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.”