The upcoming increase to the national living wage could cost the sector tens of millions in additional costs, the pharmacy negotiator last week (November 28) revealed.
The government announced last week that from April, the national living wage will rise by 4.1% to £12.71 per hour, while the national minimum wage for 18–20-year-olds will increase by 8.5% to £10.85 per hour.
CPE analysis of the autumn budget found that the new national living wage alone could result in £69-£94 million in extra costs per year for community pharmacies.
Read more: Pharmacies face closures and ‘lay-offs’ after autumn budget
The “upper end of this range recognises that the hourly increment [of 50p per hour] will almost certainly, as a minimum, need also to be applied to higher paid pharmacist staff”, the negotiator said.
It added that while the wage rise announced this year “is smaller than in previous years”, pharmacy owners “will continue to face pressure to raise wages beyond this statutory minimum, especially as workload…continues to grow”.
And it stressed that “unlike most employers, pharmacies are unable to pass any of these higher costs on to the people they serve - NHS patients - through higher sales prices”.
“Service deterioration”
CPE noted that the government’s decision to freeze the secondary threshold for employer national insurance contributions (NICs) at £5,000 from April 2028 to April 2031 “will increase employers’ NICs liabilities as wages rise”.
“For community pharmacies already facing significant workforce cost pressures, this will lead to further underfunding and risks service deterioration as well as reducing headroom for staffing, training or service expansion,” it said.
The negotiator also said that the government’s decision to “lower multipliers for retail, hospitality and leisure (RHL) premises including most pharmacies” could offer greater “clarity” on business rate cost levels.
Read more: NHS prescription charge freeze extended for 2026/27
But it added that the phasing out of the 40% RHL relief from April makes it unclear whether pharmacies will “see a stepped increase or decrease in this operating cost”.
It stressed that pharmacy business rates “are not reimbursed by the NHS” unlike GPs’ and dentists’ - and called for an end to this “disparity” with “pharmacies either having their full costs covered or given the same business rates relief as these other primary healthcare providers”.
“Reimbursement of business rate costs could be based on existing mechanisms already used by the NHS to ensure only the NHS-related portion of these business rates are reimbursed,” it said.
Read more: Contract negotiations delayed amid government ‘conflict’
Meanwhile, the decision to invest an additional £300m in NHS technology “could streamline referrals, improve access to patient information, allow more efficient data flow and communication between NHS professionals” and support pharmacy clinical services “expansion”, CPE said.
But this “will need to include investment in community pharmacy’s digital infrastructure to enable their full participation in digital health initiatives”, it added.
“Very serious concerns”
CPE said that it has “very serious concerns about the longer-term outlook for the community pharmacy sector” - and that pharmacies having to “absorb the inflationary pressures and workforce shortages” is “pushing many further into loss-making territory” and towards closures.
The body’s chief executive Janet Morrison said that a “fully supported community pharmacy network would have so much to offer patients and to help deliver the 10-year health plan”, but “this can only happen if pharmacies are economically viable”.
Read more: CPE: 60% of pharmacy owners took no earnings last year
“The impact of this budget must be mitigated and we must make progress towards a sustainable operating model for pharmacies to prevent pressures from derailing the vision for the future,” she added.
Sector leaders last week branded the government’s new budget “very concerning” and warned it could lead to closures and “staff lay-offs” for community pharmacies.
