The increase in the minimum wage announced in today’s Autumn Statement will set ‘alarm bells ringing in general practice’ as GP funding isn’t keeping up with wage growth, medical accountants have warned.
Chancellor Jeremy Hunt said that from April next year the national living wage will increase by 9.8% to £11.44 per hour.
The Association of Independent Specialist Medical Accountants (AISMA) has highlighted that many practice staff are paid the minimum wage or slightly higher and will expect to see their pay to increase proportionate to that rise.
‘If global sum funding from April 2024 isn’t increased to take this into account, practices will be left short’, Andrew Pow, board member of AISMA, has warned.
He explained: ‘Since March 2019 the minimum wage has seen cumulative growth of around 46%, including this latest increase, compared with an increase of around 19% in global sum funding from 2019/20 through to 2023/24.’
‘Today’s confirmation that the minimum wage is to increase by 9.8% will be setting the alarm bells ringing in general practice, where funding is not keeping pace with wage growth, led by minimum wage increases.’
AISMA’s response has been echoed by other bodies.
Director of the Institute of General Practice Management (IGPM), Robyn Clark said the minimum wage rise represents a huge cost and will have implications for the whole practice team in order to maintain salary differentials.
‘Whilst I am all in favour of minimum wage rises we need to ensure that GP contracts are uplifted to support this,’ she said on X.
Dr Katie Bramall-Stainer, chair of the BMA’s GP committee England also said that ‘the increase to minimum wage is a good thing for those workers benefitting from it’ but added that it would be left to ‘already struggling practices to fund this within practice costs and expenses as outlined in the 2024/25 contract’.
‘Practices have already lost out on the previous minimum wage increase because the 6% funding uplift didn’t cover this. Now many are struggling with extreme inflation, the rise in utilities and running costs, NHS Property Services’ extortionate charges, cost of living pay increases for other staff, alongside the overall increase in demand and lack of resource and workforce.’
Dr Bramall-Stainer said unless funding was increased ‘practices will be left with no choice but to reduce staffing at a time when they are most needed in order to stay afloat, and at worse, it could see the closure of even more practices.’
Other measures announced in the Autumn Statement include reducing the main Employee National Insurance (NIC) from 12% to 10% from 6 January.
Andrew Pow said this will benefit salaried employees and other staff members.
‘For a salaried GP on £50,000, this will mean a saving of around £700 a year,’ he said.
In addition, from April 2024, Class 4 NICs for the self-employed will be reduced from 9% to 8% and no self-employed person will have to pay Class 2 NICs.
Mr Pow said that GP partners and locum doctors would save £192 a year from the abolition of Class 2 NICs. They will also benefit from the 1% cut in Class 4 NICs on profits between £12,570 and £50,270 from April. For a self-employed GP on £50,000, this will mean a saving of around £375 a year, Mr Pow explained.
‘The bigger picture, however, is that because income tax thresholds remain frozen until 5 April 2028, more people are paying more tax at higher levels’, he further added.