The Association of Independent Multiple Pharmacies (AIMp) has asked Prime Minister Liz Truss for complete business rates relief and reduced VAT ahead of increasing costs this winter.

In a letter to Ms Truss seen by The Pharmacist, the AIMp joined 12 membership organisations across business, hospitality and retail in calling for 100% business rates relief, headline VAT to be reduced, and the VAT on business energy bills to be brought in line with the domestic rate.

Chief executive of the AIMp Dr Leyla Hannbeck, who signed the letter, told The Pharmacist that amid the economic struggles faced by all businesses, pharmacies needed relief to deliver NHS services.

Business rates

The letter called for complete business rates relief from 1 October 2022 to 31 March 2023 to ‘help high street businesses cope with significant and immediate cost pressures they face’.

Business rates were discounted during the Covid-19 pandemic, but the reduced rate ended on 31 March 2022. The Government’s mini-budget, announced last week, only mentioned business rates relief for newly occupied and expanded premises in designated areas in investment zones.

Community pharmacies, along with NHS-owned properties like hospitals, pay business rates on their buildings.

In 2018, then Secretary of State for Health and Social Care Stephen Barclay said that business rates were part of the operational costs taken into consideration during spending reviews, which determined the overall level of funding for the NHS.

VAT and energy costs

The letter also asked for headline VAT to be reduced for the retail, leisure and hospitality sectors, which it said will provide a ‘double boost’ by bringing down both costs for low-income households and driving spend for struggling businesses.

It also said the VAT rate on business energy bills (which stands at 20%, except for businesses which use limited amounts of energy) should be brought in line with the rate on domestic energy bills (5%).

The Government’s Energy Bill Relief Scheme, which will initially run between 1 October 2022 and 31 March 2023, will provide a discount on wholesale gas and electricity prices for all UK businesses whose prices have been significantly inflated, including pharmacies.

The National Pharmacy Association welcomed this move but said that the relief provided will ‘barely touch the sides’ of the cost crisis that pharmacies are facing.

Pharmacies facing rising costs

Dr Hannbeck, who signed the letter on behalf of the AIMp, argued these changes ‘would make a significant difference’ for pharmacy.

She explained: ‘At the moment, our costs are rising and this four-five year deal that PSNC has negotiated is not doing pharmacy any favours and hence, anything like this would benefit businesses and pharmacies, and so we’re definitely keen to pursue that.

‘But we are stronger with our voice with all the other sectors in the UK that's why we've chosen to be part of it and sign the letter.’

The most recent Community Pharmacy Contractual Framework (CPCF) included no increase in funding other than a £100million write-off of the excess margin. An independent economic review of community pharmacy ahead of the next CPCF was also agreed.

Ms Hannbeck added: ‘Over 90% of pharmacy activities are NHS activities, so it’s kind of disproportionate in terms of the [business rates and VAT] level that we pay. Another thing with pharmacy is that we don’t pass our costs on to the patient, so it’s another argument that pharmacy should be exempt from all of this.’

Protecting the high street

The letter also argues the changes will benefit high street businesses beyond just pharmacy.

It reads: ‘This package of measures would not only be vital for high street business survival, but it would also protect vital jobs at a time when people cannot afford to be made redundant. It would also limit inflation for hard pressed households.

‘Finally, this would provide us with the time to develop a long-term framework that would create the conditions for a thriving mix of commercial and community uses on the nation’s high streets, including how investment zones may accelerate this growth.’

The letter was also signed by leaders from The Association of Town and City Management, British Beer and Pub, British BIDs, British Independent Retail Association Melanie Leech Chief Executive, British Property Federation, Civic Voice, Institute of Place Management, The National Association of British Market Authorities, The NMTF, Night Time Industries Association, Revo and UKHospitality.

A HM Treasury spokesperson said: ‘No national government can control the global factors pushing up the price of energy and other business costs, but we will continue to support businesses in navigating the months ahead.

‘Our Growth Plan introduced a six-month scheme to support non-domestic customers in Britain with their gas and electricity prices, which will protect businesses from soaring energy costs and give them the certainty they need to plan through this winter.

‘In addition, we are currently providing a 50% business rates relief for businesses across the UK, reducing employer national insurance and have committed to loosening the burden of business regulation. This follows the billions in grants and loans offered throughout the pandemic.’