The U.K. is facing a silent crisis: our supply chain is haemorrhaging. Lorry drivers are becoming harder to recruit. Deliveries are failing to arrive to supermarkets on time. Shelves are being left empty. While some people, like Scotland’s First Minister Nicola Sturgeon, are blaming Brexit, the Government has pointed to the pandemic to explain the problems. Issues with the supply chain have been on the lips of manufacturers, hauliers, and government officials for months — so, it’s fair to say that we’ve seen it coming. Yet, what’s actually going on? Who’s right, and who’s at fault?
The most obvious problem is the national shortage of drivers for heavy goods vehicles (HGVs). According to a recent survey undertaken by the Road Haulage Association (RHA), members of the industry estimate that there is a shortage of at least 100,000 drivers, which many believe has been due to Brexit. That is, regulations on work permits and right to work in the U.K. introduced by the country’s withdrawal from the EU are perceived to have negatively impacted the haulage sector’s ability to recruit.
What does this mean, exactly? Are we saying that the U.K. supply chain has been propped up by illegal immigrant workers whose right to work has been overlooked by hauliers’ recruiters? It’s impossible to say for certain. What we can argue more definitely, though, is that it’s now become much more difficult to attain that right — those who’ve been forced to leave the country aren’t able to come back to work as a driver with ease. That’s why the RHA’s Chief Executive has written to Prime Minister Boris Johnson requesting for the introduction of a temporary work visa for HGV drivers.
That said, many other factors are at play here. Indeed, an equal percentage of respondents also felt that an increase in the number of drivers retiring was responsible for the shortages. This, along with the sector’s inability to carry out enough lorry driving tests due to pandemic restrictions, represents the role that COVID-19 has played in disrupting the supply chain.
It seems that the furlough scheme, whilst propping up the U.K. economy, had the unintended consequence of giving drivers a much higher quality of life. During lockdown, many had the chance to reconnect with their families and rejoice at the freedom from working 16-hour days for a modest income. Indeed, government data shows that the transport sector had one of the highest volumes of furloughed employments. This has arguably been what’s caused the influx of keen retirees, and also explains the additional votes in the survey for ‘Drivers leaving for a different industry’ and ‘Unsatisfactory pay rates’. Of course, Transport Secretary Grant Schapps MP will focus on the detrimental effects of pandemic policies and not government pandemic relief, but this sentiment of discontent bubbles under the surface regardless.
Another issue, hinted at in the RHA survey, and illustrative of a deeper, cultural issue within the supply chain, starts with IR35. Receiving the third-most number of votes, members of the RHA also blamed anti-avoidance tax legislation that was extended to cover medium and large companies on 6th April 2021. It means that employees contracted by a manufacturing or haulage firm through an agency are now liable for increased income tax levies. In response, agency workers (the ones that are left after Brexit, that is) have demanded increased wages. As many agencies are unable to stump up the cash, the supply of agency workers has dwindled for the supply chain to draw from.
At face value, this is fair enough — they deserve to earn a living wage, what more is there to the matter? Well, the fact that essentially a small income tax increase to agency workers has been voted as one of the largest contributors to the current crisis betrays a certain fragility in the supply chain. I would argue that this instability has its roots in an overreliance on agency workers in lieu of a reluctance to invest and trust in permanent employees.
While agencies represent an easy option for employers to plug holes in vacancies with poor working conditions, low pay, and long hours, they should’ve represented a short-term solution. Companies needed to commit to improving working conditions (I would suggest by focusing on building teams’ camaraderie and community) and increasing pay to attract permanent, long-term employees at the same time as hiring agency workers. But, they didn’t. And now manufacturers and hauliers alike are suffering the consequences.
The critical issue, I would propose, is cultural. It reflects a corner-cutting mentality from those higher up on businesses’ hierarchies — supervisors, managers, managing directors, executives, etc. I’d guess this was all abundantly clear to those lower down, and I’d also guess they weren’t listened to. Who can blame the higher-ups, though? Pressure from Brexit and COVID-19 in recent times has caused a great deal of uncertainty, right? True, but the reliance on agency has outlived these worries by many years, and now the taxpayer is facing the consequences.
The rungs of the supply chain link many countries, economies, sectors, and businesses. They are held tightly together by trust and co-dependence. The links are strong because they must be, because the world relies on them, but they are weak if pulled out of shape. Once you take that for granted, you jeopardise the entire chain. If you can’t deliver, then stock piles up. If stock piles up, you have no space to produce. If you can’t produce, you stop buying raw materials. If you stop buying raw materials, international economies dependent upon your demand collapse. It may start with delivery failures, but where will it end?
With this analysis, are we any closer to a culprit for these problems? It is certainly clear that Brexit and COVID-19 have a share of the responsibility, as the country’s political opponents have contested. However, one thing nobody’s mentioned is the supply chain itself: culturally, it seems the chain has rusted. Its corner-cutting, short-term employment strategies made it inflexible to meet the unprecedented challenges of recent years. Over time, its links experienced increased friction from managerial neglect such that the current climate has caused weathering to emerge. So, a question remains: is it too late for an oiling?