– in the House of Commons am 12:00 am ar 29 Mehefin 1978.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Tinn.]

4.3 p.m.

Photo of Dr Gerard Vaughan Dr Gerard Vaughan , Reading South

I am sure that the House will have heard with sympathy that the Secretary of State has had to go back into hospital and will want to wish him a speedy recovery as he will not be with us today.

We have noted your comments, Mr. Speaker, about the shortness of the debate. I, for one, will endeavour to be fairly brief in opening the debate.

Yesterday my hon. Friend the Member for Beeston (Mr. Lester) presented a petition with 1 million signatures—2 per cent. of the population—which were collected in just under four weeks. That is a measure of the feeling in this country against the Government's astonishing mishandling of the pharmacists. That is why we have brought this situation before the House today for urgent debate.

For two years negotiations have been going on between the chemists and the Government over their payment for National Health Service work. These negotiations have now completely and utterly broken down. The pharmacists are asking for an independent arbitration, and the Government have refused it. That is the tragedy of the present situation. Pharmacists in Scotland can go to arbitration, but arbitration is apparently denied to pharmacists in England. Meanwhile, the small pharmacies round the corner are in such perilous financial circumstances that many of them are closing down.

More than that, the whole pattern of drug dispensing is being changed. Insidiously and quietly a major alteration is going on in our health care. I say that because pharmacists are, on average, dispensing between 5 million and 6 million prescriptions a day. Indeed, they do more than that. As well as giving drugs, they are part of what has been called the "Johnny has a sore throat; what can I give him?" service. Pharmacists provide an essential part of our health care in terms of advice, comfort and support for thousands of people. That aspect, which is beginning to be eroded by the Government's policy, constitutes a very serious change.

At present, 2 per cent. of pharmacies are closing down each year. Last year one pharmacy closed down almost every working day. The rate was lower in the first three months of this year, but it is now beginning to rise again.

Those figures would be even higher but for the fact that one in three pharmacists in general practice is over 60 years of age. This is a serious situation. The pharmacist finds himself trapped. He is locked into a business, to which he has probably given a life-long service, and cannot now get out because he cannot sell it. The goodwill in the small pharmacy has virtually gone. Profits are so low that no one wants to buy the stock. Therefore, the pharmacist has no choice but to try to continue, hoping that by some miracle the situation will improve. That is the disastrous situation which the Government have brought about in the last four and a half years.

The local pharmacist is now in an impossible financial position with respect to National Health Service work. Last year inflation for drugs was running at 24·6 per cent. This year it is running at 21 per cent.—that is, 21 per cent. on top of the 24·6 per cent. We do not hear very much about those figures from Labour Members.

Last year, for the small chemist to keep a stock of drugs available on his shelves—for most chemists that represents £6,000 worth of stock—he had to set aside an extra £1,500. This year he will have to set aside an extra £1,200. That is only to stand still, not to improve his service. That is to keep the same number of drugs on his shelves available to the public. Even worse, that has to come out of an average overall gross profit of only £1,600. Therefore, we can begin to see what an impossible situation the pharmacists is in.

Not surprisingly, many chemists have now reduced their stocks, so that what was, on average, 11 weeks' supply of stock has now been cut to seven weeks' supply. But this does not solve their problems, because under the present arrangement with the Government, if they reduce the amount of stock they hold, the Government reduce their payments for NHS prescribing. So the unfortunate chemist is in a vicious circle. If he does not replace his stock, if he cuts it down, he gets less money and he then has less with which to replace his stock.

Therefore, we have a situation today in which the stocks on the chemist's shelves are diminishing rapidly. But, more than this, the range of drugs which the chemist holds on his shelves is also diminishing rapidly. So there is not only less stock but there is less variety. This has the effect, as was found in a recent survey, that one in eight of prescriptions had to be supplied on at least two visits. The person had to go to the chemist, ask for what he wanted and then go back later in the day.

This, as the House will realise, is a terrible problem for young people with children in prams, for the elderly and for people in rural areas where the bus services and transport may be very inadequate. It is particularly the rural chemists who are finding that their business is running away from them. Help the Aged says, for example, that in one part of Kent there is now no pharmacist within an area of 500 square miles. If that is true, that is a very serious position, indeed.

The number of trained pharmacists is being reduced, so that many chemists' establishments now have one trained pharmacist and a number of other staff working on lower salaries who are not fully trained pharmacists at all. That is a direct deterioration in service which is going on. Whereas in the past the majority of newly trained pharmacists wanted to go into retail pharmacy, we now have a situation in which 60 per cent. want to go into industry or into the hospital service. That is another falling off in the standards of pharmaceutical care. The whole pattern of provision for the public and the community is being altered, and the Government sit back without, apparently, any policy, allowing this to happen, totally inert and inactive over this situation.

It is a sad characteristic of the present DHSS Ministers that whenever they make a positive statement on a great range of subjects—on abortion, on unemployment amongst nurses, on the waiting lists, or on industrial unrest in the NHS—within a few weeks they have to come to this House and admit that the situation is not as good as they thought it was, and that, in fact, there is cause for alarm. Last November we had exactly this situation. In a debate on the Consolidated Fund, we were told that there was no cause for alarm. But within a few weeks, we had the Minister saying that he was very worried indeed about it.

In conclusion, the pharmists, quite rightly in our view, feel that they are being unjustly victimised. They have asked to go to arbitration. They have undertaken to abide by any decision made as a result of arbitration. The Government have refused this. As I said earlier, if one is a chemist in Scotland, one has a right to arbitration, but not if one is a chemist in England.

The review body formula which is applied to all other Government contracts does not apply, apparently, to the chemists. Why not? The chemists ask how their remuneration is actually fixed. What are the criteria? What are the relationships between their income figures and those of other professional bodies? They do not know. To them it appears that the Government take a totally arbitrary view on this matter. After two years of negotiation with a monopoly employer, they now have a situation which has broken down.

The Government say that there is no case to answer and that the chemists are reasonably paid. That is the Government's answer. The Government say that if the chemists went to arbitration, there is no doubt at all that the arbitration would come down in favour of the Government. Then why do the Government not allow the chemists to go to arbitration? What is stopping us? Why does not the Minister tell us? I ask him to tell us today what is the Government's case in refusing arbitration. What has the Minister to fear that he does not intend to tell us about today? If his case is as good as he says it is, he has no reason whatsoever to refuse these people a just appeal to an arbitrating body.

I suggest that the Minister's case is not as good as he says it is and that the pharmacist is a professional and he is a small business man—and small business men professionals can get no understanding and no support whatsoever from the present Government.

Photo of Mr Doug Hoyle Mr Doug Hoyle , Nelson and Colne

Rubbish. Absolute nonsense.

4.15 p.m.

Photo of Mr Sydney Tierney Mr Sydney Tierney , Birmingham, Yardley

I think that there is some evidence from a number of sources that pharmacists have problems, particularly in meeting their commitments under the National Health Service. I am sure that most Members of Parliament will have received complaints from constituents about the availability of dispensing outlets. There is no doubt that they are declining in number. Nearly all hon. Members will have received letters from pharmacists with premises in their constituency, because they have conducted a national campaign.

I want to comment on three aspects of the problem—the effect of the pharmacists' problems upon the public, the reasons for the decline in the number of pharmacies, and the fear that the whole retail pharmacy structure is in danger of collapsing. I should also like to say something about the problems and the concern of the trade union which is involved in this industry.

In my area I have received representations from individuals and various residents' associations about the availability of dispensing outlets. Particular complaint has been made on behalf of old people and young mothers, as the hon. Member for Reading, South (Dr. Vaughan) said, and obviously there are large areas, particularly housing estates, near city centres which lack dispensing facilities, and many people have to travel into cities to get prescriptions dispensed, which costs a lot in both time and money.

Certainly the fall in the number of dispensing outlets puts a strain on the rota system, particularly at holiday time. I imagine that we have all experienced difficulties and complaints from constituents who have had to go over bank holiday weekends to the dispensary of the local hospital, or make contact with the police with a view to getting some service which they require, sometimes in an emergency. It is obvious that there is some strain on the service and that gaps are appearing in the structure.

Local pharmacists who have written to me have talked about 250 closures a year. The hon. Member for Reading, South spoke of a drop of 2 per cent. per annum. The point I want to make is that everybody seems to agree that closures are taking place at a pretty fast rate. I think that all of us must be concerned about this and determined to do something about it if we are to sustain an adequate spread of dispensaries within our neighbourhoods.

We must have a viable and efficient structure working in conjunction with the Health Service, with accessibility to all members of the community, whether it be in cities, towns or villages. If the trend of closures continues, then the whole structure of dispensing outlets will collapse. The economic and social costs would be beyond calculation. I think that we can envisage what would happen if that should occur.

I think that all hon. Members know that the pharmaceutical services negotiating committee represents chemist contractors. It has been, and will continue to be, involved with the Department about the remuneration of the people it represents. This is right and proper. It could be called a trade union, and I would not attempt to interfere in any of its negotiations. In any case, the structural mechanism of the agreement it has with the Department is not easy to follow and would make it difficult if one wanted to interfere.

The pharmaceutical services negotiating committee is right to seek to improve and maintain the level of remuneration of its associates. I do not think that anyone would dispute that. But I am hound to say that the decline in the number of pharmacies cannot he imputed solely, or generally, to the overall level of remuneration contracting chemists receive from the Department.

That is not the only cause. There are few pharmacies within the Health Service except in the health centres and in hospitals. There are few outlets that do nothing else but dispense. Instead we have chemists' shops where doctors' prescriptions are dispensed and a multiplicity of other goods are sold—toiletries, cosmetics, cameras, medications and healing remedies of more than 57 varieties. Such shops provide a wide service.

Pharmacists are pharmacists first and shopkeepers second, particularly when they own their own shops. But often it is the other way round. They are shopkeepers first and pharmacists second. This is a problem, and it must be examined. Whether they are shopkeepers first depends upon how many prescriptions they dispense.

Photo of Mr Kenneth Lewis Mr Kenneth Lewis , Rutland and Stamford

There is much in what the hon. Member says. But does he think that the reason why pharmacists become pharmacists second and shopkeepers first is that they have no option? They have to expand the non-pharmacy side because pharmacy alone does not give them a good return.

Photo of Mr Sydney Tierney Mr Sydney Tierney , Birmingham, Yardley

Pharmacists often have to rely on the success of their general trading to remain in business. This is the danger in the system. Pharmacists should not have to rely on general trading profitability. They should be able to make a living by providing a public service.

A decline in the retail trade of chemist shops, because of competition or changes in shopping habits—I have in mind supermarkets and hypermarkets which sell similar items to those sold in chemists' shops—has caused the closure of many small retail pharmacies. In many instances much of the profit on the shop side has been lost and the number of prescriptions dispensed has not earned sufficient remuneration to keep the business viable.

Population movements through slum clearance have caused problems. One of the biggest problems is the inability to find outlets to replace pharmacies which have closed. I am thinking of housing estates where shop premises are available and there is a need for a pharmacy. Overheads on new premises are astronomical and often supermarket competitors are already installed in the area selling similar lines to those sold in pharmacies at more competitive prices. Pharmacists are reluctant to operate on the basis of earnings from prescriptions alone, because that is too risky. To some extent that is understandable.

It is clear that many doctors in the Health Service are opposed to community health care and health centres. Many pharmacists are opposed to State pharmacies. If that were not so, there would not be so many owner-occupied pharmacies. Many pharmacists want to continue to own their pharmacy-cum-shop and to operate it on a profit-and-loss basis.

Many of us would like to see the National Health Service extended to encompass more dispensing services than it has at present. But we have an infrastructure of mixed types of dispensing outlets. We must retain that structure, with fair remuneration for those who operate it so that the public is protected, until we find a better structure.

Last year I asked the Minister about his responsibility for maintaining a service for dispensing prescriptions within the Health Service. The Minister said that he had power to make or authorise whatever arrangements were necessary to enable an adequate service to be provided. The Minister has powers in this respect.

There should be some agreement with the contracting chemists and their representatives in order to create a structure of dispensing outlets which enables pharmacists to survive on the basis of remuneration earned from prescriptions and the other services that they provide for the Health Service. A dispensing service which relies for its existence on the success of its general trading operations, with cut-price attacks from supermarkets, is vulnerable and will remain so for as long as this pattern of trading continues.

The main difficulties are experienced by small businesses which dispense a small number of prescriptions. Perhaps this situation should be examined because of the public service role played by the operators.

The large multiple chemists also have problems. Some of them have pharmacies within supermarkets and department stores. Such companies do well both in general trading and by dispensing prescriptions. But the retail trading hours of pharmacists and the anti-social hours involved in weekend work, particularly when a rota is operated, together with relatively low pay, mitigate against the recruitment of both qualified and unqualified dispensers in the large businesses.

Photo of Mr Michael Shersby Mr Michael Shersby , Hillingdon Uxbridge

What evidence is there to show that the recruitment of pharmacists is affected by anti-social hours? I have always been under the impression that pharmacists, like doctors and dentists, are dedicated people who are prepared to accept that an element of weekend working is necessary.

