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IR35 reform sees HGV driver shortage reach ‘crisis point’

Government warned about ‘failing supply chains’ as IR35 reform leads to lorry driver shortage ‘crisis’

Richard Burnett, Chief Executive of the Road Haulage Association (RHA) has written a letter to the Prime Minister calling for action to “resolve the significant and rapidly deteriorating shortage of HGV drivers,” which recently enforced IR35 reform is having a major impact on.

Burnett states that the industry is now at “crisis point”, with a shortage of more than 100,000 drivers. He also said “critical supply chains are failing.”

Covid, Brexit and IR35 reform were cited as some of the factors that have exacerbated the situation. 21 other professional bodies and businesses including Eddie Stobart, the Food and Drink Federation, the British Meat Producers Association and the British Beer and Pub Association, co-signed the letter.

Many lorry drivers are engaged in a freelance capacity and changes to the IR35 rules have “resulted in agency labour withdrawing their services”, Burnett states.

Government intervention only way to avert crisis

This is because the agencies have a low-profit margin – typically two to three per cent – which they can no longer sustain as a result of the increased cost of engaging drivers inside IR35.

Burnett wrote: “We firmly believe that intervention from the Prime Minister/cabinet office is the only way that we will be able to avert critical supply chains failing at an unprecedented and unimaginable level.

“Supermarkets are already reporting that they are not receiving their expected food stocks and, as a result, there is considerable wastage.”

According to The Grocer magazine, Tesco reported two lorry loads a week were being destroyed due to late deliveries.

IR35 reform forcing HGV drivers onto payroll 

Burnett added: “To make the situation even worse, summer holidays are fast approaching, and drivers will take their leave entitlement. 

“The lack of agency drivers to help support their absence will exacerbate the problem even further as will continued unlocking of the economy and the spikes in demand for food and drink created by the hot weather and major sporting events.”

Rod McKenzie, Managing Director of Policy at the RHA, told Contractor Weekly: “Many companies have stopped engaging with contractors outside of IR35 and many drivers do not want to be on the payroll because it means they get paid less.

“While some employers have increased the day rate to compensate for the additional National Insurance and Income Tax and because they did not want to lose the drivers, many are now thinking twice about working in this sector.

“The impact is being felt across all industries, from farming and construction to retail and hospitality.”

Problem will only get worse in the run-up to Christmas

The RHA has urged the government to “recognise the repercussions” of IR35 reform and intervene. It also urged them to introduce a temporary worker visa for HGV drivers, to address the shortfall.

Nick Allen, CEO at the British Meat Producers Association told Just Food magazine: “The labour shortage in the meat industry is turning into a big problem. 

“The people and skills we need are just not available in sufficient numbers in the UK, which means we’re imminently looking at having to close UK production lines and buy from overseas suppliers.

“[…] This problem will only get worse in the run-up to Christmas as we head into the busiest period for the industry.”

 

By Contractor Weekly

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14 thoughts on “IR35 reform sees HGV driver shortage reach ‘crisis point’”

  1. Gareth

    There isn’t a shortage of workers/drivers, there’s a shortage of decent paying jobs.

    • Johnny

      These were decent paying jobs before. What’s changed?

      • Dan

        Why should drivers be given a tax and NI break so that the likes of tax avoiding amazon can pay low rates to drivers.

        • Gary Andrews

          That’s misunderstanding the issue and just mimicking the distraction tactics of government and HMRC.

          Offshore tech firms are reaping the benefits of IR35 while it crushes the small onshore operators who can’t structure as they do.

        • Dave

          It’s not a tax dodge, I, WE travel to several different places to provide a service.
          Different start times, different companies, different rates etc do NOT get this mixed up with a 9-5 job, that it ain’t.
          Working alongside agencies NOT for them, we are not at the same place all of the time, but it must be our choice to be available, our licence is our responsibility, our lively hood not to be abused by someone else. We are self employed for good reason.

  2. ProtoHipstr

    Have you read the letter or just cherry picked words to suit the sites agenda? Click bait at it’s worst.
    https://www.rha.uk.net/Portals/0/News/Policy%20and%20Campaigning/Policy%20and%20Campaigning%20Documents/RHA%20letter%20to%20Prime%20Minister%20230621.pdf?ver=2021-06-23-163949-737
    IR35 is one of five points raised and it’s at the bottom of the list.
    • COVID
    • EU exit
    • Retiring drivers
    • Test shortage
    • IR35
    A shortage of people enter an industry and work for low wages is the real reason for the shortage.

    • Johnny

      Not sure about click bait.
      It seems to me that IR35 is the only one on that list to have caused a £5-£6 an hour drop in rates as outlined in the letter.

    • Gary Andrews

      Everyone wants a special exemption to both the Brexit and IR35 rules that are destroying their own industries. It begs the question why were created in the first place and who benefits?

      • Griff

        I get the impression that govt was hoping lots of contractors would work via umbrella companies (not the naughty umbrella companies mind, just the good ones owned by their mates, so their mates could take a cut for effectively doing nothing). The reality is they have driven many small limited companies out of business, with still useful staff taking early retirement or moving sector

  3. GT

    Unlikely that HMT / HMRC will back down as they have invested so much in rolling this out. The civil service do not understand working for yourself and don’t seem to have the will or intelligence to find out.
    Will need the law changing.
    Obviously its not just truck drivers.

  4. JoJo San

    Tax expenditure not income

    Easy solution

  5. Gareth

    Tax expenditure not income

    Easy solution

    • Johnny

      Beware Those Offering Simple Solutions to Complex Problems.
      When you start looking at a problem and it seems really simple with all these simple solutions, you don’t really understand the complexity of the problem. And your solutions are way too oversimplified, and they don’t work.
      – Steve Jobs

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