Yahoo Finance Is Brexit or Covid to blame for Britain’s supply chain crisis?
A recent report by the accountancy firm Grant Thornton concluded there were almost 1m vacancies in the UK. Half of them were in the food and drink sectors, industries that have for the past 20-30 years relied heavily on an EU workforce.
The chronic labour shortage has led to a crisis in supply chains, affecting a lengthening list of products. So what is the root cause of the problem?
The government argues it is the lingering impact of the pandemic. But industry bosses say it is the cliff-edge cause by Brexit with a lack of British workers filling the gaps left in the haulage industry, warehousing, hospitality and the meat production sectors.
Grant Thornton’s research showed that since the start of the pandemic, 1.3 million foreign-born workers had left the UK and were yet to return.
“These shortages are placing huge pressure on the sector and there is a very real chance that they could quickly reach breaking point,” Grant Thorton said in its report, Establishing the labour availability issues of the UK food and drink sector.
“They are shortages that cover the full breadth of the supply chain from the initial inputs into farming all the way through to those that serve food and drink ‘at the table’.”
As the crisis spread to petrol supplies on Friday, the transport secretary, Grant Shapps, dismissed claims that Brexit had caused the problem, insisting that Covid was the “main reason”.
The supply of lorry drivers was down to the fact 40,000 tests could not take place during the pandemic, he said.
“The pandemic is the cause, but Brexit is limiting our options for solutions,” said Shane Brennan, the chief executive of the Cold Chain Federation, which represents chilled and ambient food warehousing owners.
Or put another way, Priti Patel’s decision, supported by many Brexit supporters, to shut the door to low-skilled workers in new immigration laws seems to be exacerbating the problem.
“It is not EU policy that is to blame here. This is a domestic policy by the Home Office about who can and can’t come into the country,” said a spokesperson for the British Meat Processors Association (BMPA), which commissioned the Grant Thornton report.
The problem is that meat processing plants, retailers, care homes, hospitality and companies such as Amazon are all competing for a limited supply of low-skilled workers at entry-level salaries. So even if there were enough lorry drivers, the supply chain has come under severe strain from labour shortages.
The Labour party, which has largely avoided commenting on Brexit since January, blames lack of planning in the face of countless warnings over shortages of EU nationals in the workforce.
Anneliese Dodds, the chair of the party and former shadow chancellor, told Sky News on Friday the crisis was a reflection of “big failures in planning for this situation”. The Liberal Democrats went further, calling on the government to rethink their immigration policy.
Industry leaders say the pandemic has exposed the weaknesses in the just-in-time supply chain model. Brennan said the food shortage crisis meant that supermarkets, and in turn consumers, may have to permanently reset their expectations, with the model perishing.
“It’s not that we won’t have strawberries all year round, it’s that we won’t have 12 varieties of strawberries and supermarkets. Retailers are going to have to adjust their supply chain and may end up ordering every two days or once a week,” said Brennan.
The government has rejected all calls to solve the problem by issuing short-term visas to truckers and other workers from the EU. It is convinced Brexit is the solution as it can prod British employers to wean themselves off a low-wage culture and recruit and train local staff.
But industry bosses say their very survival is at stake. With the pandemic and Brexit already taking its toll, a winter of wage inflation is not the answer.