Photo of Mr Sydney Tierney Mr Sydney Tierney , Birmingham, Yardley

From my experience there are problems in the large dispensing outlets such as the Co-op and Boots. Because of the rates of pay and the anti-social hours they find it difficult to recruit qualified staff. I have represented such staff and have dealt with the problems.

The difficulty of recruiting qualified staff sometimes leads to the closure of an outlet. The public are affected by that. In the large multiple companies remuneration is an important factor for the staff. USDAW—the Union of Shop, Distributive and Allied Workers—in which I declare an interest, is the largest trade union within the drug and fine chemical industry. It is the only union with members in the pharmaceutical retail and distributive network. Naturally, USDAW has followed with interest the negotiations with the Department and the pharmaceutical services negotiating committee. It has followed the negotiations because it is the trade union on the national joint industrial council for retail pharmacy responsible for maintaining the wages and conditions for pharmacy employees—qualified and unqualified dispensers and shop assistants who work in chemists shops.

The jobs of USDAW members in wholesale and retail pharmacy are dependent on preserving the viability of the existing infrastructure for supplying prescription medicines and over-the-counter pharmaceuticals to the public. The pay of qualified pharmacy managers and unqualified assistants is low compared with the pay of their trade union colleagues employed in the wholesale or manufacturing side of the industry.

USDAW wishes to protect the jobs of its members when pharmacies close down. The union is anxious about the low pay in the industry. If the Department places restrictions on profitability in the retail pharmacy sector and wages remain relatively low, the retail sector will lose its skilled professional staff and some pharmacies will be in danger of closing because of the shortage of trained personnel. There are signs that that is happening.

Mistakenly, the retail side of the industry is not usually considered to be important—and I stress the word "mistakenly". The retail industry will become more and more important. There would be nothing but chaos in the manufacturing and wholesaling sides of the drug and pharmaceutical industry if the retail end of the infrastructure broke down, to say nothing of the great hardships that the public would suffer and the outcry that would ensue.

The problems of pharmacists, like many other problems that we discuss in this House, have no single simple solution. While the argument about remuneration is strong, this is not a single simple answer to the problem. There certainly is a case for pharmacists, whether owner-occupiers, small businesses or big business groups, to receive a fair remuneration for the services they carry out for the Health Service. No one would deny them that. As has been said, their contribution is vital. They may have a case for some improvement in the situation, but that is a matter for those who represent them and negotiate on their behalf, and they should be given every facility to test the validity of their claim.

I also believe that there is a strong case for large and small proprietors to survive in business mainly on their professional skills and less by their shopkeeping abilities. Many pharmacists have closed because their general trading situation has deteriorated. A degree of planning is required to balance the situation. The pharmaceutical services negotiating committee appears to agree with that. I am pleased to note that it has recently agreed a draft submission to the Government which would radically change the freedom of retail pharmacists to conduct their businesses how and when they please. They are aware that a more rational location of pharmacists is in the public interest.

In considering the problems of pharmacists and the number of closures, one cannot ignore the trade union point of view. The problem of low pay for qualified and unqualified staff on the retail side is significant, as is that of anti-social hours. The continuation of the retail infrastructure depends on the ability of employers to recruit and retain appropriate staff when, as the hon. Member for Reading, South pointed out, other industries are competing for many of these people who are taking advantage of those opportunities or going into hospital services. This problem increases as the national companies grow and the small pharmacies disappear.

I hope that my right hon. Friend the Minister of State will consider all these points and recognise that the retail end of the National Health Service is as important as any other sector.

4.34 p.m.

Photo of Mr William Van Straubenzee Mr William Van Straubenzee , Wokingham

I am sure that the whole House has listened with care and attention to the interesting speech by the hon. Member for Birmingham, Yardley (Mr. Tierney), with the greater part of which I certainly agree. Particularly I hope that the Minister of State, who is to reply to the debate, will take careful note that his hon. Friend supports the principal request made from the Opposition Front Bench by my hon. Friend the Member for Reading, South (Dr. Vaughan), which was, ay I think he put it, that the pharmacists should certainly have an opportunity of testing their case, by which I take it he means that he is in favour of the central request for arbitration.

I congratulate my hon. Friend the Member for Reading, South, who opened the debate. He spoke in this matter, as: in so much else, with very great authority, and not the least of the merits of his-speech was that it was extremely brief. I intend to follow his example.

I am not at all sure that the Government have taken on board the very serious situation that is developing in so many areas with the closure of small chemists' shops. It is becoming very difficult for many of our constituents to get their prescriptions made up, and not only is it in this aspect of the National Health Service that problems are encountered. I make merely a glancing reference to a matter with which all hon. Members will be familiar, and that is the difficulty of constituents in some parts of the country in getting dentures made on the National Health Service.

I do not think that any other single problem is raised with me so often when I am walking about my constituency as the request "Cannot you get a chemist to come here?", "Cannot you get him into the neighbourhood shopping centre?" or "Cannot you get him to the large village?" I represent an area where this problem—and we all have different problems to face—is growing and has grown massively. It is also an area where for many people public transport is nothing like as good as it should be. It is all very well if one can drive quickly in one's car to pick up one's prescription, but for those who are dependent upon the bus, which is perhaps most inconvenient and not always certain to run, if they are elderly or suffer a deformity of some kind, the location of the local chemist is of immense importance. A person who is dependent on a drug to treat arthritis or the innumerable other conditions that affect young and old knows exactly what I mean.

I must add my voice to the authoritative voice of my hon. Friend the Member for Reading, South in saying that the situation is of great concern to us all. Recently the Minister of State was kind enough to write to me at some length giving the figures for closures of chemists' shops over the years. There were 228 closures in 1975, 215 in 1976 and 138 in 1977. I note, of course, a decreasing graph of closures, but the figure is alarming nevertheless. My hon. Friend produced on another occasion for the 12 months ending November 1977 the figure of 266 pharmacy closures as against 135 pharmacies being opened.

Photo of Dr Gerard Vaughan Dr Gerard Vaughan , Reading South

Even though matters have improved slightly this year in that in the first three months the number of closures was 21, my hon. Friend may be interested to know that there were no fewer than 22 closures in April alone.

Photo of Mr William Van Straubenzee Mr William Van Straubenzee , Wokingham

I steered clear of the figures for this year because my hon. Friend dealt effectively with that aspect when he spoke. I have merely quoted the other figures to show how serious the position is.

The essential dispute is over the size of the increase in the net profit margin on National Health Service dispensing. The Minister has rejected arbitration basically—I hope that I condense accurately a complicated argument—on two grounds. First, he says that it seems essential for the area of disagreement to be precisely defined before arbitration is considered. I must concede that it is desirable, if possible, and that we should have absolute precision. However, there are many cases in the experience of hon. Members where such a situation did not apply but where it was nevertheless right to go forward to arbitration.

The Minister's second reason is that we should wait a while to see how the differential on-cost system of payment work out. He will agree that that system, comparatively newly instituted, clearly has no relevance to the closure figures I gave because it comes at a later stage. I see the Minister nodding in agreement. If that is so, I canot really see why we need wait any longer before moving to arbitration.

Many times in this House I have heard, as have hon. Members of all parties, Goverments, and particularly a Labour Government, urging parties to a dispute to arbitrate. For example, I should not be the least surprised if on the very dispute of which we heard a few minutes ago, affecting the catering services of the House, we did not hear recommendations to the parties to go to arbitration. It will not surprise me in the least if we hear that, and yet here, where in a sense the Government are the employer, they are resolutely setting their face against it. Rightly, doctors and dentists have a review body procedure, but the unfortunate chemist finds himself in a limbo position.

Photo of Mr Roland Moyle Mr Roland Moyle , Lewisham East

The hon. Gentleman is making a very responsible speech, but I feel that I ought to correct him on one point. The Government are not the employers of these pharmacists. They are independent contractors.

Photo of Mr William Van Straubenzee Mr William Van Straubenzee , Wokingham

I am aware of that, and I hope and believe that I used a phrase such as "in a sense" in referring to the employer position, but, of course, I accept the correction of the Minister of State. I quite understand that the chemists are legally in an independent contracting position. But, in relation to my argument about arbitration, I do not think I am straining the argument in placing the Government in an employer position so long as I keep the phrase in inverted commas, so that the Government have the initiative. It is because I believe that the situation is more serious than the Government realise that I gladly but briefly add my words of support on this subject.

4.43 p.m.

Photo of Alan Beith Alan Beith Opposition Whip (Commons)

The pharmacist, or the chemist, as we all know him so much better, has a key role in the National Health Service, a fact which is obvious from the very long and high standard of training which we consider is necessary to give him. The chemist's feeling at the moment is that the place which is so well recognised by the amount of training he is given is not well enough recognised in the remuneration he gets.

The importance of that role can be seen in the two key things which he does. The first is to stock and supply the medicines prescribed by general practitioners to the general public, a very responsible role when one thinks just how dangerous are some of the commodities he is prescribing, how much care has to be exercised, how much security has to surround their storage and how much depends on whether the right amount is handed over to the patient.

The chemist, however, is more than that. He is an indispensable source of advice and guidance to the public on minor ailments. He is part of the front line troops of the National Health Service, the first person whom many members of the public, myself included, contact on minor ailments when we say quite happily, "I do not want to bother the doctor with a little thing like this. I will go to the chemist and see if he can do anything about it." We are quite ready to bother the chemist when we do not want to bother the doctor.

But the chemist is not paid for that side of his service. He benefits from the advice he gives to those of us who seek it on these occasions only if the end result is that he sells us something off his shelves. It is not always realised just how much use people make of chemists as a first port of call and how the general practitioner would be even more overwhelmed than he is on small matters if this were not the case. When we look at it closely it it very easy to see how much longer the queues in the waiting rooms would be if the things with which chemists now deal with in the first instance were being dealt with every time by the general practitioners.

We must look at this professional service aspect because, as some hon. Members have pointed out during this debate, we should encourage the pharmacist to make the best use of the expensive health training that he has been given. He may be a shrewd businessman or he may not, but surely we should have a system which makes use of the investment which society has put into him in the form of training. Whether he can supplement his income successfully by the success of his business is not the test of his ability as a pharmacist. The emphasis ought not to be on how successful a business man he can be in selling other products.

As the pharmacists' representative body itself has recognised, the time has come to look at that service side of the pharmacist's role and to see whether the system should give more encouragement and recognition to it. In any case we had better remember it now, when we are considering the current issues of the remuneration of chemists. If the retail pharmacies collapse, that service will not be available and the impact on the rest of the Health Service, on general practitioners and on the casualty departments of hospitals and other places in the front line will be keenly felt.

We can see now in the areas where pharmacists are not available the problems which arise. In many rural areas the facilities of a pharmacist are something one has to go a long way to find, and in some places that service is replaced by the doctor himself carrying a dispensary service. In many other areas, though, it is necessary for people to travel long distances to a chemist's shop, often at considerable expense. As in so many other ways, the patient in a rural area is paying a very high price at the receipt of service for the Health Service.

That is something which many people in urban areas do not always recognise. The patient in a rural area has to pay not only the prescription charge. He may have to pay £1 in bus fares to get to a chemist and back again, just as he may have to pay to travel for hospital treatment. In so many ways the rural consumer is at a disadvantage. I can think of quite big communities in my constituency, such as the large mining village of Shilbottle, where people have to pay a very high bus fare to reach the chemist's shop in the nearest town to get a prescription dispensed.

In some areas energetic attempts have been made to deal with this problem by providing voluntary collecting services to get prescriptions for the elderly and housebound people. The Department must look carefully at what help and encouragement can be given to these services.

My hon. Friend the Member for Colne Valley (Mr. Wainwright) had a motion on the Order Paper dealing with this matter which attracted support from many parts of the House. It arose from the problem that help was no longer being given by the area health authority for the petrol costs of a voluntary collecting service which was doing a splendid job in bringing prescriptions to people who could not get out from their homes to travel to a nearby town to get them. He drew attention to a circular published by the Department concerned in Scotland, which offers far better possibilities for this kind of initiative and enterprise, which depend in large measure on voluntary effort. I hope that the Department will look again to see what can be done to help schemes.

Photo of Dr Gerard Vaughan Dr Gerard Vaughan , Reading South

Perhaps the hon. Gentleman would care to comment on the fact that about 20 per cent. of prescriptions now require at least two visits before they can be collected.

Photo of Alan Beith Alan Beith Opposition Whip (Commons)

I noted the hon. Member's comment on that and I was reminded of my own experience quite recently when I went to the doctor on a minor ailment and got a prescription for two items. It happened that I was travelling right across my constituency and I was in the fortunate position of being able to call on a number of chemists to try to get those items. I went to five chemists' shops, none of whom could provide both items on the prescription and all of whom had the kind of stock problems to which I shall refer in a moment. On the face of that difficulty, anybody who was not in the unusual position of having a car at his disposal and who did not have other reasons for travelling a considerable distance across Northumberland would have been at his wits' end trying to get the medicines which had been prescribed for him.

