Northern Ireland community pharmacy owners are reeling from a £1m financial hit as April staff salary bills are paid this week.
This is the first month-end when the real financial impact of the new minimum wage and national insurance changes (NIC) are being felt. The £1m bill has landed in spite of urgent pleas to the Department of Health, the Health Minister, the Department of Finance, and UK Treasury, seeking relief for providers of public health services such as community pharmacy.
UK Chancellor Rachel Reeves explained that the increased income from raising Employer NIC would be used to fund “public services”. Community Pharmacy is, in fact, one of those public services, and these latest payroll costs will compound funding difficulties with no sign whatsoever of additional investment in the sector.
Community Pharmacy services are provided by a network of individual pharmacy owners, who each run their pharmacy as a small business. Unlike private sector businesses, as the provider of a heavily utilized and contracted public health service, community pharmacies do not have the opportunity to raise their fees to the Department of Health, or to pass costs on to patients.
With no sign of relief from April’s increased NIC taxes being provided to community pharmacy owners, they either have to fund the higher staff costs out of their own savings or cut staff or opening hours in order to reduce the cost.
At Minister’s Questions in the Assembly on Tuesday 8 April, Health Minister Mike Nesbitt was challenged over the matter, when Kellie Armstrong MLA highlighted that his Department is “effectively asking…pharmacy owners… to absorb the cost, and that they will close the gap through personal finances.”
The Minister replied, saying, “I do not accept that at the moment, because it is just too early… I will work with the new permanent secretary and senior officials in the Department to see what can be done. Certainly, trying to avoid individuals having to put their hands in their own pockets to cover these costs is a motivation for me.”
Representing the contractors for Northern Ireland’s 508 community pharmacies, Gerard Greene, Chief Executive of Community Pharmacy Northern Ireland (CPNI) said,
“We need urgent support now. We have already made representations to the Minister, urging him to either seek relief from the Chancellor and HM Treasury, or to fund full cost recovery for community pharmacy.
“The total annual cost for our sector will be in excess of £12million. As we reach the first month-end after these new taxes came into effect, our sector is feeling the full force of an additional £1million month end cost. By the end of June this will be £3million. To be absolutely clear, this hit is entirely shouldered by individual pharmacy owners as our pleas to the Department of Health appears to be falling on deaf ears.
“At a time when community pharmacy owners are already struggling to balance the books, the Department of Health cannot expect this to be tolerated and patient services to remain unaffected: it will cripple the sector.
“By allowing these new staff costs to slide in, unaddressed, the Minister is essentially allowing individual contractors to prop up vital health services out of their own pockets This is not a fair or reasonable way to run public health services.
“We know the Northern Ireland health budget is under pressure and we would urge the Minister to take this back to Treasury for immediate review and reparation.”