For those not brave enough to seek refuge in the sun somewhere this August, summer lasted three days, and now it’s back to work, back to school, back to the office, back to complaining at the weather, the news, and the fact that advent calendars are already out in shops. But it’s been a restless start to September, with National Insurance being driven up to fund social care, HGV drivers retiring (and not just because they’re flat), and the Northern Ireland Protocol continuing to drive everyone round the bend. Many thanks to the government for beginning the new term with a full bookbag of homework.
This week, the government announced that they would raise both National Insurance and tax on dividends by 1.25% in order to help fund health and social care. The Commons voted in favour by 319 to 248.
Despite raising £12 billion annually, the move breaks their own party manifesto promise not to raise taxes. Well, since when have ‘trust’ and ‘politicians’ been used positively in the same sentence together?
We are very critical of this decision, with our Chief Economist, Kitty Ussher, arguing ‘this is an extraordinary time to be adding additional burden to business and the cost of employing staff, just as it looks to recover from the pandemic.’
While it may be back to work for a lot of us, many businesses across the country are struggling with a shortage of workers.
Windows of restaurants, shops and pubs, have been plastered with the plea for staff.
One of our surveys has revealed that directors are attributing this to the long term skills gap, as well as more immediate term issues like coronavirus, and furloughed staff reluctant to re-enter the labour force. While getting paid to not work seems like the dream, it is time to get back into the office on behalf of the post-pandemic recovery.
Businesses are experiencing rising costs as a result of the lack of staff, and with the added burden of the National Insurance increase, there is a danger of undermining that recovery.
Driving a wedge in the system
From one shortage to the next, the exodus of EU drivers, in combination with coronavirus, and IR35, has resulted in a lack of Heavy Goods Vehicle (HGV) drivers on the road.
This is putting huge strain on supply chains across the UK, and is also responsible for the increasing empty shelves in shops.
Many big companies have reported the knock on effects of the driver shortage, with McDonald’s claiming a lack of milkshakes, Nando’s having to shut 50 sites due to supply chain issues, BP closing many petrol stations as a result of shortages, and pubs running out of beer. Just as we need it the most!
Stats have shown that there is now a shortage of 100,000 lorry drivers out of a pre-pandemic total of 600,000.
The government’s long term solution is to target students, raise awareness of the value of the haulage industry, and promote HGV driving as a strong career path for young people.
However, with so much reported disruption, the government needs to do much more to address this issue in the short term.
Uncovering the recovery
The economy grew by 0.1% in July, according to ONS figures.
Although it seems recovery is flattening out, it shows the economy is stable.
GDP is still 2.1% below pre-pandemic levels, but we are expecting to see a strong growth in Autumn in line with the continued success of the vaccine roll out, and schools reopening.
The standstill arrangement – why nothing is moving
Before rushing off to recess, Lord Frost announced the new ‘Command Paper’, that would seek to reconsider the operation of the Northern Ireland Protocol, based on a system of mutual trust.
On Monday, Lord Frost issued a statement in Parliament that the Northern Ireland Protocol will continue in the way it currently is, so negotiations with the EU can continue a little while longer. This is known as a ‘standstill arrangement’, so named because no-one can standstill dealing with this anymore.
If any progress has been made, it is that both parties recognise it would be a mistake to return to tensions similar to those in the sausage war of June-July 2021.
With both labour and driver shortages putting a strain on the business community, the talk has turned to what will happen this Christmas? The thought of not having a turkey on the table this December is enough to ruffle anyone’s feathers, let alone the potential lack of pigs in blankets. No more sausage wars this year, please. Let’s hope the government comes up with a solution soon.
Tuesday 14th September
APPG on business in a pandemic world, looking at how businesses have gone digital during the pandemic.
All-party corporate responsibility group will discuss apprenticeships and skills policy. The guest speakers will be Gillian Keegan, the Minister for Apprenticeships and Skills, and Toby Perkins, the Labour Shadow Minister for Further Education and Skills.
Wednesday 15th September
European Scrutiny Oral Evidence on the institutional framework of the UK/EU Trade and Cooperation agreement.
APPG on financial markets and services, discussing setting up financial services in the UK for success. The Speaker will be John Glen MP.
Tuesday 14th September
Labour Market statistics
Wednesday 15th September
Consumer Price Inflation Statistics for August.
Friday 17th September
Monthly insolvency statistics for August
Our Chief Economist, Kitty Ussher, is giving the "Key Economic Update" at a conference organised by ICAS, the professional body for chartered accountants. The conference is called ICAS Insolvency and Restructuring Conference 2021.
Our Director of Policy, Roger Barker, is meeting with Barry Gardiner MP to discuss his Private Member’s Bill aimed at outlawing the firing and rehiring of workers.
Thursday 16th September
Roger Barker is meeting Lord Frost at the first in person meeting of the Brexit Business Taskforce.
Roger is also taking part in a webinar debate on shareholders versus stakeholders run by Winmark Global.
Roger is moderating a fireside chat with Kate O’Neil from the Financial Reporting Council on director’s liability and changes to the audit regime. This is at a conference organised by City & Financial.
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