The situation has become much worse, and in Northumberland we have lost seven out of 63 chemists' shops in two years. At that rate we shall have halved the number of chemists' shops there within 10 years. Special measures to help the very small pharmacist in very rural areas have been of some assistance, and I can point to one or two of the very small chemists living in scattered areas who have benefited from the sliding scale and the rural area subsidies introduced by the Government and who might not now be operating but for that.

Helpful though that has been, we have to remember that it has been at the expense of other pharmacists. As a correspondent, a chemist, pointed out in a letter to my hon. Friend the Member for the Isle of Wight (Mr. Ross), It cannot be denied that Mr. Ennals is providing the small pharmacists business with more money, but his Robin Hood approach is not exactly appreciated by the owners of the busier pharmacies whose remuneration is being reduced to help to pay these pharmacists more money. That brings us back to the fact that there is an overall problem of the amount of money going into retail pharmacies which this particular scheme has not solved, even though it has helped one or two of the smaller pharmacies in the more scattered areas.

Pharmacists look for a recognition of these difficulties in the handling of their remuneration problem, which has now gone on for such a long time. They point out that to have one's claim to additional income measured by the rate of closures—the rate of people going out of business—is a harsher test than anybody else has to face. At least, it provides solid proof that something is wrong with the remuneration. We must bear in mind some of the difficulties with which the chemist has had to contend in recent years.

Drugs and medicines are now big business, and more and more are coming on to the market. Sometimes they represent major advances and important alternative treatments; sometimes they are merely brand name differentiation—one company producing something slightly different from another. But the chemist has to stock them. Unlike other traders, he cannot simply drop old lines. At least one doctor in his area may go on prescribing anything that he previously stocked. It is not likely that doctors will all at once switch prescribing from long-tried medicines to new alternatives.

The worst possibility is that if a doctor suddenly stops prescribing something that a chemist has been encouraged by demand to stock, he will be left with a large stock of which he cannot dispose. He cannot put it out on his counter, marked "Sale—unwanted drugs at reduced prices." The doctor who runs his own dispensary is in an easier position. He and his colleagues in a group practice can decide to change one medicine for anther. He can relate prescribing to stock far more easily than the pharmacist, particularly as the latter is usually dealing with several doctors in different practices.

The result of all this is that the chemist faces an ever-expanding stock list. He has to borrow to get his stocks and he is paid not on sale but later. By the time he is paid, high rates of inflation—which are higher in drug prices than in almost any other field—make it a nightmare to recoup the interest on what he has had to borrow. His profit deteriorates all the time. He cannot mark up the price of his remaining stock to compensate. To him, the prices are fixed.

The move to group practices, while it has helped some pharmacies, has caused great difficulties for those which are some distance away from health centre. Previously, there may have been a nearby doctor whose patients went to these chemists for their prescriptions. Now, when a practice is centred elsewhere, the chemist loses the bulk trade in the morning or evening as large numbers of people leave the surgery. He is increasingly squeezed out. The High Street chemist, who in many places is at the most convenient point for the largest number of consumers, is often the one who is left out.

In some rural areas there are staffing problems, particularly when it comes to covering holidays. A chemist who wants a holiday is not like other shopkeepers. He cannot call on a helpful friend or an unqualified member of staff. He must have someone capable of doing a highly professional job. It has been suggested that some sort of relief service for pharmacists could be provided in rural areas. I hope that the Department will consider this.

But all these difficulties are part of the background to the dispute on remuneration, which centres on the net profit margin. The chemists say that their present 16 per cent. return on capital is only a 2·9 per cent. return on turnover, which is not enough. The equivalent of a 5 to 6 per cent. return on turnover, which is what they are asking for, would be well within the pay code.

Governments have often been hesitant about going to arbitration because they fear that a settlement will fly in the face of pay policy, cash limits or whatever restraints they are applying. That does not seem to be the case with the pharmacists' claim. The area of dispute does not suggest that the Government could be presented with such an arbitration report. It is much narrower and could go to abitration without raising those fears. In any case, Governments have gone to arbitration in circumstances when they have faced that result.

My hon. Friend the Member for the Isle of Wight asked in April whether the Minister would now permit independent abitration. Among other things, the Secretary of State said that he had not yet been told the grounds on which"— the pharmacists— find my arguments unacceptable."—[Official Report, 3rd April 1978; Vol. 947, c. 26.] The Minister must surely know those grounds by now. He may not agree with them, but the pharmacists have made their position clear and have put a strong case. The Minister may feel that he can answer it, but we have nothing to lose by taking the matter to independent arbitration.

This is a situation in which, above all, the application of an independent mind would help to re-establish confidence in every quarter. The pharmacists could see their claim being examined by someone who, they felt, had no vested interest and who would be likely to award them, even if he went beyond the Minister's offer, a result in line with the pay and prices code. Surely that is reasonable.

I think that we all find it difficult to understand why the Minister should so far have been reluctant, but some time has elapsed and an opportunity has been given to see what effects the new system has had on the profits of pharmacists and on their attitudes. Whatever reservations Ministers may earlier have had, they could now readily submit this matter to responsible and sensible arbitration.

4.57 p.m.

Photo of Mr Eric Ogden Mr Eric Ogden , Liverpool, West Derby

I ask the hon. Member for Berwick-upon-Tweed (Mr. Beith) to forgive me if I do not follow him into the details of his argument. However, I confirm his description of pharmacists as the front line of the National Health Service, not only because of their special knowledge and skill but because people do not want to bother the doctors. My immediate thought was that, judging from my constituency postbag there are areas where one needs to be fit, well and aggressive in order to bother doctors so effectively as to be able to see them. No doubt that is unfair to most doctors, and we could have a similar debate on the problems of the medical profession.

We should all be grateful to the Opposition for using at least part of a Supply Day for this debate. The hon. Member for Reading, South (Dr. Vaughan) referred to only one of the problems of pharmacists. Perhaps the right hon. Member for Wanstead and Woodford (Mr. Jenkin) will refer to others when he replies. They have made a useful contribution to the general debate—even if I and perhaps some of my hon. Friends are not wholly convinced that they are doing this entirely without regard for possible party political advantage.

I must first declare my interest. I am a parliamentary adviser to the Council of the Pharmaceutical Society of Great Britain, an interest which I share with a Conservative Member.

The society is the registration and professional body for pharmacy in all respects of pharmaceutical practice except that of remuneration. It operates under Royal Charter and several Acts of Parliament. Its 31,000 members—in retail pharmacies, hospital services, industrial organisations, research and academic institutions—control its continuing activities in what I regard as an admirable and democratic manner. Some of our trade unions—I speak as a member of the national executive of a major union—could learn much from the detailed organisation of the Pharmaceutical Society and the way in which it controls its activities.

My opposite number will confirm that the term "parliamentary adviser" means exactly what it says—not a public relations consultant, or a public affairs manager, and certainly not a publicity officer. Our duty is to advise the society on parliamentary affairs. Naturally, we learn much of pharmaceutical matters.

The hon. Member for Reading, South, after a series of Committee meetings on the Conservative Bill reorganising the hospital services, said, referring to me, how useful it was to have a pharmacist serving on the Committee. He was perhaps a little surprised when I pointed out to him that I was not a pharmacist but a coal miner. Coal certainly has pharmaceutical derivatives, but I take it that the hon. Gentleman meant to be complimentary—more complimentary than the remark of one now retired Member of the Department of Health and Social Security who referred to the society's parliamentary advisers as the ultimate deterrent.

It is strange that in the House, although we have members of almost every profession in the country, pharmacy is the one that is not represented. There has not been a pharmacist Member in the House since Sir Hugh Linstead, who was secretary and registrar of the society and a Conservative MP. Among hon. Members opposite is a member of the Society of Apothecaries, but that is not quite the same thing. I hope that at some time in the not too distant future the society will be able to produce one of its own to speak in this House—and naturally I hope that this will be from the Labour Benches.

All that I have learned about pharmacy and pharmacists convinces me of their almost infinite variety. There are those I call the pure professionals, who look with perhaps an understandable degree of envy, or at least admiration, to their colleagues in dentistry or ophthalmy who have relative freedom from the demands of commerce and trade, and look back, and indeed forward, to a golden age of pharmacy, free from such restrictions of commerce, when they are able to practise their profession without trade. They look, too, at practice in Europe and other places where pharmacy is practised with much less involvement in trade than here.

Other pharmacists, through the hospital pharmacy and the area and regional health authorities, are able to combine the special skills of pharmacy with skills of administration in a career service. Others hold the highest positions in industry, research and commerce, and recently even the Football Association has called on the knowledge and practical common sense of a professor of pharmacy to help try to resolve some of the problems of drug abuse in professional football.

Photo of Mr Doug Hoyle Mr Doug Hoyle , Nelson and Colne

I do not want to interrupt my hon. Friend's interesting speech, but I hope that this move by the Football Association embraces industrial relations practices, of which I have been complaining.

Photo of Mr Eric Ogden Mr Eric Ogden , Liverpool, West Derby

My hon. Friend never misses an opportunity of making the appropriate point. We can both send copies of Hansard to the Football Association tomorrow.

The pharmacists about whom we are really talking in this debate are the small independents or the very small groups of pharmacies in the town or village, the people in the local community who are in the front line of which the hon. Member for Berwick-upon-Tweed spoke. These are the pharmacists about whom we and our constituents think. They are the people, in our minds, of medicines and medicine.

The one aspect of pharmacy which is not a direct responsibility of the society is the remuneration of pharmacists. Of course the society has a direct interest and concern in the welfare and well-being of all its 31,000 members, whether they be in any of the aspects I have described or among the 10,800 pharmacists whose remuneration is negotiated by the pharmaceutical services negotiating committee. The Pharmaceutical Society is on record clearly and unequivocally as wholly supporting the claim of the PSNC for arbitration on the current remuneration dispute with the DHSS.

The Pharmaceutical Society is convinced that in a situation, as it says, where retail pharmacists (chemist contractors) are dealing with one authority, and an impasse is reached, natural justice can only he properly served by an independent assessment of the views of both sides. That is the society's position. It is stated clearly. It is one of the points of view that have been taken into account by Ministers and the Department, and even if it has not yet persuaded Ministers to move towards arbitration I am certain that it is a continuing concern of Ministers and an effective way of helping towards that arbitration.

I believe that that statement is a much more helpful and much more calm way towards arbitration than a leading article which appeared in the Pharmaceutical Journal on 11th March. That article was headed "Intransigence rules". It read: The decision by the Secretary of State for Social Services to deny pharmacists in England and Wales the right to go to arbitration over their long-standing dispute with the Department of Health over the net profit margin on National Health Service dispensing suggests a degree of intransigence on the part of the Government that borders on the tyrannical. That was the statement. It seems to me such a complete overstatement as to be completely counter-productive. We know that my right hon. Friend the Secretary of State is a determined man who has to be persuaded, that he can be unconvinced or convinced. But no one in his right mind could possibly call him tyrannical. That article seems to have been written by the same school of journalists as those now writing speeches for the hon. Member for Abingdon (Mr. Neave) and equally counter-productive. My advice was that that sort of thing would not persuade anyone anywhere. It certainly confirms that the editor of the Pharmaceutical Journal has more Press freedom in Lambeth High Street than some of his colleagues in Fleet Street. But he does not help towards a solution.

Photo of Sir Albert Costain Sir Albert Costain , Folkestone and Hythe

Has the Pharmaceutical Society had any sensible argument from the Secretary of State about why there should not be arbitration?

Photo of Mr Eric Ogden Mr Eric Ogden , Liverpool, West Derby

Most of the difficulties between the profession and the Department have been argued out and decided by agreement between the Department and the Society on the PSNC—the profession. This remuneration dispute is one of the very rare occasions when there has not been agreement either readily available or reluctantly available. We are talking of an exceptional situation and not a regular and continuing situation. This is the one-off affair where agreement has not been possible. On hundreds of occasions up to now agreement has been possible.

Part of our problem and part of our duty today is to see whether we can find a way of resolving the difficulties, and we have to recognise that the PSNC is not simply an organisation for the small pharmacist. It is a complex organisation and the needs of its members vary tremendously. It speaks for 10,800 or more pharmacists—not all are small independents or even the pharmacies with branches. PSNC includes the 1,200 pharmacies controlled by Boots. I suggest that the needs of Boots, a first-class company in manufacturing, pharmacy and retailing, which can pay £60,000 to Glenda Jackson for three television commercials—good luck to her and good luck to the company—are not exactly the same as the needs of the small pharmacists to whom I go for my prescriptions. There is a difference, and that difference goes all through the PSNC—to the Boots company, to the co-operatives, to the 300 multiples, to the thirties, the threes and the tens. There is considerable variety within the PSNC.

To me, that variety seems to make it necessary to have both a common contract of service for pharmacists as such, not the lowest common denominator but the highest common multiple all the way along the line, plus the provision of—I will not say supplementary benefits in this debate—special allowances, special considerations and special remunerations, so that we can achieve the end we want, which is the provision of proper pharmaceutical services where they are needed for the people who need them.

Remuneration is not an end in itself. Pharmaceutical services are not an end in themselves. Their purpose is to provide service to the people in need. Some special services have to be available. The essential small pharmacy scheme is only one way in which it can be done.

