The new government’s first budget yesterday (October 30) saw Chancellor Rachel Reeves confirm the rumoured rise of the national living wage as part of the Treasury’s bid to “protect working people” and “restore economic stability”.
The 6.7% rise will see those on minimum wage earning £12.21 an hour from April 2025, which means eligible full-time workers will earn £1,400 more a year.
Read more: National Insurance rise would be ‘kick in the teeth’ for pharmacy, NPA warns
Meanwhile, the national minimum wage for 18-20 year-olds will increase by 16.3% to £10 an hour, the government confirmed.
The Chancellor also announced that employer National Insurance contributions (NICs) will also rise in April by “1.2 percentage points” to 15%, while the threshold at which employers start paying this will reduce from £9,100 per year to £5,000.
But Employment Allowance, which supports small businesses with their employment costs, will increase from £5,000 to £10,500, Reeves added, helping businesses to cope with the changes to minimum wage and employer NICs.
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The Allowance means eligible employers will be able to reduce their annual NI liability by up to £10,500, so employers will have to pay less Class 1 NI.
Support
Pharmacy leaders this week urged the government to include pharmacies in “any support” given to the NHS, warning that a rise in NI “without additional support would be a real kick in the teeth” to the sector.
During her speech, the Chancellor also revealed that the government will provide “a £22.6 billion increase in the day-to-day health budget”.
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This will support the NHS in England to deliver an additional 40,000 elective appointments a week, the Treasury said earlier this week.
The budget also confirmed that there will be a £3.1bn increase in the capital budget “over this year and next”.
“This is the largest real-terms growth in day-to-day NHS spending, outside of COVID-19, since 2010,” the Chancellor said.
“Very worried”
NHS chief executive Amanda Pritchard welcomed the Chancellor’s “decision to prioritise the NHS with record levels of capital investment” in such a “tough financial climate”.
But pharmacy leaders voiced their concerns about the announcements.
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Community Pharmacy England (CPE) chief executive Janet Morrison said she had “once again” underlined to ministers the “disastrous” risk of further pharmacy closures – adding that CPE is “ready to restart [pharmacy contract] negotiations immediately”.
“[The] budget looks to impose yet more cost increases on community pharmacy businesses – without providing any clarity on whether relief is on the way for the sector,” she said.
Independent Pharmacies Association (IPA) chief executive Dr Leyla Hannbeck said small and medium-sized businesses such as independent community pharmacies “have the right to be very worried…about their viability and their very existence”.
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“It’s vital that some of the welcome extra NHS money…delivers the much-needed funding boost to the current pharmacy contract negotiations,” Hannbeck said.
She warned that without a rise in pharmacy funding, the “tsunami of overhead increases” in the minimum wage and employer NICs will “push even more community pharmacies over the edge”.
“Desperately needed funding”
National Pharmacy Association (NPA) chief executive Paul Rees similarly criticised today’s announcements, saying that there was “absolutely no mention in the budget of action to halt the closure of our vital NHS pharmacy network”.
Pharmacies will be “deeply worried” by the “looming increases” in employer spending, he added.
“We just hope that the detail includes desperately needed funding to halt the decline and realise the immense potential of the pharmacy network,” Rees said.
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"If the government is serious about delivering its three big shifts in healthcare - hospital to community, analogue to digital and sickness to prevention - it must now invest in community pharmacies,“ Company Chemists' Association chief executive Malcolm Harrison added.
And Numark chair Harry McQuillan said that while the budget’s focus on “healthy businesses” and a “healthy NHS” was a “promising start”, the rise in employer NICs “will place an unbearable strain on community pharmacies across the country”.
The Chancellor also included references to additional measures to crack down on shoplifting and announced a new Office for Value for Money “to help us realise the benefits from every pound of public spending” during her budget speech yesterday.
Reeves added that a “COVID-19 corruption minister” will soon be appointed to “uncover those companies that used a national emergency to line their own pockets”.