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Government Is Refusing To Budge On Labour Shortages But The Worst Chaos Is Yet To Come

Government Is Refusing To Budge On Labour Shortages But The Worst Chaos Is Yet To Come
6 min read

The Confederation of British Industry (CBI) has intervened in the debate on Britain's chronic labour shortages with a stark warning: they could last another two years without urgent government action.

Most of the headlines around recent food shortages have focussed on the dearth of lorry drivers, with the Road Haulage Association recently putting the shortfall at around 100,000.

But shortages are being felt across the country's supply chains: a shortage of processors has left KFC, Nando's, and Greggs short of chicken, while up to 100,000 pigs face being culled because there aren't enough workers in slaughterhouses, according to the National Pig Association.

But up to now, calls to reform immigration rules to help plug gaps in the workforce have been firmly rebuffed with the government steadfastly insisting that employers should hire more British workers instead.

Conversations with government figures over the last few days suggested that position was not going to change any time soon. 

"Businesses and employers had known for a long time that the free movement of people was coming to an end," one government source told PoliticsHome this week. 

"What we want to do is to focus on making those jobs and sectors more attractive to the domestic labour force.”

Briefing PoliticsHome this week on the current state of play, the CBI said one food processing company it represents had 950 vacancies, which amounted to nearly 10% of its total headcount. The food and drink industry is believed to be short of around half a million workers.

The shortage of lorry drivers specifically is a problem going back several years, widely put down to poor pay, grim working conditions, and an aging workforce. But the problem has been compounded significantly over the last few months by the coronavirus pandemic and Brexit.

14,000 EU drivers are estimated to have left the UK in the year to June 2020, according to recent Logistics UK analysis of Office for National Statistics data, and the government's post-Brexit immigration system has made it much harder for them to come back and rejoin the profession.

Just 600 of those drivers have returned to Britain, says Logistics UK.

This is why the CBI and many other major industry organisations have spent the past few weeks urging ministers to relieve the pressure in the short-term by temporarily adding lorry drivers and other supply chain workers to the Shortage Occupation List. This would make it easier for companies to recruit staff from Europe and would help businesses get through the next year or so, they say.

PoliticsHome understands there were discussions in the Home Office recently about bringing forward the next Migration Advisory Committee (MAC) review, currently not due until 2022, of which jobs should be on the Shortage Occupation List.

But in the end, the department led by Home Secretary Priti Patel decided against bringing it forward. 

In a sign of the current thinking inside Cabinet, one senior minister said the fact that Germany and other EU member states were suffering lorry driver shortages of their own suggested that the government adding the profession to the Shortage Occupation List wouldn’t necessarily help.

But there is still huge pressure on government to find a solution regardless. Labour MP Seema Malhotra, Shadow Minister for Business and Consumers, said "the government is sleep walking into another potential crisis," with supply chains set to be put under even more strain in the coming weeks when demand for goods rockets in the run-up to the Christmas period.

Labour is urging the government to immediately seek MAC's advice, rather than wait until next year, and in the meantime appoint a minister with the sole responsibility of handling the supply chain crisis.

Malhotra told PoliticsHome it wasn't clear who in government was in charge of sorting out the disruption. "It’s an issue that goes across different departments but I cannot see where exactly in government is gripping this issue as a whole," she said. 

She believed the creation of a new ministerial position was "absolutely critical" if the government is to get a handle on the situation.

"Currently there is nobody in charge, and without some leadership and ownership of the situation it’s going to get worse," said the Labour MP for Feltham and Heston.

For now, the government is refusing to budge, but ministers are expected to come under even more pressure to change tack in the next few weeks and months when the country's supplies are put under greater strain. 

Ian Wright, CEO of the Food & Drink Federation, on Friday issued an ominous warning when asked about the disruption by the Institute For Government think tank. 

"It's going to get worse, and it's not going to get better after getting worse any time soon," Wright predicted. 

He echoed industry warnings that the heightened demand for goods in the run-up to the busy Christmas period is going to put even more strain on supply chains. Businesses are also bracing themselves for a wave of new post-Brexit paperwork on EU imports — though as PoliticsHome reported this week, the government is considering postponing those checks again to stave off more disruption.

Wright's most striking remark, however, was he expected the food shortages cropping up on shelves and menus up and down the country to last forever, thanks for a fundamental shift to how the UK's supply chains work.

"The result of the labour shortages is the just-in-time system that has sustained supermarkets, stores, and restaurants so that food has arrived on shelves or in kitchens just when you need it, is no longer working, and I don't think it will work again," he said.

"We are now in for permanent shortages."

If Wright's prophecy turns out to be correct, there will be questions over just how long the government line can hold.

A government spokesperson said: “We are closely monitoring labour supply and working with sector leaders to understand how we can best ease particular pinch points. Similar challenges are being faced by other countries around the world.

“We want to see employers make long term investments in the UK domestic workforce instead of relying on labour from abroad. Our Plan for Jobs is helping people across the country retrain, build new skills and get back into work.

 “The Government encourages all sectors to make employment more attractive to UK domestic workers through offering training, careers options wage increases and investment.”

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