacy across the UK is faring – complete the survey here.