The PSNC has a first-class record in negotiating on behalf of its members. Agreement has been reached on almost every occasion. This is the one occasion on which agreement has not been reached. Part of our task should be to help towards reaching agreement.

Arbitration was almost the whole theme of the speech by the hon. Member for Reading, South. There was a time when the right to arbitration was written into the contract of the chemist contractors. It was taken out, if not at their direct request, certainly with their full knowledge, agreement and consent. That is on the record as a matter of history.

When the Pharmaceutical Society tells me that it believes that natural justice says that this should be allowed to go to arbitration I am reminded of my father's words to me—"Eric, never claim natural justice or even justice, but do claim your rights." We have to recognise in this debate that arbitration is not a right in law for pharmacists. We can argue that it ought to be. We can argue that it should be. But at the moment it is no use pretending that it is a right that we can claim, because it is not. Deluding ourselves about facts which do not exist does not help the situation.

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Redbridge Wanstead and Woodford

If it were a right, there would have been no need for the debate. It is because it is not a right that we are pressing the Government to concede it.

Photo of Mr Eric Ogden Mr Eric Ogden , Liverpool, West Derby

The article that I quoted from the Pharmaceutical Journal specifically used words to the effect that the Secretary of State is denying pharmacists the right to go to arbitration. I was simply putting on record that there is no right in law. One does not claim by right what one has no right to have.

The PSNC is now asking for arbitration on this one issue alone. It is not asking to go back to the old situation in which arbitration was written in for a whole series of possible circumstances. It is asking for arbitration on this one issue. It is a one-off affair. There are precedents for this within the DHSS. Therefore, no one can say that there will be any difficulties in allowing what is requested. It cannot be said that it has never been done before. It has been done, and it is within my memory and that of the hon. Member for Reading, South.

The PSNC is not agreed on the advantages or disadvantages of a permanent provision for arbitration, under controlled conditions, being written into the chemists' contracts. I discussed this matter on Monday with the chairman of the PSNC. It was quite clear from our discussion that there is no commitment inside the PSNC for arbitration to be written in contracts. This might be one way of getting out of the present difficulties. Therefore I think it could usefully be considered by the PSNC and Ministers.

Look at the time scale. We are now at the end of June. Suppose that the PSNC were asked to consider and to take the opinion of its members on whether they wanted arbitration, not just on this one issue alone but to be written into their agreed terms and conditions, with an agreed arbitrator, so that it was in their regular chemists' contracts, with a new clause to that effect. It might take two or three months for that to be considered. That would take us to the end of September and the beginning of October.

This place is full of rumours that in October we might be interested in other things than pharmaceutical problems—the problems of the ballot box. Whether those rumours be true or no, there will at the end of October be a Government and a Parliament ready to carry on with the government of the country, and to consider whatever advice may be brought to the House and to the Government by the PSNC. If the PSNC were to come back in October asking the Government to consider whether the PSNC should have arbitration, not on a one-off basis but all the time, the Government could then consider it.

The Government are committed to considering in January 1979 the new rates of remuneration that were introduced last January. If the Government were to move some way towards the PSNC, and agreed to review the position, say, on 1st November, that would be some move on the part of the Government towards the PSNC. This could be a way in which the PSNC and the Government could reduce the present difficulties. It is a personal suggestion and one that will stand or fall on its merits, depending on how people regard the proposal.

I thought that the hon. Member for Reading, South was in a rather robust, pugilistic and strident mood this afternoon. It did not really become him. I felt that he was going a little beyond looking for help for the pharmacists, that he was looking for a little party political advantage at the same time, and that he was over-emphasising—it might get him into difficulties in the future—what he felt was the role of Governments, Ministers, legislation and regulations either in creating the problems of pharmacists or in solving them.

The hon. Gentleman sought to blame the Government for creating the problems and failing to provide instant solutions, but he knows that matters are not as easy as that. The Opposition chose the subject for debate. We are not debating it on a resolution in which the Opposition could have spelt out not only the problem but the problems, and also perhaps indicated some of their solutions. They chose not to do so and we debate the Adjournment of the House. The whole House is in favour of adjourning, presumably, as soon as we have all spoken, and I think it would have been better had the Opposition chosen to debate the problems of pharmacists on a resolution instead of in an Adjournment debate.

The hon. Gentleman did not say it in so many words, but I gathered that he fully supports arbitration, and he has committed himself and his party to arbitration on this one issue. He did not tell us whether he supports the suggestion that arbitration should be written into the system. I think that as a result of arbitration he would recognise that there ought to be more remuneration for pharmacists. I gather from the hon. Gentleman that I am correct in saying that. But he said very little about how that money is to be found, and he is the official spokesman of a party which is committed to reductions in public expenditure.

I ask the hon. Gentleman, therefore, to confirm or deny what was written in a very interesting article which appeared in The Observer last Sunday. It was written by Adam Raphael, its political correspondent. The hon. Gentleman has no doubt seen the article, in which it is reported: The Conservatives are planning public expenditure cuts totalling at least £4,000 million by 1981 for immediate implementation if they win an October General Election. The article goes on to say that the Shadow Chancellor and the Tory Front Bench spokesmen have been told to prepare a report on how this should be done. It states: Tory Shadow Ministers who have been engaged in a series of interviews with the Conservative finance team have been told that the total savings will in fact have to be far larger than £4,000 million. We know that it is public expenditure which pays the remuneration of pharmacists. The article goes on to say: Particularly sensitive are the proposed increases in school meals, dental and prescription charges, and the proposed fees for doctors' visits and hospitals stays. In a debate on this subject, it is surely not sufficient for the hon. Gentleman to say "This is the problem, solve it." The hon. Gentleman, who is deserving of the regard of the House, should offer some of his own solutions and spell out their implications. He knows, as a member of the medical profession, that the British Medical Association is officially opposed to any increase in prescription charges. He certainly knows, from his contacts with pharmacy, that the Pharmaceutical Society, long before the time when Sir Hugh Linstead was on the Conservative Benches, was opposed to the introduction of prescription charges, and that later it was opposed to any increase in prescription charges. That was the attitude of the society as expressed by Sir Hugh Linstead in 1961, by Mr. Darling in 1971, and right up to the present day.

The society is quite clearly and firmly committed to the principle that the National Health Service should be free at the time of use. That point should be taken into account by Conservative Members as much as by the Minister. Proper remuneration is only part of the argument. Town planning has as much to do with the location of pharmacies as has Government legislation. Possibly the reduction in the number of pharmacy closures has much to do with the fact that there has not been quite so much town and country planning or town centre re-development recently as in the past.

We know how these things happen. The town centre is cleared, the doctors' surgeries are moved, and the pharmacists follow afterwards. I hope that when the Minister receives advice from the Pharmaceutical Society about the rational distribution of pharmacies he will look very closely at the question whether the family practitioner committees should be more involved in the decisions on planning applications in local areas.

There is one practical way in which the Minister can help pharmacy. He will know that before Part III of the Medicines Act came into effect, when a member of the public went to a pharmacy and said "This is my particular difficulty", the pharmacist said "You had better go and see your doctor", or he would say "Try this. If it does not work, go to see your doctor". He had three kinds of medicines available—those on general sale, those on prescription only, and another range of medicines, which were more potent, which could be provided only under the close personal control of the pharmacist himself. If that kind of list were now available to pharmacists, it would help pharmacy doctors and the public.

We have discussed some of the problems of pharmacists. I sometimes think that there are almost as many problems as there are pharmacists. But there are also many achievements. I hope that this debate will help rather than hinder progress towards the resolution of those problems and that we can use the same skill and dedication in our parliamentary professions as every pharmacist does in the day-by-day conduct of his or her professional duties.

5.21 p.m.

Photo of Mr John Farr Mr John Farr , Harborough

I should like to back up the remarks which have been made on both sides of the House about the critical position in which pharmacists find themselves. My hon. Friend the Member for Reading, South (Dr. Vaughan) illustrated it very clearly. I echo what has been said—that the real need is for arbitration.

My hon. Friend gave the House several statistics. The alarming figures that he gave can be expressed possibly in another way. In the past 10 years, the number of pharmacists in the nation has declined by 20 per cent. There are now only 9.000 left. Over the past 20 years or so, a rather worrying aspect is that, whereas in 1955 only ·07 per cent. of pharmacists were closing, in 1975 that rate had accelerated to 2·6 per cent. Clearly there is considerable cause for concern.

What has brought me into the debate is the concern which has been expressed to me by the pharmacists in my constituency, not so much because some of them are closing but because many of them are finding it unprofitable to maintain the usual, rather expensive equipment which a pharmacist is expected to supply. For example, there are oxygen sets. Only a few months ago I wrote to the Minister about this particular difficulty. The return to a pharmacist, of obtaining and renting out an oxygen set is not sufficient to make many of the smaller pharmacists continue to do that particular work. The situation has become very strange in parts of the Midlands, because in many areas there are one or two pharmacists who have plenty of these expensive oxygen sets available for patients. They are now supplying oxygen sets, even though it is not economic for them either. They are covering areas which were formerly covered by other pharmacists who are finding it unprofitable and impossible to continue with this facility.

What has incensed pharmacists so much is that the Secretary of State rejected their claim and refused to allow it to go to arbitration. They are very conscious of the fact that, for example, in Scotland pharmacists have the right to have any claim of this nature independently assessed. In Scotland they have the advantage of the procedure under the Whitley Council. But English chemists, because they negotiate direct, have no such right.

As has been pointed out by more than one hon. Member, other groups with contractual relationships with the NHS, such as doctors and dentists, are able to use review body procedure in order to get an independent assessment of their claims. But that is not available to pharmacists, even though the Government could in effect be regarded as a monopoly employer.

I have already mentioned the difficulty which has arisen in parts of my constituency in relation to the supply of oxygen sets. I have been in receipt of many letters and representations from pharma- cists in my constituency about this situation. One of them, who operates in the South of Leicestershire, has written repeatedly to me and to the family practitioner committee pointing out the imbalance which is occurring whereby his firm is now having to supply oxygen sets almost throughout the county. The firm now has about 20 oxygen sets authorised for its possession because other pharmacists throughout the county are not finding it possible to finance their purchase and use under the existing financial arrangements.

In addition, there is a situation similar to the one which has been touched on by my hon. Friend the Member for Wokingham (Mr. van Straubenzee). Not only is there a risk of pharmacists either closing or reducing their activities because of the present financial structure, but in parts of the country where specially large residential developments have occurred, where there is a crying need for a new pharmacy, and where possibly a few years ago a new pharmacist might have been willing to go, it is now very difficult to find anyone who is prepared to take up a position in those new areas. As my hon. Friend the Member for Wokingham pointed out, public transport has become no easier in the last few years. There are many areas in the country, which one could almost call deprived areas, where large new housing developments have taken place, where not only are pharmacists not available, but under the existing system it does not appear likely that they will be available.

I strongly urge the Minister to permit arbitration. Like hon. Members on both sides of the House, it seems to me utterly illogical that the Government advocate arbitration in all other forms of industrial disputes but in this particular matter, which is surely one where the Government are in a monopoly position, arbitration is called for more than it would be in the normal way.

I know that other hon. Members wish to speak. Therefore, I should like to conclude with a message from the pharmacist to whom I have already referred. I should like to read a short extract from the letter which he sent. This person lives in Oadby on the fringes of the city of Leicester, and his father started his little pharmacy a number of years ago. The way he puts it is typical of many pharmacists who are struggling to exist. He says: Pharmacy has become an obsession, involving every week 60–70 hours of work here since my early twenties and before that seeing the same thing done by my father. It has become a way of life so that my life style, as expressed by my accountant, has become frugal. I live on less money than my Pharmacist employees. The money saved having been ploughed hack into the business, purchasing our premises, refitting, increasing stock where possible, with the result I have a thriving business. I fully support the remarks which have been made by my hon. Friends as well as the remarks of Labour Members. I urge the Minister to allow arbitration in this dispute at the earliest possible time.

5.29 p.m.

Photo of Mr Doug Hoyle Mr Doug Hoyle , Nelson and Colne

Although it does not always happen in every debate, I think that on this occasion there is wide agreement on both sides of the House with regard to the plight of retail pharmacists. I agree with my hon. Friend the Member for Liverpool, West Derby (Mr. Ogden), that while we thank the Conservative Opposition for tabling this subject for a debate on a Supply Day, we were a little sorry that some of the remarks made by the hon. Member for Reading, South (Dr. Vaughan) were not only partisan but party political points.

It does no good to suggest that this Government are not interested in the plight of small businesses. They are devoting a great deal of attention to them at the moment. My right hon. Friend the Chancellor of the Duchy of Lancaster has spent a considerable amount of time studying them, as has my hon. Friend the Under-Secretary of State for Industry, the hon. Member for Keighley (Mr. Cryer). Considerable help has been given to small businesses in the Budget. For those reasons, I do not think that the approach adopted by the Opposition helps any discussion of the problems facing retail pharmacists.

