Experts warn that IR35, alongside Covid and post-Brexit regulations, is fuelling the UK’s HGV driver shortage
The government recently announced temporary visas for 5,000 HGV drivers to work in the UK in the run-up to Christmas.
The move comes after petrol stations have experienced long queues of drivers rushing to fill up their cars amid concerns of fuel shortages.
Changes to the off-payroll working rules, which came into effect earlier this year are said to be one of the three main factors (alongside post-Brexit regulations and Covid) fuelling the shortage of heavy goods vehicle (HGV) drivers.
According to a survey by the Road Haulage Association (RHA), there is now a shortage of more than 100,000 qualified HGV drivers in the UK. The figure includes drivers from the EU who had previously been living and working in the UK.
‘Chaos’ caused by IR35 reforms driving HGV crisis
New immigration rules following the UK’s exit from the single market have made working in Britain less attractive.
Meanwhile, the pandemic saw large parts of the economy shut down, travel restricted and a significant backlog of HGV driver tests.
And the “chaos” left in the wake of IR35 reform in the private sector has only added to the HGV crisis, as previously reported by Contractor Weekly here.
The introduction of IR35 reform in April 2021 shifted the responsibility for determining a contractor’s tax status to the end client.
In response to the changes, many businesses have placed all contractors engaged inside IR35 or on the payroll, which experts say has contributed significantly to the current crisis.
Businesses must rethink ‘needless, risk-averse’ IR35 decisions
Seb Maley, CEO at IR35 specialist, Qdos, said: “This is the first real high-profile example of what not to do when it comes to managing IR35 reform, along with its wide-reaching economic impact.
“Far too many businesses that once engaged contract HGV drivers as self-employed workers have handed them an ultimatum – work on the payroll or have your contract cancelled. This has led to an exodus of drivers.”
Maley urged these businesses to rethink “needlessly risk averse IR35 decisions”, stating they have a better chance of retaining the services of HGV drivers if they manage IR35 reform fairly.
He added: “The HGV crisis won’t be solved on IR35 alone, but through sound management, businesses could definitely alleviate the issues they’re experiencing and in turn, the problems the UK is facing as a result of this shortage.”
Andy Chamberlain, director of policy at self-employed trade body IPSE, echoed Maley’s concerns.
Government must clear up ‘confusion’ or risk more crises
He said: “The changes to IR35 are the forgotten factor driving the HGV crisis. The IR35 changes have already had numerous unintended consequences, from freelancers losing work left, right and centre, to many being forced into unregulated – and too often unscrupulous – umbrella companies. Now we can add fuel and food shortages to the list.
“IR35 is evidently not the only factor involved, but as research from the Road Haulage Association has shown, it is a key factor for more than half of drivers who are leaving the industry.
“This cannot be overlooked. But sadly, as with so much else to do with contractors and the self-employed, that is exactly what government is doing yet again: overlooking this vital sector.”
Chamberlain also highlighted that the IR35 reform failed to tackle the issue of disguised employment. Haulage firms now forcing drivers to work inside IR35 leaves them with the “worst of both worlds” – paying taxes as if they were an employee without receiving any rights in return.
He added: “If government really wants to resolve the HGV crisis and get food and fuel flowing again, it must address the IR35 factor.
“[…] At the very least, government must turn its attention to the mess left in the wake of IR35. This crisis is just one unintended consequence of the changes, and unless government clears the confusion after the changes, there may be more to come.”
Just seen the bullsh*tter Johnson blustering on about a high wage, high skill economy? The opposite of what’s actually happening. The sheer brass neck to even attempt that lie.
IR35 takes high skilled, well taxed flexible workers and turns business owners into no-rights employees. It’s not just HGV drivers bailing from the workforce under these circumstances. They’re the most noticeable right now, but only the tip of the iceberg.
Ignore the lies in the wreaking ball’s speech, prepare for Soviet era goods supply and services.
Absolutely spot on. The whole piece around IR35 being a major factor isn’t reported and if it is follows with the line ‘tax avoidance’ as the BBC reported it, with Brexit being blamed. People forget (especially Tory MPs who implemented it) that Brexit happened in January 2020, and IR35 hit the private sector in April of this year and some months later we have a shortage. It isn’t rocket science just selective amnesia on a draconian tax grab on this who aren’t unionised to fight it.
