IR35 reform 'fuelling 100,000 HGV driver shortage'

Private sector IR35 reform is fuelling a shortage of HGV drivers as big as 100,000.

In fact, the new IR35 off-payroll rules are one of five factors to have worsened an initially predicted driver shortage of 60,000 to a “crisis point,” says The Road Haulage Association.

'Agency labour withdrawing because of IR35'

Writing directly to prime minister Boris Johnson, the RHA says: “The introduction of IR35 [reform] has resulted in agency labour withdrawing their services.

“Low-profit margin logistics businesses (typically 2-3%) cannot sustain demands for £5-£6 per hour rate increases.”

The RHA’s letter to Mr Johnson comes after sweets giant Haribo said it was struggling to get its stock into shops as a direct result of the UK-wide lorry driver shortage.

The resulting empty shelves have reportedly been confirmed by Sainsbury’s, Asda, Co-op Food, Marks & Spencer and Morrisons – but in more than just the confectionary aisles.

'IR35 changes exacerbated the shortage'

Indeed Tesco, Britain’s biggest supermarket, has said it is now destroying two lorry loads of food products each week because of late deliveries, The Times reported.

“Prior to the pandemic, we estimated a shortage in excess of 60,000,” the RHA said of the lack of HGV operators.

“At that time, UK road transport businesses employed approximately 600,000 HGV drivers, including 60,000 from EU member states who were residing and working in the UK.

“Several factors have exacerbated the shortage which is now at crisis point -- over 100,000- -and critical supply chains are failing. Those factors include [Brexit, Covid and IR35 reform].”

'Urgently intervene, PM'

A specific demand in relation to the April 6th off-payroll rules does not appear to have been made by the association, although its letter asks Mr Johnson to “intervene” because of them.

“For clarity, we welcome legislation that ensures fair and equal tax for all,” RHA chief executive Richard Burnett writes in the letter, which has been co-signed by more than 20 supplier and logistics companies

“However, government must now recognise the repercussions of this and the other issues mentioned and urgently intervene to help us to resolve the resulting crisis.”

'Vast majority of HGV drivers haven't returned'

One demand on the PM is for the Home Office to implement a seasonal or temporary visa scheme for qualified lorry drivers, such as a scheme currently available to farm workers.

The association says the effect of covid-19 is that the “vast majority” of drivers who returned to their country of origin during the pandemic have not returned to the UK.

Business immigration lawyer Laura Darnley confirmed the desperate need for solutions for supply chains to ContractorUK on Friday – the day after Frontier Work Permits became mandatory.

'HGV agencies looking for a solution -- of any kind'

And now it seems, Frontier Work Permits (FWPs) could become potentially industry-saving.

“Increasingly we’re working with recruitment agencies such as those supplying warehouse operatives and HGV drivers who are looking for a solution -- of any kind, to the candidate shortage”, said Darnley, a director at Brabners LLP.

The legal adviser added: “The occupations [asking us about them applying for FWPs] range from board-level directors to HGV drivers. There are no minimum skill levels or salary levels [on such permits], so it is potentially open to anyone…so long as they meet the eligibility criteria.”

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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