A number of my constituents have written to me about the problems of small retail pharmacists. Certainly they have problems, and we have to face them, because, as a number of hon. Members have said, the small retail chemist works very hard and very long hours. He per- forms a duty for the area which he serves that is second to none, and I know that many of my constituents who live in small towns and villages are completely dependent on their local retail pharmacist.

I agree with the hon. Member for Reading, South that because stocks have had to be run down as a result of inflationary pressures, it frequently happens that a person takes a prescription consisting of a number of items to his local pharmacist only to find that he cannot obtan all of it and that he has to go back at some later date to complete it. For many of my constituents that means a return journey by bus, and that puts a considerable strain on pensioners and on housewives with young children. What is more, the person who is ill and obtains a prescription from his doctor wants his needs attended to immediately. This is a problem which will get worse unless we can help retail pharmacists.

I am still pessimistic about the closure rate. I know that it has begun to slow down at long last. However, there have been 4,000 closures in the past 17 years, and we know that today there are only about 10,000 left. It means that almost 30 per cent. of pharmacists have gone out of business. There may well have been some slowing down in this but, when we see the figure coming down to 10,000, we must begin to wonder how long it will be before there are acute problems in certain parts of the country.

My right hon. Friend tried to help the small pharmacist by the redistribution. The large multiple stores such as Boots and the co-ops can well afford this kind of thing. But the case that is being made by the retail pharmacists is that, despite my right hon. Friend's help and the fact that he put in an additional £5 million, because of the reassessment of stocktaking and because there was this reduction from 11 weeks to seven weeks, there is still this problem of the £17 million which went out, which means even allowing for the £5 million, £12 million which is still missing and the retail pharmacists rightly claim should go back into the kitty. They are facing a squeeze. Inflationary pressures are building up and, even though the level of inflation is better than it was, we know that drugs are extremely costly.

One of the difficulties of the small retail pharmacist is knowing which drugs to stock, especially if he serves a number of general practitioners. Always there is the problem that a GP has a run on a certain drug, and then it changes. What is the pharmacist to do with the stock which he has accumulated? It is certainly a financial problem for the small retail pharmacist, and he cannot understand why, having built up this kind of business, his profession cannot follow the pattern in Scotland and go to arbitration.

My hon. Friend the Minister of State has written to me saying that there is no need for arbitration, and we have heard from my hon. Friend the Member for West Derby that there is no provision for arbitration and that there is a difference between the pharmacist in Scotland and his counterpart in the rest of the country. Nevertheless, I ask the Minister to look at this again. In present circumstances, I think that arbitration would be one way out of the difficulties of the retail pharmacist. The call for this has come from both sides of the House. If my hon. Friend found it possible to re-examine this decision, he would be helping the members of a very hard working community who are very highly valued in the areas which they serve. I know from the letters which my constituents write to me how much they value the services which they get from retail pharmacists.

I also note from the Opposition's motion that we are discussing the problems of pharmacists, which means that we should not confine our attention to the problems of retail pharmacists. That being so, I ought perhaps to declare my interest in hospital pharmacists since I am president of the ASTMS and we organise a large number of hospital pharmacists.

Photo of Mr Doug Hoyle Mr Doug Hoyle , Nelson and Colne

There are problems in the hospital service. If we are to provide an efficient pharmaceutical service in our hospitals, we need additional funds pumped into that sector of the National Health Service. The advent of many modern drugs has meant the use not only of more effective drugs but of more toxic drugs. This has created a demand for more expertise and knowledge on the part of hospital pharmacists. I welcome the fact that hospital pharmacists are becoming more involved not only in the choice of drugs but in the administering of them and in the monitoring of drug therapy generally. It is right that hospital pharmacists should be developing this expertise. But if we are asking for the expertise, we need to put more resources into this side of the service.

This has been recognised by the DHSS. In 1972, it issued a circular advocating an increase in volume in work of this kind by pharmacists in the hospital service, and this has been going on. But one of the problems in building up a more efficient service has been that, although pharmacists have responded to the call for more drug information, any improvements, as always, have had to come out of existing resources. It has also meant for them a higher standard of education and more training, and this means that the problem still remains of how it is to be done out of the available resources. Hospital pharmacists feel that more funds are needed not only for the degree courses which will be necessary if they are to obtain the higher qualifications needed of them but also, if we are to develop on these lines, for the provision of additional staff.

There are two other matters I wish to mention. The first is the need for increased funds for the drug and therapeutical committees that must be developed within the hospital service. There is a similar problem here—it is the old story. That development must come out of existing resources when we need additional resources for it.

Secondly, there is the problem of the application of the Medicines Act 1968 to hospital pharmacy. If we cannot put additional resources into the hospital pharmacy service more problems will be created. The Crown immunity which applied to hospitals in this respect has been removed. This has meant that the medical inspectorate from the DHSS has asked, rightly, for the same standard of environmental control, documentation and hygiene in cases where hospital manufactured medicinal products are produced, as applies to the pharmaceutical industry. I would not argue with this at all, but there is the problem of how it can be done. It is absolutely necessary for the safety of the patient, and hospital pharmacists agree with it. But, can we manage to do all the things that are necessary for the safety of patients if we cannot get additional resources into that sector of the Health Service?

When we look at the quality control required, it is the same story. If we are to develop it we will need additional resources, and I hope that the Minister will look again at this problem. Hospital pharmacists agree that the safety of the patient must be paramount, and if this objective is to be achieved additional resources are absolutely necessary.

There is a great deal of benefit in debates such as these, which are of a non-partisan nature. We are all agreed about the plight of the retail pharmacists and I have introduced the aspect of hospital pharmacy as well. However, we must consider this against the background of drugs. We should be looking at the high prices of drugs, and the profits that are being made by the drug companies. I hear slight murmurings from the Opposition Benches, and I am sorry to disturb the peace of the House. However, I think that these profits should be looked at because this is an area in which there is great scope to make savings. Savings could be made here rather than at the expense of retail pharmacists or of holding back the development of hospital pharmaceutical services. I believe that this is an avenue to which we might direct our attention.

5.43 p.m.

Photo of Mr Hugh Fraser Mr Hugh Fraser , Stafford and Stone

I congratulate my hon. Friend the Member for Reading, South (Dr. Vaughan) on raising this matter, and I congratulate the hon. Member for Nelson and Colne (Mr. Hoyle) on at least the first part of his speech. I hope that the Minister, as a Scot, will adopt the principle that has been adopted in Scotland and will allow arbitration.

In my constituency in the last few years 15 small chemists have gone out of business. Any small chemist today faces the problem of holding stocks, because of inflation, and the problem of changes in habit—what the doctors prescribe—becomes far more complex. Running a small business is infinitely more difficult than it used to be and many more hours are spent filling in forms and so on.

Labour Members have criticised us for talking endlessly about cutting Government expenditure, yet wanting to spend money in this direction. The point surely is that in an over-pressed National Health Service one of the best ways of taking the load off the doctors and the hospitals is through small chemists. When I was a child and I was feeling down I did not go to the doctor; I went to Charlie the chemist on the corner and he told me what to do. Charlie the chemist was usually right. A great load could be taken off the central machine in this way.

The hon. Member for Nelson and Colne talked about pharmaceutical services in hospitals. The point is that we want to make things available to the public outside the hospitals. Some doctors are now setting up their own prescribing services, and this is an enormous burden to the average constituent. Instead of going to the local chemist to get a prescription he has to go to see the medical group. I believe that this should be stopped. It is far better for these matters to be handled by the chemists so that they will be far more readily available to the old lady who at present has to take the bus to see the doctor instead of her equally old friend going once a week to pick up her prescription from the local chemist.

I thank the hon. Member for Liverpool, West Derby (Mr. Ogden) for what he said about the excellence of the pharmaceutical profession. Here again more should be done. I think that there should be a higher degree of qualification. I agree that greater powers of prescription should be given to the home chemist. This is all to the good. The key is that none of this can happen if the small chemist disappears.

The root of this debate is the disappearance of small chemists. There is one simple way out of it. The Government should give way, and allow arbitration, on this complicated but essentially simple matter of keeping the small chemists in being.

5.48 p.m.

Photo of Mr George Park Mr George Park , Coventry North East

My sole interest in this debate is the one fact on which the whole House is agreed—that far too many chemist shops are closing. They do not close according to any predetermined pattern, but in closing they leave huge gaps in the Health Service in both rural areas and towns alike.

Before we have any discussions on the distribution of chemist shops, the Department must settle the present disagreement. This argument has been going on for two years. That is far too long for any argument because both sides involved tend to get into entrenched positions and repeat the same old arguments. One way out is to bring a fresh mind to the problem, to have a fresh look and to see if a solution can be found.

There is general agreement that the cost of replacing drugs for the chemist is 20 per cent. to 25 per cent. There is also agreement that the return that chemists get on their capital is considerably below that. In effect, in running this part of his shop—if these figures are true—the chemist is subsidising the Health Service. I do not think that we should ask him to do that.

The chemists say that this is one of the reasons why these shops are closing. I gather that the Department is not entirely convinced about this. But we must disentangle this and discover whether the rate of return on capital refers solely to the dispensing side or whether it refers to the complete activity in the shop.

I submit that out of a possible arbitration there should emerge a clear-cut decision to the effect that remuneration received by chemists in fulfilling prescriptions should stand on its own and should not require any subsidy from the chemist. In other words, the payment made by the Government should cover this part of the National Health Service. If the chemist concerned is not a very good business man and loses money on the other aspects of his chemist shop, that is his affair. Certainly the Government could not in that case be blamed for the closure of the shop.

I do not consider it suitable to insert within the provisions arbitration as of right. Although I believe that there should be arbitration, I feel that arbitration as of right should be considered only after we have settled the present difficulty. The argument has now taken place for two years, and that is long enough. We are all receiving far too many letters from constituents saying that people have to take two buses to get a prescription filled. Although I appreciate the view taken by the Department, if the position is as befuddled as it now is after two years of discussions, surely both sides should go to arbitration, state their respective views, and then let the arbitrator decide the way out.

I hope that at the end of this process the fulfilling of prescriptions will not cost the chemist money, but will yield him a reasonable rate of return on his capital. If that happens, I believe that it will remove the current spate of criticism which has been directed at the Department.

5.53 p.m.

Photo of Mr Robin Hodgson Mr Robin Hodgson , Walsall North

I agree with the hon. Member for Coventry, North-East (Mr. Park) that we are all receiving far too many letters from constituents complaining about the declining state of our pharmacy services. I also agree, as we can all see in our constituencies, that too many chemists are closing their premises.

I wish to take up one point made by my right hon. Friend the Member for Stafford and Stone (Mr. Fraser) about the preventive role of the pharmacist. In a debate two or three weeks ago, to which the Minister of State replied, we discussed extensively the importance of taking some of the strain off the hospital services by improving the general practitioner services, and of taking some of the strain off the GP services by improving the health visiting service in the community. In that preventive role the pharmacist has an important, if unofficial, role to play as adviser, informant and articulate and experienced professional in helping people with minor ailments to avoid having to trouble overworked doctors. The Minister of State is very much aware of these factors because he referred to them in the earlier debate to which I referred.

Photo of Mr David Crouch Mr David Crouch , Canterbury

The role of the pharmacist is a tradition that dates back over 100 years. It involves the feeling in the medical profession that the pharmacist is there to help doctors at the point of delivery of medical care. Therefore it is not a new idea that members of the medical profession should expect the pharmacist to give some assistance to the patient who goes to them direct.

Photo of Mr Robin Hodgson Mr Robin Hodgson , Walsall North

My hon. Friend has underlined the point I was seeking to make.

The second point I wish to make relates to the decline of communities—particularly in the urban areas, one of which I represent. The Government Front Bench has wept crocodile tears over the decline of our city and town centres. The fabric of those centres is held together by a balanced variety of shops—green grocers, hardware shops, pharmacists and many others. If that tangled skein of services is broken and if certain of those shops close, the whole balance of the community is lost and the area begins an irreversible decline. It is important that we should consider carefully the effect of the continued rate of closures on the fabric of our urban and inner city centres.

My hon. Friend the Member for Reading, South (Dr. Vaughan) said that the people who use pharmacists to a great degree are the young mothers with children, and also elderly people. The number of the very elderly in our country will increase faster than will the number of the retired. In the next 15 years, the number of elderly people, those between 75 and 85, will increase by nearly one-third, from 2·2 million to 2·8 million; those over 85—the oldest of all—will increase by nearly 50 per cent., from 500,000 to 740,000. Those are the people who are least able to get about and who make the most use of doctors' prescriptions. The decline in the number of pharmacists obviously will affect them to the greatest degree.

I have read the correspondence which the Secretary of State for Social Services placed in the Library about his negotiations with the pharmaceutical services negotiating committee. It is a complicated matter, but it is apparent that there are two points which the Secretary of State has not fully considered. The first relates to the effect of inflation on drug costs. The rate of return on capital employed is affected when the rate of inflation of drug prices is very high.

