Blog: business rates should reflect vital role that community pharmacies play

With the well documented challenges facing general practice, community pharmacy clearly has an ever greater role to play in the wider primary care system. Community pharmacies are the trusted and convenient first port of call for episodic healthcare advice and treatment in the neighbourhoods and communities that they serve.

The NHS Long Term Plan has highlighted the need for reform in the provision of urgent care across England. The NHS sees a core role for community pharmacies in providing safe and convenient access for those with urgent care needs, who currently have no viable alternative other than to book an out-of-hours GP appointment or to visit A&E.

Unlike GP practices, whose business rates are reimbursed by the NHS, business rates treat pharmacies in the same way as any other high street business. Although community pharmacies are commercial entities, their role supporting the NHS and patients ought to be recognised in a similar way to GP surgeries, most of which are also independent commercial entities.

The CCA has raised several of its concerns in a response to the Treasury Committee’s recent inquiry into the Impact of Business Rates on Business. In particular, we are concerned that business rates do not take account of the important role that pharmacies play in providing access to healthcare in local communities.

Community pharmacy should also be considered differently to other businesses, as we are impacted in numerous ways by unilateral government decisions on funding, which are out of our control. For example, the imposition of a revised Community Pharmacy Contractual Framework in 2016/17 meant a 12% cut in funding for the services provided by community pharmacies to the NHS. Even though this reduction in revenue is government imposed, business rates for community pharmacies remain unchanged.

We believe that the government should abandon the principle that the revenue it generates from business rates each year must remain constant, apart from increases for inflation. This policy doesn’t reflect the economic reality that businesses are facing. If a business’s revenue falls then it should expect its business rates bill to fall too, but this isn’t currently the case.

We are calling upon the government to review the process for assessing the rateable value of business property. The ‘rateable value’ is the estimate of a business’s open market rental value. Currently this is done every five years by the Valuation Office Agency (VOA), though the most recent re-evaluation was delayed by two years. The economic environment can change dramatically over a five-year period. While the value of business properties could decline over this period, the business rates charged will not.

On top of the growth of rates linked to property values, we believe that the use of uniform, centrally set, multipliers creates an unfair burden of tax on business. Business rates have already grown ahead of inflation because they are linked to VOA set rateable values.

The multiplier used to calculate rates from the rateable value has increased from £0.348 to £0.491 since 1990. So, even if rateable value growth was only fixed to inflation and not property prices, business rates would have increased in real terms by an additional 41% since 1990. The practice of increasing the multiplier means that in effect the government is taking two bites from the business rates cherry.

In the current system, unlike small businesses, large retailers get little to no relief from changes or exemptions, which means that they must absorb a larger share of the rates burden. Large retailers often serve as anchors in high streets, providing strong reasons for shoppers to visit and maintaining the overall attractiveness of town centres. Squeezed incomes, online shopping, changing tastes and increasing overheads have all contributed to the number of empty shops on UK high streets, which increased by 7,500 in 2018. The loss of ‘anchor’ tenants – which our members often are – can accelerate a decline in footfall, especially in medium sized towns and cities in the country’s heartlands.

We are calling a fairer way for obtaining rates from community pharmacies that are already an integral part of the primary care landscape – and who stand ready and willing to do more for patients and the public.

Malcolm Harrison

Chief Executive

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