National living wage and employer national insurance contributions will increase from April 2025, the chancellor has announced in today's Autumn Budget. But pharmacy leaders have expressed concern that pharmacies will not be able to meet these 'looming increases' unless pharmacy funding is uplifted in the next contract.
Increases to living wage and national insurance contributions
The national living wage will increase to £12.21 per hour from April 2025, the chancellor Rachel Reeves announced today.
Alongside this, minimum wages for under 18-20 year olds will increase to £10 per hour for all eligible workers, while minimum wages for under 18s and apprentices will increase to £7.55 per hour.
From 6 April 2025, employer national insurance contributions will also increase by 1.2 percentage points to 15%, and will need to be paid after the first £5,000 of each employee's salary, rather than £9,100 per year as it is currently.
But 'to support small businesses', the government has committed to increasing Employment Allowance from £5,000 to £10,500 and removing the £100,000 threshold, expanding this to all eligible employers.
Living wage and NIC increases will 'impose huge additional costs' on pharmacies
Paul Rees, chief executive of the National Pharmacy Association (NPA), said pharmacies would be 'deeply worried by looming increases in National Insurance and the national living wage which would impose huge additional costs on their NHS-funded services if the government does not pick up the bill'.
And he expressed hope that the NHS funding announced today would include money to stem pharmacy closures.
Government pledges support for high street businesses
The government also promised to permanently lower business rates multipliers for retail, hospitality and leisure (RHL) properties from 2026/27, and in 2025/26 will freeze the small business multiplier and provide 40% relief on bills for RHL properties, up to a £110,000 cash cap.
The chancellor also promised a crackdown on shoplifting, saying in today's budget speech that the government was 'taking action to deal with the sharp rise in shoplifting that we have seen in recent years', adding that it would 'scrap the effective immunity for low value shoplifting' and provide 'additional funding to crackdown on the organised gangs which target retailers'.
£22.6bn for NHS, including £100m for GP premises
A £22.6bn increase in the health budget and £3.1bn increase in capital budget over this year and next was also announced, which includes £100m in ‘a dedicated fund to deliver around 200 upgrades to GP surgeries across England, supporting improved use of existing buildings and space, boosting productivity and enabling practices to deliver more patient appointments.’
'Vital' to invest NHS money in pharmacies
Dr Leyla Hannbeck, chief executive of the Indpendent Pharmacies Association (IPA), said it was 'vital' that some of the extra NHS money 'delivers the much-needed funding boost to the current pharmacy contract negotiations to end the effective funding freeze we’ve endured since 2015, despite rising inflation and costs'.
'If it does not, the tsunami of overhead increases in the national minimum wage, national insurance and other costs will surely push even more community pharmacies over the edge and undermine the government’s claim to believe in investing in primary care as a means to transform healthcare.'
And she noted that independent community pharmacies are '95% dependent on NHS funding, so cannot make up revenue or profit from general consumer sales as the big retail chains can'.
They 'have the right to be very worried today about their viability and their very existence', she added.
And she called for community pharmacy contract negotiations 'to resolve quickly and ensure any funding boost remains intact and is not offset by other budget measures', with a net funding increase required to combat the financial challenges facing the sector.
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