This week’s topics:
- Shortage of HGV drivers causing supply chain pressures and the associated impacts linked with the imminent end of the UK’s Job Retention Scheme
- A view on the temporary reduction in VAT ending for food, accommodation and attractions on 1 October 2021
- What’s the outlook for private equity investment in sport?
Shortage of HGV drivers causing supply chain pressures, and the end of the furlough scheme
There is an estimated shortage of around 100,000 HGV drivers in the UK with a significant impact on supply chains.
Charles Johnson-Ferguson, Transport and Logistics Leader at PwC said:
The shortage of HGV drivers is not new, and has been a challenge for many years, although a number of factors have made it particularly acute at the moment;
- “HGV driver tests were postponed during Covid creating a backlog of around 40,000 tests and therefore a significant number of drivers have not entered the industry. The Government are taking steps to streamline the testing process, and add more testing capacity but not quickly enough to fill the immediate shortage
- Brexit meant that some drivers did leave, but the real challenge for EU drivers not being able to enter the UK to take up the roles as HGV drivers is not being given "skilled worker status". It is also worth noting that the EU has its own shortage of HGV drivers so there is no guarantee that they will come over to the UK even if able to.
- The industry has been poor at attracting new and diverse workers to the profession and whilst it is working to improve diversity and attract women and ethnic minorities this is not a quick fix
- To solve the current problem the parts of the supply chain that can afford to are increasing rates of pay as an incentive to attract drivers. Whilst this is working for the supermarkets it is creating challenges in other parts of the UK supply chain as drivers leave for more lucrative jobs
- “Historically amongst the highest paid drivers, fuel tanker drivers are now able to leave to drive for supermarkets on the same pay. The situation is even more dire for these specialist driving jobs where additional qualifications are required due to the nature of the goods being carried meaning they are difficult to replace or recruit.”
Along with this, the Job Retention Scheme (‘furlough’) comes to an end later this week, on Friday 1 October, it is expected that many UK workers face an uncertain future.
Hoa Duong, economist at PwC, comments on what impact this will have on different sectors, including the correlation between the scheme ending and the ongoing HGV driver shortages:
- “This week’s end of the furlough scheme (Friday 1 October) is not expected to be a ‘silver-bullet’ for the current lorry driver shortage or the UK labour market paradox, in which high unemployment and high job vacancies coexist.
- “This is because the number of workers in the transportation sector, including HGV drivers, make up only 9% of the total furloughed workers by the end of July. There is also the risk of overestimating the number of workers to be released from the scheme as many may move to self-employment or economic inactivity.
- “The paradox in which businesses struggle to recruit amidst high unemployment rates is just the tip of the UK labour market iceberg. The real challenge lies in skills mismatch issues which could potentially have a ‘knock on’ effect on the whole economy and not a challenge that can be resolved overnight. As the furlough scheme runs its course, more attention should be placed on long-term goals, such as retraining and upskilling across all sectors, especially so in the business services and manufacturing industries.”
The reduced VAT rate for hospitality and tourism increases to 12.5% on 1 October 2021
The temporary reduced VAT rate, announced by the Government in the March 2021 Budget, is coming to an end on 30 September 2021.
- The temporary 5% reduced rate currently applies to VAT for goods and services supplied by the hospitality and tourism sectors in an attempt to support businesses during the pandemic and encourage consumer spending. From 1 October a higher but still temporary reduced rate of 12.5% will be in place for the hospitality and tourism sectors.
- All affected businesses will need to ensure that they apply the correct rate from 1 October, with this new rate currently set to last until 31 March 2022.
- This staged approach was introduced to help businesses manage the transition back to the standard 20% rate.
Sue Rissbrook, Retail Tax Leader at PwC, comments:
- “VAT rates slowly returning to normal levels for hospitality and tourism businesses suggests a confidence in a bounceback from the pandemic and a need to regain fiscal control at the centre.
- Consumer spending has been up and with the festive season round the corner the hospitality and tourism sector will hopefully get the boost it desperately needs.
- However, as the furlough scheme wraps up at the same time as the lessening of the VAT reduction, we’ll need to cautiously watch what the impact is on sector prices, jobs and businesses.
- “What the impact will be of the increase of VAT to 12.5% will depend to some extent on whether businesses decide to absorb or pass on the additional 7.5% VAT to consumers.”
PwC’s 2021 Sports Survey - views on private equity investment in sport
PwC’s 2021 Sports Survey has gathered the views of nearly 800 sports leaders on the current state and future direction of the industry. The findings reveal insights into the attitude towards private investors in sport including:
- 83% of sports leaders recognise that private investors can accelerate sports’ growth
- 82% of respondents say private investors can enable innovation/entrepreneurship
On the other hand:
- 77% of respondents believe private investors do not understand sport’s complex stakeholder structure
- 74% believe private equity shifts control away from sports bodies
- 73% believe investors’ short-term goals conflict with sport’s long-term development
Clive Reeves, Sports sector lead at PwC UK, said:
- “Our 2021 Sports Survey results indicate that sports leaders believe private investors could have a real impact on sports’ commercial growth, however, there is acknowledgement that investors must understand sports’ stakeholder structures and consider longer term development of the sport.
- “Recent deal activity suggests there is growing interest on both sides to collaborate more. Sports institutions are likely to be interested in private equity partners that provide both financial resources and expertise to realise their growth potential. In return, private equity firms are interested in sports businesses that have a clear strategic plan, stakeholder alignment and operational readiness before entering negotiations.”
Something to read:
How does a more secure organisation improve workforce productivity? This article looks at how better cyber security can improve trust, empower individuals and make them feel that they can take true advantage of hybrid working. pwc.to/2VT9x2Q
Something to go and watch:
PwC UK are collaborating with TEDxGlasgow in this #MakeorBreak year. Working with TEDxGlasgow, we’re engaging with our teams to consider the actions we as individuals can take that will make a difference. Get your tickets now: https://t.co/9lvLOef39w?amp=1