Budget brings VAT changes but no wider relief for community pharmacy

The Chancellor has announced his Spring Budget today, including within it two VAT changes related to community pharmacy services, which PSNC had been pressing for over several years and was a focus within our CPCF negotiations.

From 1st May 2023, Government will extend the VAT exemption on healthcare to include medical services carried out by pharmacy staff directly supervised by pharmacists. This will help as pharmacy businesses try to make better use of the skill mix within pharmacies now and in the future.

From the implementation date, this will allow contractors to review the VAT status of any locally commissioned services, where non-registered pharmacy staff provide the service. In time, it could also be used to amend nationally commissioned services such as the Hypertension Case-Finding Service to allow support staff to provide parts of the service.

Later this year, the Government will also extend the zero rate on prescriptions to medicines supplied to patients through Patient Group Directions.

HM Treasury said these measures were being introduced to ensure that the VAT system keeps up with changes to how the NHS operates and healthcare is delivered.

More widely, the Chancellor promised to halve inflation and said that the NHS would soon publish its long-term workforce plan.

But the Budget brought no further relief for community pharmacy, and this must be corrected when Government publishes its Primary Care Recovery Plan, which is expected in the coming weeks.

PSNC has this week told Government that it cannot afford any new services in 2023/24, nor a Pharmacy Quality Scheme, and that it must put further funding into the sector through a fully funded Pharmacy First service or via other mechanisms.

The most realistic prospect of getting that extra money will be as part of the Government’s imminent Primary Care Recovery Plan and making that happen is PSNC’s primary focus.

We are continuing to leverage all the political and other allies that we have to influence the Recovery Plan, including hosting a joint Save Our Pharmacies event in Parliament next week.

Janet Morrison, PSNC Chief Executive said:

“PSNC has been fighting for changes to these VAT rules for many years so it’s great to see this work finally come to fruition. The change to VAT exemption related to the provision of services being supervised by a pharmacist is a critical step if pharmacies are to make headway in making best use of the skill mix that they have, so while small in impact in the context of the current challenges, this is a very welcome development.

But the bigger picture of the Budget brings no such relief. It’s become depressingly predictable that community pharmacy will be overlooked in the Chancellor’s Budget statements, but never has this been a bigger missed opportunity than today. It’s particularly insulting that some organisations are being given help with energy bills, but not our network of pharmacies. As I told the Minister this week: pharmacy is teetering on the edge of collapse and Government has a choice to make. A choice to back our sector and reap the benefits for the NHS and patients, or a choice to keep going as they are and oversee the collapse of community pharmacy, putting the welfare of millions of people at risk.”