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Autumn statement: Living wage increase a ‘death blow’ to pharmacies

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Autumn statement: Living wage increase a ‘death blow’ to pharmacies

Chancellor Jeremy Hunt

Pharmacy owners have responded to the announcement in chancellor Jeremy Hunt’s autumn statement that the National Living Wage is to rise by just under 10 per cent, with one describing it as a “death blow” to the struggling sector.

The UK Government announced yesterday that it had accepted the Low Pay Commission’s recommendations for minimum wage rates from April 2024. The National Living Wage (NLW) will be offered to adults aged 21 and over, rather than those aged 23 and over as happens under the current system, and will rise by £1.02 to £11.44 per hour, an increase of 9.8 per cent. 

Meanwhile, the hourly rate for 18-20s will rise by £1.11 to £8.60 (a 14.8 per cent increase), and the rate for 16-17s and apprentices by £1.12 to £6.40 (21.2 per cent).

The Government said the increase – the “largest ever increase in minimum wage in cash terms” – would meet the objective set in 2019 of having a NLW “equal to two-thirds of median hourly pay for those aged 21 and over”. 

Mr Hunt said: “Next April all full-time workers on the National Living Wage will get a pay rise of over £1,800 a year. That will end low pay in this country, delivering on our manifesto promise.”

Some pharmacy owners said the increase, which comes on the back of a 9.7 per cent increase introduced this April, would threaten the survival of their businesses. 

Dorset contractor and former National Pharmacy Association board member Mike Hewitson posted on X that the latest increase “will be the death blow for many… I conservatively estimate this will cost the sector £110m/year to implement”.

“Community pharmacies are already up against it with a 40 per cent real terms funding cut since 2014,” said Mr Hewitson, adding: “At a time when most are already losing money I don’t see any sustainable way to bridge the gap other than NHS England picking up the tab in its entirety.”

Sheffield contractor Martin Bennett said that with the minimum wage increase the trend of pharmacy closures in England would worsen next year. He called on the Government to give pharmacies “an adequate uplift in funding”. 

Tony Evans, head of pharmacy at property broker Christie & Co, argued that while the planned increase would be “a benefit to many,” it was likely to “put even more pressure on pharmacy businesses as they continue to grapple with the flat funding agreed as part of the five-year deal first announced in 2019”.

Mr Evans commented: “As a result, this will place more emphasis on the need for a successful outcome to 2024-25 funding negotiations to ensure the future viability of pharmacy business." 

The Government said the new figure was based on reported data on wage levels and forecasts for future years, and that the “sharp rise” announced yesterday “reflects the continuing strength of both actual and forecast pay growth across the economy since March”.

Low Pay Commission chair Bryan Sanderson acknowledged that while NLW increases weren’t “easy for employers” as the country’s economy faces “unprecedented challenges,” but said that increases to the hourly minimum rate have improved living standards for “thousands of people” working in essential roles.

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