The Secretary of State's letter to the PSNC of 28th February had two aims. On the one hand, it appeared to be trying to withdraw some earlier promises or vague suggestions of improved rates of return made to the PSNC. It also said: The return for Review Board contracts is based upon capital assessed at historic costs after depreciation, whereas the capital employed by retail pharmacists on NHS dispensing is continuously updated to maintain its value in real terms. It is true that it is updated in real terms because drugs are continuously being replaced at higher prices. Nevertheless, inflation has a serious effect on the working capital requirements of the pharmacist. The pharmacist has to find an ever increasing amount of money to fund the holding of stocks in respect of the same volume of drugs. The point made by the Secretary of State in that letter does not answer the PSNC's criticism.

The second point I wish to make concerns the subject of overheads. Where there is a relationship involving labour, drug costs and overheads—a relationship that is altering all the time—and the return on capital employed is being held steady, one risks squeezing profitability. This is what has happened because chemists' overhead costs have risen particularly sharply, particularly because of the increase in local rates. In my own metropolitan borough the rates have risen two-an-a-half times in the past five years. The effect of that ballooning of overheads depresses profitability of the chemist, and it will eventually drive him out of business if he is not prepared to accept a lower rate of return. I do not believe that the Secretary of State has taken these matters sufficiently into consideration when rejecting out of hand the request of the PSNC for arbitration. He has not even been prepared to consider some alternative suggestions which that committee has advanced, such as a basic premises allowance.

The effect in my constituency is very similar to what has been outlined by other hon. Members. In a small urban constituency we have lost three pharmacists. Two of them cover new housing estates and one is a High Street shop. The people who live on the two large council housing estates will have to travel considerable distances to be able to have their prescriptions filled. It is not good enough for the Minister of State to say that the evidence of pharmacy closures is not clear, because it is perfectly clear. Every contributor to this debate has referred to this point. Each one of us has seen chemists closing and we all have letters from constituents to back up the point.

What is the attitude of the Secretary of State? In his letter of 16th May he said: The effect of the differential scheme"— referring to the treatment given by the Department to small pharmacists— should provide material evidence as to whether the present level and method of distribution of remuneration are sufficient to sustain an adequate spread of NHS dispensing services for patients. The Secretary of State is saying that until the stable has burnt down he is not prepared to do anything. He says that if he then finds that all the chemists have closed he will be prepared to do something about it. We say that the right hon. Gentleman has shown a lamentable lack of attention in many areas of his departmental responsibilities and that this is evidenced by the many debates and Questions that we have had in the House in the past few months. He now has an opportunity, instead of waiting until the horse has bolted before shutting the stable door, to tackle the problem quickly and authoritatively by referring the dispute to arbitration as requested by the PSNC.

6.0 p.m.

Photo of Mr John Ovenden Mr John Ovenden , Gravesend

At the beginning of this Session I tabled Early-Day Motion No. 16 on the need for a comprehensive pharmaceutical service. The motion called attention to the importance to the community of retail chemists, expressed concern about the rate of closures and called upon the Government to make available sufficient funds to ensure a comprehensive pharmaceutical service. In five lines, the motion summed up everything that has been said in the debate. An important aspect of the motion is that it has been signed by 269 Members from all parts of the House and I was sorry to hear the rather partisan note struck by the hon. Member for Reading, South (Dr. Vaughan) at the end of his speech. There is no monopoly of concern on one side of the House about this issue. I hope that now that the hon. Gentleman has heard some of the debate he will accept that.

Many of us welcome the fact that the Opposition have initiated the debate, though some of us regret that it is on a motion for the Adjournment and not on a commendable motion such as Early-Day Motion No. 16, which I would have lent the Opposition for the day if they had wanted it. There is a serious decline in the pharmaceutical services in this country and those services are a vital and often unappreciated part of the National Health Service.

There were 277 closures in 1977 alone. A total of 138 new chemists shops opened, and I am sure that my right hon. Friend the Minister of State will refer to that, but we are still left with a deficit of 139 and, although the rate of closures has been reduced, we must remember that we are starting from a smaller base. We have fewer than 9,000 retail pharmacies in the country and we are moving towards a very serious situation.

It has been suggested that pharmaceutical remuneration is not the sole reason for the closure of chemists shops. I have no doubt that that is true. We have relied for our pharmaceutical services for a long time on the fact that chemists have been able to carry on profitable sidelines. Often profitable retail businesses have been carried on in the same premises. Unfortunately, the changes in retail practice and the growth of supermarkets have made the running of such sidelines impossible. We can no longer rely upon those businesses to subsidise our pharmaceutical services. If we are to have the sort of service that we all desire, we shall have to make sure that the money is made available from public funds to allow that service to continue without the hidden subsidy that has existed in the past.

It is not just the overall decline in the number of pharmacies which must worry us. We should also be concerned about the disparity in different areas of the country. For example, there are 1·3 pharmacies per 10,000 people in Oxford-shire, but 2·4 in East Sussex—nearly twice as many. There are also wide disparities within counties. The position in Kent has been mentioned. In an area of 400 square miles to the east and south of Rainham, in Kent, there is not a single pharmacy. Villages are isolated from pharmaceutical services, and this is most serious.

It is time we recognised that we need to reorganise our services to provide pharmacies in the new areas of growing population as well as in the rural areas, but that cannot be done under the present financial system and within a pharmaceutical service which is starved of funds. There is a desperate need for initial service grants to encourage the establishment of new services where they are needed, and that sort of money cannot be found out of the package that is available to the profession from the Government. We all welcome the support that has been given to small pharmacies, but it is no substitute for the availability of sufficient funds to ensure a comprehensive overall pharmaceutical service.

As has been said, pharmacies provide a vital public service. They provide a prescription service which is sorely missed when pharmacies close, and the people who are hit hardest are the people who need pharmaceutical services but have no personal transport, and those who rely most upon pharmaceutical services are the sections of the population lacking personal transport—the young, mothers with young children, the elderly the sick and the disabled. The categories with the greatest need for prescription services are those that have problems with personal transport as well. They are the people who suffer most.

The chemist shop provides many other important services, including the provision of medicines that, although not dispensed under prescription, are restricted and can be supplied only by registered pharmacists. When one moves into an area where there is no pharmacy, one soon finds that many medicines are not available. This tends to put much greater pressure on the doctors' services, and, as hon. Members have stressed, we want to relieve the pressure on doctors' services as much as possible. The closure of pharmacies will tend to increase that pressure.

In the areas where pharmacies have closed, doctors have taken over the dispensing of medicines. The hon. Member for Berwick-upon-Tweed (Mr. Beith) referred to this point. It fills a gap, but I wonder whether it is a desirable practice. Should we expect the same professional man to prescribe and dispense? Should we remove the very valuable check that exists upon doctors prescribing medicine? That is going by the board as pharmacies close and doctors do their own dispensing.

I hope that the Minister of State has got from the debate the message that there is deep concern on the Labour Benches as well as on the Opposition Benches about this problem. I do not believe that this is the right forum in which to debate and resolve industrial disputes. The right place to resolve such disputes is round the negotiating table. If they cannot be resolved there, the proper place for them to be resolved is through arbitration. We cannot resolve the dispute today. I hope that my right hon. Friend will take the message that the dispute must go to arbitration and must be resolved.

We have been told that arbitration is not appropriate because there is no agreement between the parties about what the dispute is. I have never heard that argument used in an industrial dispute. If there is a disagreement about what each side is saying, the best way to resolve it would be for each side to put a statement to the arbiter so that he may decide what the dispute is and how it can be resolved.

We have had two years of negotiations and arguments about this issue. If we have not yet got to the position where one side can find out what the other side is talking about, we shall not get much further if we continue along the same road. That is the most overwhelming case for negotiation; and I hope that the Minister will accept that this is the only way that the dispute can be resolved.

6.8 p.m.

Photo of Hon. Robert Boscawen Hon. Robert Boscawen , Wells

I agree with the hon. Member for Gravesend (Mr. Ovenden) that we all recognise the complex nature of the dispute. I do not intend to make light of the difficulties faced by the industry, the negotiating body and the Government, but I am concerned about the Government's case for not going to arbitration and we ought to examine that case for a few moments.

The Government have made out a favourable case for what they are doing. They have explained carefully that they have introduced the new system of differential on-costs to help small pharmacies at a cost of £5 million. The Government say that this should be given time to work. They have also spelt out the bargain that the pharmacists have with the NHS, whereby the cost of NHS drugs is reimbursed fully, as is part of the cost of overheads and labour. They say that a single-handed dispenser has about 85 per cent. of his time reimbursed under the present system. On the surface, he appears to be favourably treated.

Furthermore, the Government maintain that the pharmacist is given freedom from interference by the Government in the way in which he carries out his work, within his professional rules and qualifications. He is given freedom to choose the conditions of his work, the hours of his work and the position of his shop.

That is the Government's case. They maintain that they are helpful to the pharmacist, including the small pharmacists, and fair to the taxpayer. Thus, it is the more extraordinary that when that case is challenged by the industry, largely on technical grounds, the Government should not put their terms to the test and go to arbitration.

Why is that so? I find the Government's reasons not very convincing. In principle, the Government are not against arbitration. They say that arbitration should not take place yet as the negotiating committee has not defined the areas of disagreement precisely enough. They want more information. The Secretary of State has asked for much more information from the PSNC. They want to know much more about its complaints before they agree to negotiation.

I shall now be unreservedly partisan. Has not the PSNC tried for two years to produce the evidence—namely, that pharmacists are not receiving proper remuneration for the inflationary effect on replacement of drugs stocks? It seems that the disagreement between the industry and the Government is not on precise technical calculations but much more on a doctrinal issue that has hardly been touched upon in the debate.

We are dealing with a major part of health provision. It is the major part that remains within the private sector. The issue is really about the extent to which the near-monopoly customer should have the right to determine the shape, size and distribution of the remaining retail pharmacies without taking them all into the ownership of the National Health Service. Is not the area of disagreement really about whether a private professional individual may get a fair reward for his own services or whether he will be quietly driven from the scene, as happens so often in other small retailing businesses, and replaced eventually by large, central health-centre pharmacies that will provide drugs direct from the NHS to the individual without going through the hands of the private sector?

That issue must be considered in the light of the debate. As the smaller retail pharmacists become fewer and fewer, will not the Government have in the end to step in and supply the essential service to the public by some central means, possibly through health centres or local district hospitals?

Is not the Government's case given away when they argue that they cannot finance the working cost of replacing drugs to meet the inflationary spiral in the private sector, because if they did they would, in effect, be assisting private businesses towards their working capital? They say that if they were to assist private businesses in that way they would require in return their Danegeld, which would be radically to change the freedom of the retail pharmacist to practise where and how he wants.

There is a philosophical divide even though it has been hidden to some extent. Are we moving towards a State service as an appendage to the NHS, or do the Government want to retain pharmacies in private hands, spread evenly where they are most needed and where they are most desired?

Photo of Hon. Robert Boscawen Hon. Robert Boscawen , Wells

No. I know that other hon. Members wish to take part in the debate. The hon. Member for Liverpool, West Derby (Mr. Ogden) had his say earlier.

Photo of Mr Eric Ogden Mr Eric Ogden , Liverpool, West Derby

The hon. Gentleman has made a serious charge against the Government.

Photo of Hon. Robert Boscawen Hon. Robert Boscawen , Wells

It is a short debate and I must be allowed to continue. The hon. Gentleman has made his speech and the Minister will reply. If the case is wrong, the Minister will say so when he replies. I do not have any quarrel with what the hon. Gentleman said, as he made a fair and knowledgeable speech.

Photo of Mr Eric Ogden Mr Eric Ogden , Liverpool, West Derby

I trust that my right hon. Friend will take up the lion. Gentleman's argument when he replies.

Photo of Hon. Robert Boscawen Hon. Robert Boscawen , Wells

The truth is that smaller retail pharmacists are going out of business in dangerous numbers, especially in rural areas. If that is denied by the Government, let them consider how few young people are going into the retail profession. Let them consider how very few young people are buying their way into retail pharmacies. Some of the older chemists want to retire, but in many instances they are locked into their businesses by disastrous rates of remuneration. They have lost the good will on which they would like to retire, and they cannot sell.

The public are suffering both from the fact that there are no young people coming into the retail profession and because we are getting an ageing population among the existing retail pharmacists. About 30 per cent. of retail pharmacies are now in the hands of pharmacists over the age of 60 years. I do not wish to labour the point that many hon. Members have made that the reduction in the number of small neighbourhood pharmacies is most harmful in both rural and urban areas. Help the Aged has made some most telling points in the document that it circulated to all hon. Members. It makes a plea to the Government to agree to the procedure of arbitration immediately in order to prevent further hardship to our elderly people. I and other hon. Members endorse its plea.

I hope that the Government will give a firm recognition of the value of the small, individual neighbourhood pharmacist and not go along the road on which I fear they may be going. I fear that the Government would not be sorry if all small pharmacists disappeared and the State took over the whole machinery.

6.18 p.m.

Photo of Mr Ivan Lawrence Mr Ivan Lawrence , Burton

In general, I think that we have seen in this debate the spirit of what my hon. Friend the Member for Chelmsford (Mr. St. John-Stevas would call ecumenicalism. Therefore, I wish to be even fairer to the Government than I usually am. It is fair to say of the Government that they are not ignorant of the problem. It is fair to say of the Government that they have done something to try to relieve it, as I think the Minister will say when he replies.

