The UK's LGV driver shortage: 3 current issues and what can be done to solve it
The LGV Driver shortage is well known within the UK and the causes have been widely reported. It’s been estimated that the shortage is around 60,000 drivers. But as recently as last month, other sources including ITV suggest that the figure could be as high as 76,000.
Warehouse to Wheels (W2W) programmes have had varying degrees of success over the years. But recent changes to gov’t funding means that a new solution to the driver shortage is now available.
This article briefly outlines 3 issues that could make the shortage worse and presents some solutions in further detail.
Issue 1: IR35 may make it more expensive to hire agency drivers
Despite the disruption caused by the pandemic, it appears that IR35 reforms will come into effect in April 2021 – and that could spell bad news for transport departments. Changes to IR35 mean that tax & national insurance contributions for agency drivers will go up. Recruitment agencies are likely to raise their costs to cover this increase. A report from Driver Require suggests that these reforms will bring agency pay/charge rates into line with permanent employee costs, with agency costs passed onto employers at an increase of around 20%.
Therefore, hiring agency drivers to cover your driver shortages will become a much more expensive option. For many businesses operating on razor-thin margins – IR35 may using agency drivers unviable.
As a result, many companies may look to bring their driver recruitment in-house. But this will raise 4 questions;
Do you have enough resources to do this alone? Who will be responsible for finding your drivers – an internal recruiter or will this be an added responsibility for someone in your HR department?
Will you be able to coax former agency drivers back into permanent driver roles, especially after they’ve been earning more through their ltd companies? This could see drivers leave the sector altogether.
How will you find those candidates if you’re relying on just job applications? You can’t guarantee the quality of those job applications – you’ll still have to sift through applications that may have been made with the best of intentions but ultimately are irrelevant for your business.
You may have some initial success right now whilst there are some drivers from struggling sectors are available. But what happens when those industries recover and driver demand goes back up? What happens when you're looking to hire a large number of drivers but the talent that you need just isn’t there?
Issue 2: Brexit could aggravate this shortage even further
According to Richard Burnett, Chief Executive of the Road Haulage Association (RHA), there are around 60,000 LGV drivers in the UK who are from European Union countries and a high proportion of them have already returned home. If these drivers do not have EU Settled Status, it’s likely that they’ll be forced to return to mainland Europe.
In September 2020, Driver Require suggested that as many as 30,000 drivers from Eastern Europe are working in the UK through agencies. So as the demand for agency drivers is forecasted to shrink due to IR35 and the effects of Brexit become more apparent – it’s quite possible that this driver shortage will worsen quite quickly.
Issue 3: Driver retirement figures will keep increasing
Even if businesses find a way around IR35 reform and Brexit, one thing that can’t be outmaneuvered is time. Our drivers are getting older. According to a 2020 report by Driver Require, whilst there are around 320,000 LGV drivers in the UK, around 135,000 drivers of these drivers aged over 50 with the RHA suggesting that the average age of LGV drivers is 56 years. Likewise, a 2019 Talent in Logistics White Paper suggests that over around a third of the LGV workforce is expected to retire by 2024- that’s an additional 100,000 vacancies likely to be created. Similarly, Driver Require suggests that there between 8,000 – 13,000 LGV drivers retiring each year. So whilst the LGV driver shortage is around 60,000 at the moment, the sheer number of upcoming retirements is likely to cause driver demand to skyrocket in the next few years.
How can you solve your shortage?
To re-cap, the LGV driver shortage has been well known. It’s estimated to be 60,000. The pandemic has squeezed the operating margins of many transport departments. So any increases in hiring costs for new drivers is likely to be a problem.
IR35 Reform will likely make it much more expensive to hire agency drivers, Brexit could push EU drivers out of the UK and the current driver demographic means that mass retirements are fast approaching.
As such, what can be done stop this worsening driver shortage from hurting your business in the coming years?
Warehouse to Wheels (W2W) Programmes
W2W programmes have been around for a while. Employers including the Co-Op, Keyline and Meachers Global Logistics appear to have funded these initiatives themselves, paying the licence acquisition costs to help existing employees obtain Cat C or C+E licences. For businesses with sizeable cash reserves, this may be the quickest way to get qualified people quickly.
Other companies including Hermes, Moody Logistics and Tuffnells have helped their current workers obtain their Cat C licence via the LGV apprenticeships using their levy funds to cover the costs. For some employers, their insurance prohibits them from hiring drivers below the age of 25. But LGV apprenticeships aren’t just for young people, more experienced staff members can be enrolled on these programmes.
LGV Apprenticeships include licence acquisition which makes them a highly cost-effective way for companies to get their next generation of LGV drivers, especially for SMEs. Apprenticeship funding can provide a highly cost-effective way for businesses to develop their next generation of LGV drivers. SMEs with an annual UK PAYE wage bill below £3 million benefits from a 95% subsidy on total apprenticeship costs, as a result, the cost of an LGV apprenticeship is just £300. When you consider that licence acquisition can cost around £1,500 per person – SMEs can save up to 80% on each licence when done as part of an apprenticeship.
Sector-based Work Academy Programmes (SWAPs)
SWAPs are intended to help the unemployed get back into work and provide multiple benefits for employers.
Benefit 1: Employers have a bigger, more diverse talent pool to choose from. The pandemic has increased the rate of unemployment. SWAPs take motivated job seekers and give them the necessary Cat C/C+E licences and Driver CPC to obtain LGV driving jobs.
Benefit 2: Assured Quality. SWAPs take some of the guesswork out of the hiring process. All candidates who have been referred are lively locally, are recently qualified and committed to finding work . Employers are still in control of their own recruitment process – SWAPs just provide an additional source of candidates to interview.
Benefit 3: There are no direct costs, no referral or placement fees – SWAP costs are covered by Government Funding. As a result, employers can interview and hire more qualified applicants for their vacancies – for free. This makes SWAPs ideal for employers who plan to hire large volumes of drivers over next couple of years.
What can System Group do to reduce your shortage?
As a transport and logistics training provider, we have a number of flexible solutions to help you tackle your own driver shortages.
If you’re keen to maximise your apprenticeship funding, we can deliver LGV apprenticeships which currently incorporate the Class 2 (Cat C) licence. We’ll also deliver LGV apprenticeships with the Class 1 (C+E) licence included (once it is approved for delivery).
If you need a quicker solution, we can provide licence acquisition to help your existing employees obtain their Class 2 (Cat C) or Class 1 (C+E) licences.
Through our driver academies, we can give you a wider talent pool to recruit from by providing you with fully trained, suitably qualified candidates to interview for your LGV Driver vacancies. All candidates submitted for an interview will have either Class 1 or Class 2 licences (depending on the vacancy). This could be ideal for when you need to recruit in volume.
Warehouse to Wheels Model
We can combine these services into a Warehouse to Wheels Model that works for you.
If you want to make the most of apprenticeship funding, we can run a W2W programmes which combines warehouse apprenticeships and LGV apprenticeships together.
If you want LGV apprentices but need a more mature candidate pool, we can use SWAPs to give you C1-qualified drivers who begin driving 7.5tn trucks whilst being hired onto an LGV apprenticeship
If you want to upskill your current employees, we can deliver licence acquisition to your warehouse staff.