Peers in the House of Lords have voted to exempt pharmacies from having to pay increased National Insurance contributions (NICs) from April.

The amendment to the National Insurance Contributions (Secondary Class 1 Contributions) Bill says that specified employers, including those contracted to provide NHS pharmacy services, should only need to contribute 13.8%.

This would freeze their contribution at the amount previously paid in employer NICs rather than the rise to 15% announced in the 2024 Autumn Budget.

Introducing the amendment, Liberal Democrat peer Baroness Barker said that 'in the health and social care sector, the sudden imposition of these changes to national insurance, along with the increases in the minimum wage, are going to threaten the existence of large numbers of providers and have a profound impact on budgets'.

And while the government has already set out exemptions for some employers such as NHS hospital trusts, these do not apply to pharmacies and other employers.

After a debate in the House of Lords, the amendment was passed, with 305 peers in favour of it and 175 peers against it.

This included 200 Conservative peers and 64 Liberal Democrat peers in favour, and 159 Labour MPs who voted against the amendment. 

On 4 March, the bill will have its third reading in the House of Lords, which will be the final opportunity to amend the bill.

Following this stage, the bill will go back to the House of Commons for consideration of amendments. MPs can decide to agree or disagree with the amendment, or propose changes, before the bill can receive Royal Assent.

Nick Kaye, chair of the National Pharmacy Association (NPA), urged peers and the government to accept 'this important amendment', which he said 'would help pharmacies manage a looming bill of hundreds of millions of pounds'.

'This comes in the context of 40% cuts to pharmacy budgets, forcing record numbers to close,' he added.

'We've been clear that without additional support, we would recommend pharmacies to cut back services, including their opening hours, in order to protect their future of their businesses.'

Malcolm Harrison, chief executive of the Company Chemists' Association (CCA), said the trade body was 'pleased to see the resounding support for this amendment in the Lords'.

'It is absolutely right that pharmacies should be exempted from the increase to National Insurance contributions.

'Pharmacy businesses earn as much as 90-95% of their income by delivering NHS care and services.

'The amount that the government pays pharmacies to deliver for the NHS has not increased since 2014.

'As increased operating costs cannot be passed on to the NHS or to patients, pharmacy businesses have been forced to simply absorb them.'

And he noted his hope that MPs would follow suit and support the amendment too.