UK set to face winter of discontent without urgent action to tackle supply chain crisis
4 min read
For businesses to be able to survive they are going to need to trade their way out of this perfect storm of challenges that now face them.
Time is running out to avoid a winter of discontent after years of Conservative complacency, to protect families and businesses from the energy prices crunch and manage the supply chain mayhem that is having a damaging ripple effect across the country.
Having been warned repeatedly about the huge, looming shortage of HGV drivers, Ministers failed to act and we have been left with a fuel crisis, shortages on our shelves, and higher food costs.
According to the latest ONS data, in September almost one in five businesses were either not able to get the materials, goods or services they needed from within the UK, or changed suppliers or found alternative solutions to do so.
For many businesses in the hospitality and retail sectors, the golden quarter between October and New Year’s Day is their most lucrative time, with some relying on this period for up to 40 per cent of their total yearly revenues. Now businesses are warning that with this period’s revenues set to be hit, that many businesses may not survive the winter; hitting jobs and livelihoods across the country.
The recruitment and retention crisis in the HGV sector can only be solved by driving up conditions
For these businesses, this year’s golden quarter has assumed even more importance, following extremely difficult trading conditions and reduced demand in Christmas 2020. This too came after the government was warned by SAGE in September that a circuit breaker was needed to control the virus, with a delay to act having greater social and economic consequences later.
We cannot afford for the same mistakes to be made again and again. That’s why over recent months Labour has called for action of sufficient scale to urgently address the HGV driver shortfall, including a taskforce to address the issues being faced including improving terms and conditions for drivers, and referring the issue of adding HGV drivers to the Shortage Occupation List to the Migration Advisory Committee to provide advice to government to help address the crisis in the short-term.
Yet rather than being able to focus on how to maximise their trading, the government’s self-inflicted supply chain crisis – which is markedly worse than other countries are seeing – is forcing businesses contending with shortages in critical areas to work out how to survive, let alone thrive.
There has been a recruitment and retention crisis in the HGV sector for years, with apprenticeship starts down 49 per cent since 2015. This can only be solved by driving up conditions in the sector, increasing the attractiveness of the profession including for young people and women, encouraging those who have left the profession to re-join and helping to set up apprenticeships.
The recent U-turn that the government has made in saying in principle they would approve 5,000 visas for drivers is an acknowledgement of the crisis that they have created, but this is neither a long-term answer nor a credible short-term response. They are being far too slow to act and have still done nothing to actually approve these visas, and both the British Retail Consortium and the British Chamber of Commerce have warned that this number will be insufficient to solve disruption this winter.
Many of our hospitality and retail businesses are relying on a successful final quarter to rebuild their battered balance sheets and begin to pay off some of the debts that they have accrued over the last 18 months as now rent payments become due, furlough is withdrawn, and costs of materials and energy rise.
The survival of many quite literally depends on a successful end to 2021. Recent ONS figures on business deaths have shown that there have been over 100,000 in the first two quarters of 2021. The number of closures in Quarter 2 2021 is the highest second quarter figure since the start of the series in 2017.
For businesses to be able to cope they are going to need to trade their way out of this perfect storm of challenges that now face them. A failure to plan for the needs of sectors across the economy, and to heed the warnings from business about how we needed to prepare for our recovery is now hitting industry and jobs at a time when restrictions are being lifted and support is being withdrawn. For the government’s willful intransigence and appalling complacency to now be resulting in barriers to trade is unforgiveable.
Seema Malhotra is the Labour MP for Feltham and Heston.
Get the inside track on what MPs and Peers are talking about. Sign up to The House's morning email for the latest insight and reaction from Parliamentarians, policy-makers and organisations.