Pharmacy negotiator warns chancellor of effect of National Living Wage on community pharmacies

Jeremy Hunt announced in the autumn statement that the National Living Wage would increase from £10.42 to £11.44 per hour from April 2024.
janet morrison

Community Pharmacy England (CPE) has written to chancellor Jeremy Hunt to express concern over the impact of the forthcoming increase in the National Living Wage (NLW) on the finances of community pharmacies.

Hunt announced in his autumn statement on 22 November 2023 that the NLW would increase from £10.42 per hour to £11.44 from April 2024.

He also announced that it will soon apply to all employees aged 21 years or over. Currently, the £10.42 NLW applies to employees aged 23 years and over, with a separate NLW for staff aged 21–22 years, at £10.18 per hour.

The CPE letter, sent by chief executive Janet Morrison on 1 December 2023, estimated the cost of implementing the NLW increase across the pharmacy sector at between £150m and £195m — an amount described as “unsustainable”.

The letter said: “As employers, we do of course, support the goals of the NLW and would always wish to ensure that employees have a fair wage, particularly during a time of rising cost of living and in an increasingly competitive workforce market.

“However, as a sector, our core funding has been cut by 30% in real terms during the period of our five-year NHS contractual framework agreement.

“We have seen the second largest chain of high street pharmacies — LloydsPharmacy — exit the market, 236 pharmacies in Sainsburys stores close and Boots announce 300 further closures. Other multiple pharmacy groups have recently posted record losses and are currently eating into reserves.

“But the pain is being felt across all sizes of pharmacies — from large and medium chains to small independents, with many dispensing medicines at a loss and struggling to pay their rents, drugs and utilities bills,” she added.

“We are also very aware that there are many calls on public finances but we are deeply worried that we need at least to ensure that community pharmacies can remain open to offer the important new Pharmacy First service, as well as continuing to dispense essential medicines and deliver other vital health services in every high street.

“We are about to enter into negotiations for our next year of contractual funding and would urge you to bear this in mind when the mandate for those negotiations is agreed.”

Commenting on the NLW increase, Gareth Jones, director of corporate affairs at the National Pharmacy Association, said: “Our members want to reward pharmacy staff and give them a good wage for what is very responsible and important work.

“However, the small and medium-sized pharmacy businesses we represent are already struggling to make ends meet and a rise in the national living wage can’t easily be absorbed. Many are going to have to make very difficult decisions about staffing levels and other ways to cut costs.  For some pharmacy owners it might be the final step to being non-viable as a business.”

Leyla Hannbeck, chief executive of the Association of Independent Multiple Pharmacies, said: “Whilst it is good that those on lower income get better pay in a move by the government to encourage more people to work, the reality for community pharmacy is that our sector simply cannot absorb the increase with the current funding envelope that has a shortfall of over £1.2bn.”

On 21 November 2023, community pharmacy representatives told a hearing of the House of Commons Health and Social Care Committee’s inquiry into pharmacy that the current network of community pharmacies in England could cease to exist without funding overhaul.

The Department of Health and Social Care was approached for comment.

Last updated
The Pharmaceutical Journal, PJ, December 2023, Vol 311, No 7980;311(7980)::DOI:10.1211/PJ.2023.1.203669

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