Transforming Britain into a high-wage economy by taking us through a phase of fuel shortages and supply chain disruptions is such a bold, brilliant strategy from the Tories I’m amazed they never mentioned it until about two weeks ago.
Incredible. The chat this week about business being responsible for the current problems that no other country in the world is experiencing is an astonishing level of propaganda being administered by a compliant media.
“Forgotten” or deliberately ignored? The media is also to blame here – they have been pushing an anti-contractor agenda for years, and now it comes back to bite the country, they sweep it under the carpet as irrelevant.
Their “Contractors pay less tax” rhetoric is simply wrong. I was paying 4x more overall tax as an independent contractor than I am now inside IR35 contracts. I am taking home a lot personal income too, and the only winners are the big corporates who pay less overall. Was that the agenda all along?
Same. The client media narrative that contractors will pay “their fair share” of tax now under new rules doesn’t align with reality.
I’m paying 1/5 of the overall tax now I’m on the payroll and a much smaller percentage too. Obviously my moral and productivity are rock bottom. Doing just enough to get by.
Haulage, our most immediate and high-profile victim of IR35, Covid Brexatosis.
Not all causes of the labour shortage are directly down to Brexit, but like IR35, all are the responsibility of an extremist vote-leave government brought to power by Brexit.
There is no plan other than disrupt and let it fail.
There never were any plans to cope with an iron curtain erected around our own borders.
It can only get worse when temporary easings on border controls end in the new year.
The changes are permanent and so is the damage to the economy.
It is a pity that Seb and qdos talk such a good game but are just as bad as the companies who introduce the blanket bans. Do their assessments take into account mutuality of obligation? Do they actually take time to review the IR35 reviews they charge companies for? Do they even bother responding on their appeal process? I know who I won’t be using for insurance going forward.
So, yes it’s a factor, but are HGV drivers really self employed? How many have an operators licence? I’m not saying it’s the drivers fault, I’m an ex contractor myself, just that the hauliers that have chosen to avoid the cost of being actual employers need to step up and actually pay, preferably including proper employment benefits and not just to the taxman because of IR35. Yes the government caused this, but the people to fix it are the hauliers that would prefer to carry on paying drivers peanuts and with no employment benefits, sometimes the untintended consequences can be for the good of workers in the long run.
… and sometimes the easily predicted consequences of a disruption policy causes your drivers to quit in droves and your logistics infrastructure to fail.
Always the same rhetoric from the same “experts”. The ones who are invited onto the IR35 Forum hosted by the Treasury – all having vested interests in IR35 continuing, including the useless PCG/IPSE.
Qdos were invited but got chucked off it because they leaked some info.
When are they going to address the root cause? I.e. Employers NI. If that were removed, the discussion would only be over a bit of Employees NI and expenses.
I was recently called about a contract inside IR35 working at an oil co and then I was told it would have to be “through” Sunak’s family business – the second largest Indian consultancy, co-founded by Sunak’s father in law.
They were supposedly “taking the risk” for the oil co. I pointed out that there was no risk, since the work was inside. And that the rate was the same as an inside contract, so presumably the end client was not being made aware that the consultancy wasn’t really taking any risk at all.
I said no to this, on principle.
It seems these consultancies have got what they wanted when they lobbied for this – to insert themselves into many contract chains, doing nothing, leeching and adding cost. That’s what IR35 has achieved – money to middle men, increasing cost and reducing productivity in the process. While adding red tape and complexity.
If it was possible to like a post I would like this a 1000x. Sunak’s family interests in all this have been very much glossed over. But then he never even declared those interests in the members register did he?
Wow! It turns out Rishi Sunak is the real king of Tory corruption. Pure amateurs in the party are bunging out PPE billions grifting for free holidays, gold wallpaper and back door donations.
Sunak meantime is passing whole tax laws to stream all that money straight to his family estate. That’s some Nicolae Ceausescu shit right there.
Let’s pray for the same outcome.