To be fair to the Government, however, they have been in power for four years. During that time there has been an unacceptable number of closures. During that time the need for more pharmacists has been growing as the number of elderly people has been growing. During that time the pharmacists who have remained in business have been increasingly demoralised and have become increasingly angry. During that time the profit margin available to pharmacists in business has been declining. The whole argument has been dragging on for two indescribable years, for which there can be no possible excuse.

I am trying to be fair to the Government.

Photo of Mr Ivan Lawrence Mr Ivan Lawrence , Burton

I am trying to state the position as it is. I should like to read from a letter which was written to me by a pharmacist in one of the villages in my constituency. He says: In our own pharmacy, our accounts for 1976–77 show, for the first time ever, a loss in our trading position. This is due in no small part to the lack of profitability in the National Health Service side of the business. I ask the Minister to take that on board, because in his letter to each of my pharmacists the Minister suggests that loss of profitability is not a substantial feature.

The letter goes on: If this present trend continues, then a village with nearly 5,000 people living in it will be without a chemist in the future as we are not prepared to subsidise the Health Service ad infinitum. Our standard of living is seriously threatened and at present we feel totally frustrated with the attitude of the Secretary of State". The position has now been reached when something more has to be done than the Government have already done. They must try to break this log jam. Surely they undesrtand that.

I should like to make two points in relation to my constituency which I think the Minister should take on board. First, national figures or the ratio of pharmacies to people or for the rate of closure do not necessarily reflect the true situation in particular areas. That point has been made by other hon. Members. For example, the national ratio of pharmacies to population is 1:5,100, but in the Burton division it is one pharmacy to 8,500 people. Many villages have no pharmacy at all. Some have no pharmacy, no general practitioner and no branch surgeries. I refer to such villages such as Stretton with a population of 4,300 Rolleston with 3,800 and Branston with 3,800. The result is that about 40 per cent. of the population of the Burton division—50,000 out of about 120,000 people—are cut off completely from access to a chemist within a reasonable distance. That is completely unacceptable, and the national figures do not reflect that situation.

In additon, rural areas are receiving more and more old people and it is no longer possible for many of the elderly, young mothers, the handicapped and the disabled to afford to travel on buses, let alone to own cars.

The second point, which really follows from the first, has not really been made often enough in the debate. It is necessary not only to stop further closures but to set up new pharmacies. That will not be achieved if we have fewer pharmacists in training. We need new incentives from the Government for new pharmacies, not just to keep the present pharmacies going.

It may be that the Government have a strong case. If so, that is all the more reason to allow this matter to go to arbitration. Then they can prove for all the world to see the excellence of their argument. Then the pharmacists, being reasonable, devoted public servants, will cool their anger and their morale will rise. That is all that we are asking for. It is what the Government always themselves demand in industrial disputes. What on earth frightens them from going to arbitration on this occasion?

6.23 p.m.

Photo of Ms Audrey Wise Ms Audrey Wise , Coventry South West

It would be unfair for the House to blame the Government for the decline in the number of pharmacies. This matter has not suddenly arisen; it has been going on for a considerable time. That having been said, we recognise that the Government will have to do something about the situation. We may not blame them for the decline, but we are entitled to look to them to arrest the process and to improve the situation. Genuine concern is widespread.

The Association of Community Health Councils expressed its concern to the Royal Commission on the National Health Service. The association gathered evidence from no fewer than 70 community health councils. I think that when 70 community health councils express concern, the Government must bend an ear to it.

In 1952 Coventry had 87 pharmacies, to serve a population of 258,000. Now it has only 58 pharmacies to serve a population of 337,000. That, to save my right hon. Friend the Minister working it out, means a decline of almost halt in real terms. We had one chemist for every 3,000 people. Now we have one chemist for every 5,800 people. This is a very serious matter. Although I do not join in any chorus of condemnation, I must join in the appeal to the Government to do something about this matter.

I am sure that part of the decline in the number of chemists' shops can be attributed to the business in profitable lines being taken by supermarkets and so on, as has been pointed out. However, it is not good enough to look only at the cause. We must now look for a cure.

I suggest that at some time the Government might look at the profit being made by pharmaceutical manufacturers, which seems excessive. Perhaps some balancing should be done to give a fairer rate of return to small businesses in the retail sector. The Government might counterattack on that matter. I appeal to my right hon. Friend to meet the debate sympathetically.

6.26 p.m.

Photo of Mr Michael Shersby Mr Michael Shersby , Hillingdon Uxbridge

The hon. Member for Liverpool, West Derby (Mr. Ogden) said that unfortunately there was not a pharmacist in the House. Of course, he is right. Therefore, I hope that I may offer the House the next best thing as I am in fact a pharmacist's mate. If I have an interest to declare, Mr. Deputy Speaker, no doubt you will allow me so to declare it.

We have had an interesting debate, which I warmly welcome. I have only a couple of minutes at my disposal. The situation in my constituency, as in other constituencies, is very grave. One pharmacist in my constituency recently told me that, on the present basis of payment, his profit last year was 1·9 per cent. and that, although it may rise slightly due to the changes which took place in 1977–78, it is unlikely to exceed 2·4 per cent. That is totally unacceptable not only to retail pharmacies but to almost any business, be it retail or wholesale. It simply cannot go on.

The Minister knows full well from the debate tonight that the House wishes the Government to allow this matter to go to arbitration. It is no use the Government saying that they do not know what the chemists' case is. They must know. If not, it is their duty to find out pretty quickly. Every hon. Member who has spoken in this debate—it has been a good one, lacking in party acrimony—has made it clear that the House expects the Government to solve this problem. The Government are in power. They are responsible for ensuring that this branch of the National Health Service is able to discharge its duty to the public.

People are very worried because they see not only pharmacies closing but a lack of dentists. I had an Adjournment debate only two months ago about the village of Harefield in my constituency, where there is now no longer a National Health Service dentist in practice. I hope that I shall not have to come back to the House shortly on an Adjournment debate because there is no pharmacy available in my constituency. This is a serious matter to which the Government must pay urgent attention.

The hon. Member for Nelson and Colne (Mr. Holye), in an unhappy departure from what I regarded as a pleasant debate, referred to the vast profits made by the pharmaceutical industry. I admire our pharmaceutical industry. I suggest that no other pharmaceutical industry in the world ploughs back so much of its profits as the British pharmaceutical industry to develop new drugs, to the enormous benefit of our population. Therefore, I hope that we shall not hear any more on that score.

I say to the Minister, quite simply, get cracking. We have sat here long enough listening to excuses. We all know what the problems are. If the Minister does not know, we can tell him. We expect results, and we expect a reply tonight to the effect that this issue will go to arbitration without further delay.

6.30 p.m.

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Redbridge Wanstead and Woodford

When one finds in a debate that my hon. Friend the Member for Burton (Mr. Lawrence) and the hon. Member for Coventry, South-West (Mrs. Wise) are speaking virtually with a single voice, one is forced to conclude that either the millennium has arrived or they have a very strong case indeed. The millennium has not arrived, but I think that the Minister can be left in no doubt whatever of the view of the House on this issue of the pharmacists' contract.

Though this debate, to which we have devoted the half-day at our disposal, is entitled "The Problems"—with an "s"—"of Pharmacists", and many speakers have referred to the difficulties which they face from the supermarkets and elsewhere, the debate has concentrated largely on the dispute between the Department and the pharmaceutical services negotiating committee over the remuneration for NHS dispensing.

I think it is significant that we have had a large number of speakers in a relatively short debate and every single speaker—I hope that the Minister of State has taken this on board—has urged the Minister to go for arbitration.

I think that the hon. Member for Birmingham, Yardley (Mr. Tierney) put his finger on one of the causes of the difficulties which we face, and that is the attitude of the right hon. Gentleman's Department to the pharmacy trade. "Mistakenly", said the hon. Member for Yardley, "the retail end is not considered important". One has only to remember the row in January of this year over the Medicines Act regulations, when apparently no account at all had been taken of the relabelling requirements of the retail pharmacist.

There is the more recent case of the joint effort by the Department and the BMA to limit drug prescribing. This is something that is going to have a profound influence on retail pharmacists, and yet they were never even consulted on this matter at all. I think that the hon. Member for Yardley laid a true bill.

The nub of the pharmacists' case on the contract was very well put by my hon. Friend the Member for Walsall, North (Mr. Hodgson) and can be stated, briefly, as follows—and I hope that the Minister will not take refuge in the rather foolish pretence that the Government do not know what the case is. The profit margin on NHS prescriptions is based, among other things, on the average capital employed. This includes an estimate of the average stockholding of drugs. The prices of the drugs which the pharmacist has to buy have risen sharply, much more sharply than the general level of the retail price index. So, forced by the shortage of cash, they have, over the last few years, had to cut back on the levels of stock which they hold. My hon. Friend the Member for Reading, South (Dr. Vaughan) gave the figures—from 11 weeks' supply to seven weeks' supply.

The result has been, under the contract, that this gave a reduced estimate of the capital employed and, therefore, a reduced profit. It also had the effect, for the customer, of reducing the ability of the pharmacist to supply in the quantities required, and, therefore, there has been a reduced service to customers.

It is this vicious spiral which is the real nub of the problem. If profitability is cut, the cash flow is cut. That must lead to still lower stocks as chemists trim back to live within their cash availability, and that gives rise then to a further cutback in the gross profit margin. The result, as speaker after speaker has said, is a steady increase in the number of closures of pharmacies.

There is to be no let-up this year, despite the more encouraging figures in the first three months. The estimate of drug costs in 1978 is that they will go up by some 21 per cent. as against the general estimate of the Government of single-figure inflation, and this can only further exacerbate the trouble.

Nobody, of course, could argue that it is for the Government to supply the capital for the expansion of the business, but surely to goodness the formula must provide for the maintenance of the level of the business in NHS prescribing. This it is not doing, and this is what ought to be done. The case is exactly the same as that—I say this in one sentence, and no more—when the Chancellor of the Exchequer recognised for corporation tax purposes the need for stock financing relief. It was exactly the same point. In order to maintain the level of the business, one has to give special relief in periods of high inflation.

The Minister has tried, in his correspondence with hon. Members and in his notes to the House, to throw dust in our eyes, and we had all the business about redistribution. He has on other occasions said that the question of reallocation of funds between large and small pharmacists is an entirely separate exercise. But it really was going beyond the limit when the Department put out the Press release on 13th December: Agreement reached on pharmacists' remuneration". Many of the Press took this up and thought that this whole problem had been solved, but it had not. It was only about the redistribution element. There was nothing in that about the question of stock financing.

We have had mention of the £5 million extra put in, but the hon. Member for Nelson and Colne (Mr. Hoyle) dealt with that. I shall not weary the House with those figures again, but it is £5 million plus, but some £17 million minus as a result, over the three years, of the change in the profit margin.

There is the claim that the Government do not know what the case is. It seems essential to have the area of disagreement precisely defined before arbitration could be considered. So wrote the Minister of State to my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) a few weeks ago. I hope that the Minister does know what the case is about and that we shall not have any more of that argument.

As the hon. Member for Gravesend (Mr. Ovenden) rightly said, surely if there is confusion, and there is an argument which has gone on for two years about this, and neither side seems to be able to make the other understand its case, that is a classic case for arbitration, for a third, fresh mind to come in, look at the problem and reach a conclusion.

It is not as though that would be something new. As the right hon. Gentleman must know, one of his predecessors did exactly this. Kenneth Robinson, when he was Minister of Health, said this—and I am quoting from the Pharmaceutical Journal, which is the only version of what he said that I have been able to find. Writing to the PSNC, Mr. Robinson said: the Minister would naturally regard it as preferable that his representatives and yours should achieve a fair and mutually acceptable settlement through the normal negotiating process which has in his view served both sides well in the difficulties of the last few year…but in the present circumstances, and in view of the anxieties which you told us were felt by your committee, if you do decide to seek the Minister's agreement to a joint approach to an agreed arbitration the Minister would consent to such an approach. Well, if Mr. Robinson could do that, why on earth cannot present Ministers do it?

The situation has many parallels, and the House has today made clear what it requires. The House is reflecting the public anxiety. The petition presented last night by my hon. Friend the Member for Beeston (Mr. Lester), with nearly a million signatures, collected in less than four weeks, is evidence that the public are seriously concerned about the decline in the number of community pharmacies.

The figures have been quoted over and over again. The Minister may take refuge in the recent slowing down of the rate of closures, but again, to quote the Pharmaceutical Journal of 1st April: It is as yet too early to be able to predict a continuing improvement. The pharmacists have been greatly provoked, but they have shown great responsibility. The Minister will know that they had that dramatic Sunday meeting on the premises of the Pharmaceutical Society on 2nd October last, and at the end they said they were not going to strike. As The Daily Telegraph put it, Chemists will not strike because their moral sense will not allow them to cause public suffering to achieve their ends. Mr. Robert Worby, chairman of the Pharmaceutical Services Negotiating Committee, said yesterday. Would that that might be imitated elsewhere in the Health Service—but that we shall have on Monday.

