Measures announced in chancellor Rachel Reeves’ budget could have a net negative impact of over £200m each year on pharmacies, Community Pharmacy England has warned. 

New analysis by the negotiator suggests that raising the national living wage by 6.7 per cent to £12.21 an hour from next April will cost pharmacies between £115m and £152m a year – on top of the £150-£195m costs associated with the increase that came into effect in April this year. 

“Over the last 15 years, the National Living Wage has increased by 100 per cent but pharmacies have had a real-terms decrease in core funding of over 30 per cent and cannot continue to absorb their wage cost increases,” said CPE, warning that pharmacies are in no position to either pass on their higher costs to patients or to “make any further cuts or redundancies”. 

Meanwhile, the 1.2 per cent hike to employers’ national insurance contributions and the lowering of the per employee threshold from £9,100 to £5,000 is estimated to have a net cost to pharmacies of over £50m, with a higher initial cost of £74m offset by tweaks to the Employment Allowance.

On top of these increases, CPE noted that business rates relief will drop from 75 per cent to 40 per cent, arguing that as 90 per cent of their business comes from the NHS pharmacies should have their rates reimbursed by the NHS as doctors and dentists do. 

CPE’s estimate paints an even worse picture than a recent analysis from the Independents Pharmacy Association, which found the October budget would cost pharmacies more than £125m collectively or £12,002 per pharmacy per year. 

CPE chief executive Janet Morrison said: “These changes will take hundreds of millions of pounds out of the community pharmacy sector, which, without mitigation, could hasten a ‘house of cards’ collapse in the network and pose risks to the safety of medicines supply. 

“Neither patients nor the NHS can afford for this to happen, and the consequences of more pharmacy businesses collapsing for all those who work in and rely on them would be disastrous.

“Urgent action is needed now to stem these costs and immediately reset the contract sum to keep pharmacies afloat and to protect communities’ access to medicine supply and health advice.”