Driver shortage in the UK exacerbated and reaching ‘crisis point’
Even though the driver shortage issue is not a new one, it has rarely been this acute, problematic and in urgent need for resolution. Lorry drivers are lost in a sort of Bermuda triangle of Brexit, pandemic and tax reforms/peak seasons, leading to a pressing staff shortage threatening to affect the public by the end of summer in the UK.
Brexit effectively ended recruitment from the EU, making it legally impossible to recruit foreign HGV drivers; the COVID-19 pandemic created a backlog of tests and saw around 15,000 Eastern European driver returning home; finally, newly introduced tax reforms exacerbated the exodus of EU drivers from the UK which will only get worse over the coming summer.
According to Driver Require’s report on the issue of driver shortages in the UK, from 2010 to 2017 the number of EU nationals driving HGV in the UK rose from 10,000 to 45,000, and fell to 42,000 in early 2020, possibly related to Brexit. From March to June 2020, the number of EU HGV drivers declined by another 15,000, to 25,000, recovering only slightly to 28,000 by the end of the year. Additionally, the pandemic is also believed to have accelerated the retirement rate in the industry.
Cancellation of HGV driver tests
Companies, industry associations and leaders have been lobbying for HGV drivers to be put on the shortage occupations lists, however, the government’s position remains unchanged on its post-Brexit immigration regime. This is still considered to be the simplest solution by industry stakeholders due to a six-month lag for recruitment and training on top of a limited pool of candidates. Otherwise, the results could be a 15-20% increase in transport costs. Alex Veitch, Logistics UK’s General Manager, argued the government needed to act faster on prioritising cancelled driving tests and creating grants providing driver training.
Tax Reforms for haulage companies
The so-called IR35 reforms by HM Revenue & Customs required all contractors with a turnover of £10m or 50 staff to pay full tax and national insurance on their drivers, starting in April 2021. Peter Foster, writing for the Financial Times (FT), reported that even though this was widely welcomed by industry leaders, the reforms were adding to the shortage, who reject the drop in incomes that come with regularising their tax status. “The initial departure was driven by Covid, but we estimate that another 5,000-10,000 are leaving now because of IR35. A lot didn’t pay correct limited company taxes, but even with inflated wages, it’s still not enough to get the same net income”, said Kieran Smith, Chief Executive of Driver Require, a recruitment agency. Driver Require’s research suggested around 12,000-15,000 EU drivers left partly due to the pandemic and another 5,000-10,000 left due to the tax changes.
Upcoming peak seasons
Driver Require estimates a most likely driver reduction of 22,000 since the beginning of the pandemic, which will be compounded by lifting of lockdown restrictions and reopening of hospitality venues and high street shops, likely to begin from mid-2021. This will also coincide with travelling, which is likely to include HGV drivers taking summer vacations. The report highlights that this deficit would typically be covered with incoming European workers, however, those are no options this time, as the new points-based system prevents them completely from entering the UK as HGV drivers.
However, the consequences are not only a lack of product variety and a price increase, but the incredible food waste resulting from it. Tesco has told ministers nearly 50 tonnes of fresh food intended for its stores is being thrown every week because of the shortage, reported Katie Grant for iNews. Grant reported that, “shelf-life of fresh produce is reduced and can spoil before it even leaves the wholesalers while supermarkets often deem short-dated goods delivered late to distribution centres and stores unsellable”. Meanwhile, Tim O’Malley, Group Managing Director of Nationwide Produce, a UK-based fresh food shipping company, recently wrote and confirmed that “food [was] being left to rot or get thrown away because of the shortage of truck drivers.
The UK is facing one of its most severe periods of the driver shortage to date, an issue that has been compounded with the pandemic, motivating many European drivers to return to their home country and not being able to return due to Brexit’s immigration regulations. Further pain points are the approaching summer holidays, continued unlocking of the economy and peaks in demand over the summer, that could even affect Christmas preparations.
Source: Foundation for Future Supply Chain, July 27, 2021
Author: Dila Cebeci