HGV Driver Shortage

Causes, Consequences & Solutions

The HGV driver shortage is currently hitting crisis levels in the UK. As many non-essential businesses return and reopen, the demands across supply chains is increasing and the effects are rippling through many businesses across the UK.

Many companies are competing to get new drivers with Tesco’s offering a £1,000 bonus to lorry drivers who can join before the end of September to help get their produce delivered.

In this article, we take a look at the main causes, the consequences and discuss future solutions.

What are the main causes?

There are a number of combined issues that have contributed towards the HGV driver shortage. The main causes include:

• According to Logistics UK, the pandemic has resulted in the loss of at least 12 months of driver training and testing. Compared with 2019, there were 43% less tests conducted in 2020.
• The costs of driver training has been a barrier both to new entrants and business, with limited Government support for apprenticeships.
• There has been an increase in online sales, with 28.1% of all retail sales in 2020 being online, up from 19.2% in 2019.
• The logistics sector has been experiencing a significant shortage of drivers for a number of years, but this situation has been multiplied considerably by factors including the Covid-19 pandemic and Brexit.
• Driver agencies have argued that IR35 tax changes have meant that it’s no longer financially viable for them to place drivers in the industry, which has seen many EU workers return to their home countries.
• Drivers can no longer minimise tax by acting as employees of their own companies. Commercial drivers now generally count as direct employees rather than contractors and are therefore liable for PAYE and NI. The net result is that drivers must be paid more to maintain their standard of living.

What are the consequences?

The severity of the shortage is large enough to cause haulage businesses and their clients operational problems.

There is a shortage of many products, in the chemical industry for example, chlorine is in limited supply which may seem obvious as it kills bacteria and is a disinfectant, but it is also used to treat drinking water, swimming pools and used in hundreds of consumer products from paper to paints, and from textiles to insecticides.

Additionally, media coverage has drawn attention to the possibility of a disrupted food supply, which may lead to panic buying like we saw at the beginning of the pandemic.

UK supermarkets have acknowledged that there is an issue with food supply chains but are working closely with their suppliers to ensure that consumers still have access to the same selection of goods.

All of these factors could also lead to further food price increases, which would affect the most vulnerable. Pressure is on the Government to assure that the UK can enjoy a sustainable supply of fresh food.

Where haulage services cannot keep pace with demand, then unfortunately cost is likely to rise. Transport providers may be expected to request higher prices from clients, raising the cost for businesses.

With drivers in short supply, it is sensible to ensure that vehicles are full and make fewer, larger deliveries but for some businesses, lack of warehouse space is a challenge as they simply cannot store larger quantities of products or materials.

Drivers may be reluctant to work anti-social hours (eg: evenings, weekends) which reduces commercial flexibility and leads to a more cautious approach to trade-driving activity. Short-life goods are most vulnerable to transport disruption and increased wastage may result.

Solutions

The Government is supporting lorry driving training in the context of apprenticeships which includes a revised Large Goods Vehicle Driver apprenticeship standard which will be available from 2 August.

This new version will be supported by an increased funding band of £7,000, and further support on offer includes the Department for Education’s current incentive payment to employers of £3,000 for every apprentice, of all ages, hired as a new employee from 1 April 2021 to 30 September 2021.

A second proposed apprenticeship, Urban Driver, is currently being considered for future development and a further new standard, Transport and Warehouse Operations Supervisor, is also expected to launch in the coming months.

The Department for Work and Pensions (DWP) is supporting returning to driving and helping jobseekers become HGV drivers where appropriate. Increased communications to work coaches and to jobseekers are in progress.

Large numbers of EU nationals have settled status or pre-settled status in the UK and continue to be an important part of the lorry driving workforce. But for the future workforce there is a need to develop people resident in the UK as opposed to specifically providing visas for this group of workers.

For the short term the Government has announced a relaxation to drivers’ hours rules which will help provide haulage operators with increased flexibility to manage deliveries and alleviate some of the pressures being experienced.

There is also a short, targeted Call for Evidence program about to be launched to consider
whether longer relaxations would be appropriate. This complements a relaxation of supermarket delivery hour restrictions to further support the industry. Work is also progressing on increasing collaboration in the food sector.

Summary

The Government acknowledges the HGV driver shortage and has outlined measures to boost Heavy Good Vehicle (HGV) driver recruitment and retention rates in the logistics industry.

By altering provisional license entitlement and simplified and single driving tests, the Department of Transport aims to increase the amount of driving tests by 500 a week, and in doing so, streamline the process significantly.

Businesses are likely to also receive financial support regarding training, payment incentives and specialised apprenticeships to boost the supply of drivers to the industry.

There are many challenges ahead and uncertainty is affecting many businesses. The ‘pingdemic’ is causing many issues and notifications from the UK’s official Covid-19 application have increased in recent weeks.

600,000 people received a ‘ping’ this week to alert them that they had been in close contact with someone who had tested positive and they needed to self-isolate for 10 days. Although this is due to end on the 16th August, this is having such a detrimental effect on people’s working life that many are choosing to deactivate it.

If you have any questions, or would like to discuss specifics regarding your business, please get in touch.