MPs call for supply chain levy if standards fail to improve
A report on the state of the road freight supply chain by the House of Commons transport select committee, which was released last month, has been met with a mixed response from industry trade groups.
The cross-party group of MPs said that the logistics industry had failed to ensure the delivery of essential goods to retail outlets since the end of the lifting of the most severe Covid restrictions, highlighting reported shortages of fuel in filling stations and empty shelves in supermarkets.
Among the report’s key recommendations is that: “The government should give the logistics sector two years to deliver sufficient drivers and high-quality parking facilities.
“If industry does not deliver, the government should implement [a] levy charging mechanism and cause the industry to pay sufficient sums for the government to build these facilities and pay to train new drivers, so they do not have to pay the cost of their own training.”
The report said that this supply chain levy: “should be applied to those at the production and sales end of the supply chain, such as large retailers, oil companies and online service giants.
“These organisations currently make large profits which do not trickle further down the supply chain to the companies which transport the goods. As a result, hauliers and ferry operators are posting operating losses and therefore cannot afford to increase the pay and welfare standards of those they employ.
“The supply chain levy would require the parts of the supply chain where margins are greatest to deliver improved standards and the resilience to the supply chain which they themselves require to ensure their shelves, warehouses and petrol pumps are full.”
Such a mechanism must, however, be complemented by government planning reform in order to ensure its deliverability, the MPs said.
The committee acknowledges the narrow margins endured by transport companies, and their vulnerability to shocks in the labour market or spikes in costs. It also warns that government intervention to alleviate the driver shortage may have left the impression that sorting the issue out in the long term was the government’s responsibility.
Instead, it urges the logistics sector to follow the lead of bus and coach operators and train its own drivers at its own cost. Measures to ensure this happens could be included in forthcoming reform to the Driver CPC, it suggests.
The stresses of truck driving are acknowledged. The report argues that until conditions improve driver retention rates will remain low, and says the government should intervene by consulting with industry to introduce a binding code of conduct setting minimum standards for drivers’ treatment.
A lack of high-quality rest areas, particularly on key truck routes, is highlighted. The report recalls that a shortage of truck parking spaces was highlighted by a government survey five years ago, and points out that drivers are now forced to park in unsuitable areas where they are vulnerable to crime and less able to enjoy proper rest and recuperation.
Reform of the planning network is required, the report says, to take decisions on parking provision out of the hands of local authorities who “cannot be expected to elect to provide for lorry parks in their local plans in the face of opposition from residents impacted by such large projects.”
Instead a government-industry taskforce should be established to ensure regional targets set for truck parking provision are met. Minimum standards for truck-stops also need to be established covering security, toilet and shower facilities, food options and facilities for female drivers.
The committee acknowledges that the fragmented nature of the haulage sector is not conducive to concerted action by logistics operators to improve driver conditions.
Here, it castigates the actions of “a few large companies, such as the major supermarket chains.”
“These companies use their market power to drive down costs but take no responsibility for the consequences,” the report says.
“What is needed is a sector-wide solution, but, so far, despite a lot of warm words, the sector has failed to deliver this. Radical action is required to end this cycle of failure.”
The “radical action” is the imposition of a two-year deadline on the large, profitable players at either end of the supply chain to deliver the improved conditions required. Failure to do this on a voluntary basis would see the compulsory levy imposed.
A continued lack of diversity in recruitment, particularly of women and young people, concerned the committee: “That one per cent of drivers are women, and only three per cent of drivers are under the age of 25, should be a cause for shame for the industry and a clarion call to do more. The supply chain levy we recommend, and resultant improvements in training and facilities, should assist in improving these appalling ratios.”
But it welcomed the introduction of ‘HGV skills bootcamps’ as a faster and more flexible alternative to conventional apprenticeships, and said the government should make them permanent, with some targeted specifically at under-represented groups. Funding could come from the current apprenticeship levy, it suggested.
