National living wage increase could cost pharmacy £94m a year, says CPE

The 2025 Autumn Budget will ‘add further cost pressures’ to community pharmacy, the chief executive of Community Pharmacy England (CPE), Janet Morrison, has said.

According to analysis by CPE, the national living wage increase alone – from £12.21 to £12.71 per hour – will cost the sector an additional £69-£94m a year from April 2026.

And although the rise announced in the most recent Budget is smaller than previous years, pharmacy owners will ‘continue to face pressure to raise wages’, said CPE – especially as workload continues to grow.

Over the last 15 years, the national living wage has more than doubled – increasing by 109% from 2011 to 2026. Core funding for pharmacies has fallen in real terms over the same period, CPE added.

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Ms Morrison said: ‘Unlike most employers, pharmacies are unable to pass any of these higher costs on to the people they serve (NHS patients) through higher sales prices.

‘Community pharmacies are a cornerstone of primary care. However, our analysis of statutory accounts shows that the majority are continuing to operate at a loss, and closures are continuing and service levels deteriorating. Without urgent progress towards a sustainable funding model, the Government’s ambitions to shift care into the community and deliver its 10-Year Health Plan will be at risk.’

She reiterated the need to protect patient access and ensure pharmacies continue to operate through the upcoming Community Pharmacy Contractual Framework (CPCF) negotiations.

The Budget, announced by Chancellor Rachel Reeves last Wednesday (26 November), also revealed a freeze on employer National Insurance secondary thresholds until 2031, business rate changes, and £300m of additional investment in NHS technology.

Freezing the employer National Insurance secondary threshold for three more years means employers will pay more National Insurance as wages rise. For community pharmacies – already facing pressure from high workforce costs – this will lead to further underfunding and risks service deterioration as well as reduced headroom for staffing, training, or service expansion, according to CPE.

The analysis also highlighted that, unlike GP practices, the business rates that community pharmacies incur are not reimbursed by the NHS.

‘We would like to see this disparity ended, and pharmacies either having their full costs covered, or given the same business rates relief as these other primary healthcare providers,’ it said.

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CPE welcomed the additional £300m for NHS technology and said this would need to include investment in community pharmacy’s digital infrastructure.

‘A fully supported community pharmacy network would have so much to offer patients and to help deliver the 10-Year Health Plan, offering a wider range of clinical services and helping to shift care closer to home,’ Ms Morrison concluded.

‘This can only happen if pharmacies are economically viable. The impact of this Budget must be mitigated, and we must make progress towards a sustainable operating model for pharmacies.’

Last week, Dr Leyla Hannbeck, CEO and executive chair of the Independent Pharmacies Association added that there was 'very little' in the Budget to help keep pharmacy doors open.

'We urgently need sustainable funding for the pharmacy sector to stabilise services and protect patient access,' she said.

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CCA chief executive Malcolm Harrison agreed that there is need for ‘stability’.

He said: 'We hope that negotiations will now begin for the 2026/27 contractual framework as soon as possible. Any new settlement must give the sector much-needed clarity and stability.'