Medequip provides community equipment, wheelchair services and technology-enabled care for over 1.5 million people annually, enabling them to be discharged from a hospital or continue to live safely in their homes. We employ 1700 people and operate over 50 contracts for local authorities and the NHS fulfilling the prescriptions for all types of equipment ordered by occupational therapists and other medical professionals.
We are writing to each MP whose constituency covers one of our distribution centre locations, as the proposed tax increases will profoundly impact all who depend on us. Like GPs, pharmacies and hospices, we are independent businesses that provide a critical service for communities. The state ultimately funds our work; we deliver an essential public service.
The current Budget measures risks eroding the quality of our public services. To remain viable, these services require appropriate levels of state funding to meet our communities' varied and growing needs.
While we acknowledge the government’s responsibility to address the budget deficit, the new Budget measures threaten to deepen an already critical funding shortfall in our sector.
Impact of National Living Wage Increase and Employer Costs from April 2025:
Employer National Insurance contributions will now commence at a lower £5000 earnings threshold, and the rate increases from 13.8% to 15%. The minimum wage for those over 21 rises 6.7%. Navigating these challenges to stay competitive and financially solvent will require the business to leverage all available resources to achieve long-term sustainability.
Taken together, the living wage increases, and employer NI changes have a compound impact. We estimate that these two measures alone will add at least £3 million annually to our projected operational costs.
We are also faced with significant additional financial pressures in view of the continued inflationary rises in supply chains evidenced over the past couple of years, aggravated by international conflicts and the associated rising freight costs.
Cost assessment by the OBR and KMPG comment:
The Office for Budget Responsibility (OBR) calculated that these changes will cost a company around £800 a year for each employee.
“This change to employer’s NIC will impact large employers, and together with the increases in the National Living Wage will increase the economic burden of employing labour.” Paul Harden, Tax Director, KPMG UK
How can we try and respond?
As a public service provider, Medequip will seek to innovate to help mitigate these increased costs brought about by the changing fiscal dynamics. It is inevitable that we will have to ask our local government and NHS customers to support us, but we also recognise and acknowledge the budgetary pressures with which they, too, are contending.
The impact challenge is significant for Medequip. However, we will maintain our commitment to resilience and adaptability. We will achieve this by working closely with our customers and the people who use our services to optimise our activities in every area.