The government should also work towards more intermodal transport, which would improve the lot of HGV drivers as they would spend fewer nights away from home, the report said.
“The current model which sees freight moved from one end of the country to the other by road is illogical,” it found. “Moving to a multi-modal model, in which long distances are served by rail and water and shorter journeys by road, will help the country decarbonise and improve the efficiency and resilience of the freight and logistics sector.”
The MPs also urged government to work with the European Commission and governments in France and Ireland to reduce Brexit-related border delays.
Reaction
Responding, the Road Haulage Association (RHA) said it broadly welcomed the report and the committee’s focus on the significant issues affecting the industry, adding that the recommendations in the report were in line with many requests it had made.
“Whilst we support many of the government’s 33 measures to deal with the HGV driver shortage, as the report highlights, many of these are limited, temporary measures and the systemic issues affecting the industry require long-term planning,” the RHA said.
“The report rightly identifies that the voice of the SME needs to be heard more clearly in government to find the right solutions to our long-term problems; most hauliers are SME. With firms facing huge financial pressures it’s unreasonable for the logistics sector to fund driver training alone, given the significant upfront cost, the acute shortage of drivers and the difficulties in retaining new drivers due to external factors.”
The association praised the report’s recommendation to make HGV skills bootcamps a permanent feature and to make greater use of apprenticeship levy funds.
“We appreciate the principles behind the supply chain levy, but we need assurance that this would not result in undue cost pressures or limit the growth of SME hauliers,” it continued.
“We’re concerned that the industry cannot make the necessary changes to avoid the levy in just two years when so many of those changes are outside of the industry’s control.
“We oppose any measure which risks significant additional cost on SMEs.”
Richard Smith, managing director of the RHA, added: “We welcome the recognition of the difficulties of life as an HGV driver. In many places HGVs and their drivers are simply not welcome.
“This needs to change. We welcome measures that will improve HGV drivers’ experiences on the nation’s roads and the way they’re treated.”
Logistics UK said the MPs’ report unfairly attempted to blame the industry for problems encountered across the supply chain for food and other shortages, while ignoring public policy failures.
“To place all the blame for the supply chain issues facing our industry at our door does our workers a great disservice, and totally ignores the role which the government and other agencies have played in creating staff recruitment and retention problems across the sector,” said Logistics UK chief executive David Wells.
He observed that, despite operating on very narrow margins often of less than one per cent, the sector had already made significant investment in the next generation of workers through the apprenticeship levy, having paid in £700 million.
“However, due to a lack of appropriate qualifications for the sector, which did not even exist until 2021, only £150 million has been able to be drawn down thus far, representing a tax on our sector and a huge, missed opportunity for recruitment,” said Mr Wells.
He added that it was a “national disgrace” that HGV drivers were still unable to access safe and secure truck stop facilities, despite having “worked so tirelessly” to protect supply chains during the Covid pandemic – with many forced to take legally required breaks at roadsides.
“It is not the industry’s responsibility to build and run these facilities, not least because they are commercial enterprises, many of which cater for all road users and not just the haulage sector,” he continued. “The real problem that has not been resolved is local authority planning rules and red tape that prevent these facilities being built in the first place. To suggest that these new builds, which are used by all road users, could be constructed as a result of a levy on hauliers would place an unfair, disproportionate burden on the industry.”
Mr Wells added that the report’s overview of the sector’s issues with recruitment was “confused and misleading”.
“Like nearly every other industry in the UK, logistics is facing issues caused by a combination of factors, none of which are within its control,” he said. “These include an ageing workforce, the loss of European workers after Brexit and the impact of the Covid-19 pandemic on testing of new HGV drivers.
“The industry has already come together to create and fund a massive skills and recruitment campaign, aimed at young people, women and other under-represented groups, to attract new talent into the sector. The government is aware of this and has committed to supporting the industry’s efforts.”
He concluded: “It’s disappointing that the committee has taken so long to reach the wrong conclusions and not address the real public policy issues needing urgent attention.”