Community Pharmacies

Debate between Jonathan Ashworth and David Mowat

Wednesday 2nd November 2016 Commons Chamber

[David Mowat]

The access scheme is the device that will ensure that pharmacies are not closed in a random way. I want to address the point about closures head on. It is my belief that there will be a minimal number of closures. The impact analysis talks about 100 and it models 100. The average pharmacy has a margin of 15%, and the amount of efficiency savings that we are asking pharmacies to make over two years is 7%. In addition, the average pharmacy is trading for £750,000 when it closes or merges, even after we announced these efficiency savings a year ago. That value is being retained.

[Jonathan Ashworth]

The previous Minister put a figure on this. Will the hon. Gentleman tell us what he means by a “minimal” number of closures? What is the number?

[David Mowat]

These are private businesses, each with a different business model and a different amount of income from the NHS, from other retail activities and from services. Each is financed in a different way. Indeed, 30% of them are owned by two public companies, and 70% of them are multiples.

--- Later in debate ---

[David Mowat]

I need to make some progress. I will give way in a moment.

At present, the average pharmacy receives NHS income of £220,000 a year, which is based on throughput of £1 million from the NHS. That translates into a value of the order of £750,000 for each pharmacy. When pharmacies merge or are sold, that is what they are traded for and the changes will not make a significant difference.

Returning to an earlier point, 40% of all pharmacies are located within a 10-minute walk of at least two others. Instances exist of a dozen or more pharmacies located within half a mile of each other. As I noted earlier, each one will most likely be receiving £25,000 a year just for being there.

[Jonathan Ashworth]

Has the Minister been to Leicester?

[David Mowat]

I was brought up on the outskirts of Leicester, so I am delighted to tell the hon. Gentleman that I have indeed been there. Giving all these clusters £25,000 of national health service money is not the best way to spend precious resources.

In addition, the extra services that pharmacies will choose to provide, such as winter flu jabs and public health services, are commissioned separately and will be unaffected by the reset. For example, 600,000 flu jabs have been given in community pharmacies this year—more than all of last winter.

Community Pharmacies

Debate between Jonathan Ashworth and David Mowat

Monday 17th October 2016 Commons Chamber

[David Mowat]

I agree with my right hon. Friend. Boots makes a big contribution. It owns 1,724 pharmacies and is the biggest of the big four, which between them own 40% of all pharmacies. The Government’s position is that community pharmacists make a big contribution, but I repeat that the number of locations has increased by nearly 20% over the past decade, and each one gets £25,000 per annum just for being open and for being a pharmacy. One consequence is that we have seen a great deal of clustering, and 40% of pharmacies are within half a mile of three others. It is right that the Government look at that and make a judgment.

[Jonathan Ashworth (Leicester South) (Lab)]

I congratulate my hon. Friend the Member for Barnsley East (Michael Dugher) on securing this urgent question and on his exceptional campaigning on the issue. He is, no doubt, as disappointed as I am by some of the Minister’s replies.

Ministers appear to be intent on pushing ahead with the cuts that have been outlined, under which thousands of community pharmacies could close and patients could lose out on essential medical services. The Pharmaceutical Services Negotiating Committee has described the Government’s proposals as “founded on ignorance” and warned that they will do “great damage”. The National Pharmacy Association says that the proposal is a “dangerous experiment” that

“shows a complete disregard for the well-being of patients.”

Is that not an absolute indictment of the Government’s handling of this matter? The Minister has said that he will make an announcement shortly. Given the concern among Members from across the House, including Conservative Members, can he be more specific and tell us when he will give us a final decision? Will he also be negotiating a solution with the Pharmaceutical Services Negotiating Committee? As the Minister knows, his predecessor talked of the potential for up to 3,000 pharmacies to close. Is that correct, in the Minister’s judgment? If not, can he tell us how many pharmacies he thinks will close, and how many of those will be in deprived areas?

Has the Minister had a chance to study the PwC report that describes the cash savings that community pharmacies bring to the NHS? What will be the financial impact on the NHS of more patients presenting themselves at A&E departments and GP surgeries because pharmacies have closed?

Is not the real reason why Ministers are pressing ahead with these cuts the complete mismanagement of NHS finances? Hospitals ended last year £2.45 billion in the red. We have had continual warnings from experts in the NHS, and over the weekend we learned from the Prime Minister that there is no more money for the NHS. The Secretary of State and the Prime Minister would be wrong to continue to ignore the advice of experts and pretend that everything is going to be okay. Unless the Government get a grip of the funding crisis facing the NHS, I fear that these cuts are just the start and that there is worse to come.

[David Mowat]

The Government spend more than the OECD average on the NHS. We spend more than the commitments made by the Labour party before the last election. That does not mean that we do not have a duty to spend that money as effectively as we can, however, and that is exactly what we intend to do. The money that may be saved by the measures we are consulting on will not go to the Treasury; it will be recycled back into NHS England. That is what NHS England wants to happen.

The hon. Gentleman mentions the excellent PwC report, which reaffirmed the value of community pharmacists to this country. PwC did not consider whether that same value could be still provided after some savings to the network. That is what we are looking at, and it is reasonable and responsible for the Government to do so. To say that that is not the case is simply incorrect.

The hon. Gentleman mentioned that the previous Minister talked about 3,000 pharmacies closing. We do not believe that the number will be anything like that big. In some areas, there are 10 or 11 pharmacies within half a mile of each other. [Hon. Members: “Where?”] Leicester, Birmingham—we can talk more about this. It is quite possible that at the end of the review, some of those pharmacies will merge. If that happens, it will not mean that provision has been reduced. We do not believe that patient provision will suffer at all from the changes that we are considering.