It really is now up to the Government to respond constructively to the demands that have come from all sides of the House. My hon. Friend the Member for Wokingham (Mr. van Straubenzee) said—and I think I quote—"The Minister has resolutely set his face against arbitration." But what is the Minister actually saying? In the same letter to my right hon. and learned Friend, he says that he has not ruled out arbitration in principle. I would reword my hon. Friend's statement and say that the Secretary of State has irresolutely set his face against arbitration. I really must ask: why cannot the Minister now say "Yes, very well, we agree. We accept the will of the House and we agree to arbitration"?

I am sure that neither the Minister nor the Secretary of State wants the reputation of being someone who yields only to pressure and never to reason. Here is a chance for the Minister to make it clear that he wishes to preserve his reputation as a man of reason, a man who is open to persuasion and who, when faced with a case as strong as that which has been made from all tides of the House today, will accept it with good grace and go to arbitration.

6.40 p.m.

Photo of Mr Roland Moyle Mr Roland Moyle , Lewisham East

I reiterate the view already expressed that it has been a good occasion on which to have a debate. We must thank the Opposition for setting aside a half-day in order to discuss the affairs of pharmacists, particularly retail pharmacists. My hon. Friend the Member for Nelson and Colne (Mr. Hoyle) was the only person to stray outside that subject, although my hon. Friend the Member for Coventry, South-West (Mrs. Wise) also mentioned other aspects.

In the past year, hon. Members on both sides of the House have expressed a greater interest in general practice pharmacy than perhaps at any time since the inception of the National Health Service. This is excellent. It allows us to review the situation. But a great deal of what is said about pharmacy is misinformed or ill-informed.

I welcome the opportunity to make what I regard as an accurate statement of the position. I stress and reassure hon. Members that the Government fully recognise the value of the local pharmacy. When I spoke to the pharmaceutical conference in Sheffield last year, I described our network of pharmacies as one of the prime assets of the National Health Service. It is more than a prime asset—it is essential. We do not see the pharmacist's role as being limited to dispensing National Health Service prescriptions. Pharmacists offer an authoritative source of advice on drugs and their use to both doctors and patients. They must be regarded as an integral and important part of the primary health care team, and we wish to develop the role of those teams.

No other profession is as widely distributed as the pharmaceutical profession. What profession could supply a walk-in service on a street corner in every tiny community? That is one of the first essentials that we must meet. I share the general concern of the House that over the country as a whole the number of pharmacies is declining. Naturally, we wish to do something to stop that decline. The present position arises from a large number of causes, some of which have been mentioned. For example, market forces have been the prime factor in the creation of the existing distribution of pharmacies. By and large it is an adequate, if not ideal, distribution which serves the needs of the majority of the population. I stress the word "majority" because there are sections of the population which even today have an inadequate provision of pharmacies.

Pharmacies are usually near doctors' surgeries or in shopping areas—the sites preferred by patients. However pharmacies are distributed, and no matter how near the nearest pharmacy is, there will always be some people, the less mobile and particularly the elderly, who will find it hard to get to a pharmacy. I urge people to assist elderly people to obtain their prescriptions, whatever is the ultimate outcome of the problem. Obtaining an elderly neighbour's prescription was the kind of unobtrusive community self-help that we had in mind when we launched the successful good neighbour campaign.

As the right hon. Member for Wan-stead and Woodford (Mr. Jenkin) said, the debate has been dominated by the distribution of pharmacies because they are closing and the financial arrangements which might limit those closures or reverse the tide. Already this year 100 new pharmacies have opened. The position, therefore, is not one of a total desertion by the profession of the retail trade.

Photo of Mr Roland Moyle Mr Roland Moyle , Lewisham East

I shall not give way. I have only 20 minutes left. My record in giving way in debates is good. I shall not give way this evening.

Many pharmacies are still flourishing in the retail trade. But one of the major factors in the decline in the number of pharmacies in recent years is the change in shopping habits. This has been mentioned in the debate and there is agreement about it. The change of habits involves the growth of supermarkets competing for sales of goods such as toiletries which traditionally are sold in pharmacies.

Movements in populations cause a problem throughout the Health Service. As my hon. Friend the Member for Liverpool, West Derby (Mr. Ogden) said, we must also consider the redevelopment of city centres. I am sure that the Secretary of State for the Environment will take my hon. Friend's remarks to heart and consider that aspect of the problem.

We must also consider the movement of general practitioners which sometimes leaves pharmacists stranded. Sometimes there are too many pharmacies for modern conditions.

National Health Service income now represents 60 per cent. of the average pharmacy's turnover, compared with about 40 per cent. a decade ago. This means that we have a special responsibility as a Government to ensure that the National Health Service contract gives pharmacists a fair deal. It is clear that the flat-rate system of payment for NHS dispensing, which was operated at the wish of the profession from 1964 to the end of last year, made the smaller pharmacies increasingly vulnerable to the pressures that I have described. I confess that, looking back, I am sorry that the system of remuneration was not changed earlier.

There is a decline in the number of pharmacies. There might have been a slowing down in the rate of decline in the last two years, although I do not wish to make too much of that at this stage. The net decline in pharmacies in 1977 was 138, the lowest number since 1963. That is only relatively cold comfort. It compares with a net loss of 215 in 1976 and 288 the year before.

I do not make too much of the trend this year. We shall have to wait and see how it develops. The trend of the last two or three years has continued this year. Provisional figures for the first five months of this year show a net loss of 59 pharmacies, compared with 80 in 1977. This leaves us with 10,750 pharmacies. The closures have caused inconvenience and individual difficulty for many sections of the community and have accentuated the problems of the less mobile and, therefore, the elderly. We are anxious about this problem in the Department. We shall watch the situation closely.

It is interesting to note that, of the 307 pharmacies which closed in 1977, only four were more than one mile from another pharmacy. Of the 169 which opened, six were more than one mile from their nearest neighbours. That shows that there are trends which are to the advantage of the network as well as the trends that we have been discussing today.

With the agreement of the pharmaceutical services negotiating committee, additional financial help is already provided to small pharmacies serving areas where there are no other pharmacies within easy reach. The basis for this special help is kept under constant review. Last year we helped 270 pharmacies in that way. We are hoping that this scheme, with the changes in the remuneration system which were made earlier this year, will help to safeguard the future of small pharmacies.

We have no plans for introducing powers of direction to compel a pharmacist to open up a business in a particular locality or to take over the network of pharmacies. Our desire is to support the existing network, broadly speaking on the basis of the system as it has existed since 1948 and the inception of the Health Service. We have no intention of introducing any nationalisation or public ownership in this sphere. I hope that that will satisfy my hon. Friend the Member for West Derby and the hon. Member for Wells (Mr. Boscawen).

I recognise that remuneration is the key point in this debate. Let me explain how it works. Each month pharmacists are reimbursed for the cost of drugs they have dispensed in the previous monthly period, and they receive, in addition, remuneration for the dispensing of those drugs. The remuneration consists, first, of professional fees per prescription and, second, of an on-cost which is a percentage of the cost of drugs supplied during the month. The rates of remuneration are designed to meet the costs to the pharmacists of labour and overheads involved in dispensing and to provide a profit at present at the rate of 16 per cent. on the cost of a pharmacist's capital employed in National Health Service dispensing.

Pharmacists' costs attributable to National Health Service dispensing are ascertained by means of comprehensive inquiries every three or four years on a statistically representative sample of pharmacies which is selected by the Department and the pharmacists' representatives, and by reference to movements in the retail price index and other appropriate indices. Thus, there is a built-in defence against inflation in most cases for most of the time. The system is complex. The object of the complexity is to make sure that as far as possible the system is fair. I must tell my hon. Friend the Member for Coventry, North-East (Mr. Park) that the prescription side of the business is designed to stand on its own.

Until this year the on-cost element has been calculated at a flat rate of 10½ per cent. on the cost of drugs supplied: but the pharmaceutical services negotiating committee submitted evidence which showed that, on average, small pharmacies were not receiving enough income on that basis even to cover their operating costs, let alone make a profit, and were therefore in danger of closing in increasing numbers. The evidence also showed that the larger pharmacies received substantially more profit than the NHS scheme was designed to produce. In order to remedy this situation, my right hon. Friend in consultation with the committee, decided last December to adopt a differential system of remuneration which more closely matches the unit operating costs of the individual pharmacy. That is why hon. Members cannot talk about the remuneration of the pharmacist. We are concerned here with a whole range of remunerations which depends to a very large extent on the individual pharmacist. To help to smooth the introduction of the scheme, the Government provided £5 million from public funds.

The new system, which has been introduced by stages since the beginning of this year, will not be in full operation until next month. So the question of remuneration is developing, but it means that a chemist who dispenses only up to 249 prescriptions will get a 26 per cent. on-cost, whereas one who distributed 5,000 prescriptions or more—and of course, that would be the larger pharmacist—would get a 9 per cent. return. The scheme will be of considerable benefit to small pharmacists, some of whom will be receiving increases in their National Health Service remuneration of about £2,000 a year.

I turn now to the profit margin. Our agreement with the pharmacists provides that on average capital employed in the National Health Service business by pharmacists on fixtures and fittings and stocks of drugs, the value of which is continuously updated to present-day price levels, the Government will pay a 16 per cent. rate of return, which in the light of current interest rates is not ungenerous. It means that for most of the time chemists have been able to go to the bank to borrow money at rates of less than 16 per cent. and employ that money to get a return of 16 per cent. That is to their advantage and it is a good thing. The 16 per cent. rate is increased in terms of absolute remuneration with the increase in value of the working capital. I admit that rapid inflation of a couple of years ago presented pharmacists, as it presented other businesses, and trades, with a cash flow problem, but apart from brief periods I think I have described the situation quite accurately.

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Redbridge Wanstead and Woodford

Does not the Minister agree that a 21 per cent. increase in drug costs this year will create great problems?

Photo of Mr Roland Moyle Mr Roland Moyle , Lewisham East

The right hon. Member is describing the position inaccurately, because the 21 per cent. increase in pharmacists' costs is caused not solely by an increase in drug costs. It arises from at least three different factors—the handling of a larger volume of prescriptions, the introduction of new drugs and, of course, the increase in the price of drugs. If the right hon. Gentleman bases his approach to the problem on that sort of misinformation, it is no wonder that he is misleading the House.

I turn now to the question of arbitration. We are certainly not opposed to arbitration. The Government have not ruled it out. We think that at some stage it may well be a useful piece of machinery to resolve the dispute between ourselves and the pharmacists—

Photo of Mr Ivan Lawrence Mr Ivan Lawrence , Burton

Then why do not the Government use it?

Photo of Mr Roland Moyle Mr Roland Moyle , Lewisham East

I shall tell the hon. Gentleman. First, we do not know what are the precise points of dispute with the pharmacists. That has been said in the debate and it is true. My hon. Friend the Member for Gravesend (Mr. Ovenden) suggested that we should put the matter to arbitrators. I have never known of a case, in spite of what has been said this afternoon, where parties go to an arbitrator and ask him to tell them what they are arguing about. That would put the arbitrator in an impossible position. Once the parties have decided what the disagreement is, the arbitrator can propose a solution to the problem. But until that happens the arbitrator, whether an industrial arbitrator, as has been mentioned in the debate, or any other, simply cannot operate.

We put an entirely new scheme to the PSNC last December. That scheme was accepted and it is now developing. Its final stage, with its impact on small pharmacies, which are the most vulnerable, comes into operation next month. Its full impact, therefore, will not be known until some time afterwards. It may be that when we have seen how that scheme is operating we shall need to do more. It may be that at worst we shall then have a position of disagreement between the various parties to the dispute and that we can go to arbitration. But against a developing background we have put various points to the negotiating committtee on which we have not had a reply, and it is very difficult to go to arbitration at this stage.

We have put three points to the PSNC. The first is the invalid comparisons made by the PSNC with the rates of certain Government contractors covered by the review board formula. The second is the erroneous assumptions made by a well-known firm of consultants when formulating the original profit margin on behalf of the PSNC. The third is the fundamental changes which would be required in the present contractual arrangements if, as the PSNC has claimed, the rate of return on capital were to be increased so as to provide the additional capital which the pharmacists require to maintain their stocks.

If the PSNC can reply on those points, we are half-way to arbitration. I agree that it is most difficult to make a judgment of a developing situation, and that seems to me to be an argument for not going to arbitration at the moment but for holding our horses.

It will be generally agreed in the House that the sensible thing to do—and the right hon. Member for Wanstead and Woodford quoted the remarks of Kenneth Robinson with approval—would be for the parties to a disagreement first to try to settle the matter themselves. An argument which is submitted to an arbitrator to settle is never settled as satisfactorily as the parties themselves can settle it. Those are the problems to be faced in going to arbitration.

Photo of Mr Donald Coleman Mr Donald Coleman , Castell-nedd

I beg to ask leave to withdraw the motion.

Motion, by leave, withdrawn.